In our last blog post, we described the practice of “fake digital lending.”
To recap, if your organization offers “digital lending” that doesn’t allow the process to be completed online from any device, you’re instead offering fake digital lending, which can lead frustrated customers to walk. Fillable PDFs don’t cut it anymore.
Consumers of every generation are used to doing things online: buying clothing and groceries, streaming live events, undergoing health checkups, and even buying big-ticket items such as cars. In fact, Zillow recently reported that 36% of Americans would be more likely to buy a home entirely online, and 43% would be willing to sell their home entirely online. Your consumers aren’t just comfortable with conducting their financial lives online; they demand it.
To stay competitive, lending institutions of all sizes must make the online loan journey easy, intuitive, safe, and compliant for their customers. It must be a start to finish digital journey that lives up to consumer expectations.
Loan Applications from Any Device
Real digital lending provides an end-to-end online application and funds disbursement process for the consumer. Looking at your financial institution’s approach, can you offer true digital capabilities or are there gaps that you’re overlooking?
When the 2020 Banking Report polled financial institutions about their ability to process online and mobile applications, only 66% could say they support a true end-to-end process. However, the importance of real digital lending is understood in the industry, as 27% said they planned to enable digital lending within 12 months.
Real digital lending can be completed via any device. In 2020, 46% of lenders said they already have a mobile loan app, and 25% said they’d have one within a year. The trend is clear: some organizations have already implemented real digital lending, and some are working on it. For those developing their technology, it’s a race to the finish for market share.
Give Customers What They Want: An Easy Digital Loan Process
To quote the 2020 Banking Report, “Banks and credit unions can no longer put lipstick on a digital banking pig, believing that having digital loan application capabilities is enough.” It’s important to note the shift in consumer thinking: The consumer’s definition of convenience is no longer, “How close am I to the nearest branch?” – it’s now “How easy is it to apply online?”
The pressures of COVID-19 accelerated online business demands dramatically. Tech giants such as Amazon and Google set the pace for the next generation of consumer technology. More than a year later, consumers have adapted to the new digital standard with strong preferences for their preferred digital experiences.
For lenders, creating a successful digital strategy means rethinking the consumer journey. Every process, from account opening to loan applications to funds disbursement, has to be retooled. Consumers no longer have the patience for a digital process that takes more than a few minutes. That means your system has to instantly integrate data from a host of other online systems across the financial institution.
There is a warning here: there is more to digital lending than converting existing manual processes into an app. The 2020 Banking Report found that 85% of online loan applications took consumers more than five minutes to finish, and 62% took up to 10 minutes. Savvy lenders will see the opportunity here: only 15% of the research study’s apps could be completed in less than 5 minutes. Develop a streamlined digital lending strategy, and you’ll be miles ahead of your competition.
For consumers, the most successful digital journeys involve as few clicks as possible, are intuitive, personalized, secure, and can be accomplished anytime from any device. Develop an app or journey that is a remix of your old physical process at your own risk; your potential customer will click away to a process that meets their expectations.
Don't Be Last to the Digital Lending Finish Line
Consumers know the technology exists to take the work out of their financial transactions. If you can’t offer it to them, it’s becoming easier for them to find a lender who can.
Beyond the digital journey they expect, you can also offer consumers an experience that exceeds their expectations. Shifting your focus to the consumer means leveraging all of the tools available to improve their experience. Customers interested in refinancing home loans may also be interested in taking advantage of historically low auto loan interest rates. When systems can communicate across silos, from consumer to lending or vice versa, you can offer customers more value for their loyalty.
Is ramping up your institution’s digital loan processes on your to-do list for 2021? Would you like to learn about the tools you need to make it happen? Start by downloading our free Digital Journey eBook to learn more.