Posted by MeridianLink | January 5, 2022

Personalized Onboarding Strategies for Digital Lending

As more consumers apply for mortgages and consumer loans online, it’s more important than ever for banks and credit unions to use targeted digital strategies for onboarding as well as to meet the demands of consumers for personalized service.

As consumers shift from applying for credit in person at bank branches, financial institutions must move from a “lead generation mentality” and develop onboarding processes that target the needs of new customers, including incentive offers and simplified processes.

That’s according to The Future of Digital Lending by Jim Marous, owner and publisher of the Digital Banking Report. The 2021 report, published in September, is sponsored by MeridianLink.

Even when offering incentives, financial institutions must do more to build better relationships with new customers. That includes simplifying access to related products and services, providing more personalized communication, encouraging them to engage with employees at their local branches, and connecting with them on all possible channels, the report says. Often, however, organizations don’t make use of the most effective channel: text messaging – consumers open and read text messages faster than they do emails.

Growth of Formal Onboarding Programs

57% of financial institutions currently have formal onboarding programs for new consumer loan customers, which is up from 45% in 2020, 39% in 2019, and 30% in 2018, according to research from the Digital Banking Report.

“This is still lower than what we would prefer, but the improvement over the past several years is definitely encouraging,” Marous writes. “Still concerning is that 27% of organizations have no plans in the near or distant future to initiate an onboarding program for loan products. This is actually worse than we saw in 2020 (25%) but an improvement from 2019 (30%) and 2018 (40%).”

Many financial institutions are reluctant to implement new customer onboarding programs because they believe it will be expensive and complicated. While this may be true, there are third-party providers with excellent onboarding capabilities that can simplify the process for organizations at a cost that will still allow them to realize a strong return on investment, the report says.

More, Varied Customer Communication Needed

In addition, although research indicates that a successful onboarding program should include seven or more direct communications, 63% of financial institutions only connect with their customers once or twice after they receive their loans.

“The most important step for almost all new customer communications begins with an email, direct mail, text or phone call that encourages the new customer or member to set up online and/or mobile banking accounts as well as direct deposit/mobile deposit,” the report says.

The sooner they do this, the better, as customers can better manage their accounts with round-the-clock access.

But even as consumers embrace such digital convenience, industry experts say financial institutions should still encourage customers to visit their local branches.

Using Data & Insights to Create Personalized Onboarding

To be successful, banks and credit unions must continue to offer new customers the same personalized services they used to acquire those customers. Unfortunately, most lenders use a one-size-fits-all onboarding strategy but should instead send every new customer a series of customized messages on the most effective channels, e.g. text messaging.

“Bottom line, there is a requirement that the communication be customer-centric as opposed to product-centric,” according to the Digital Banking report.

Organizations can personalize customer communications around such things as the insights they collected as part of the loan application process, demographic data, and insights about how customers use their products as the relationship grows, the report noted.

This year, 16% of financial institutions said that they planned to build and execute a loan onboarding program in the next 12 months – a commitment that has never been more important, according to the report.

Organizations without plans to implement new or better onboarding processes in the near future should rethink that strategy, the report says.

Download the Future of Digital Lending Report

As sponsor of the publication, MeridianLink is making a limited number of copies of the Digital Banking Report, a $495 value, available on a complimentary basis – download your copy here.

To learn more about how MeridianLink can help you implement a post-sale onboarding system, contact one of our digital lending experts today.

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