Blog Rewind: Meeting the Digital Expectations of Borrowers
Today we’re taking a look back at a blog originally published in May of 2018 about meeting the digital expectations of borrowers to see what’s changed. Spoiler alert: the answer is not much. Digital transformation is still a hot topic among bankers and many institutions have pressed pause on digital transformation projects. The COVID-19 pandemic has put digital back in the spotlight with many community banks and credit unions realizing that they still have room to grow in their digital strategy. While there is always a reason to not pursue digital transformation, there are many more reasons to do so – making this blog from three years ago still relevant today:
These days, consumers can accomplish just about anything thanks to connected devices, whether a smartphone, tablet or smartwatch. Smart assistants have taken this idea even further, allowing consumers to complete certain activities, such as purchasing household items like laundry detergent, by a simple voice request. As a result, consumers have expectations that are higher than ever, including when it comes to managing their finances and even when applying for a loan. However, the lending process for many financial institutions is still wrought with friction, which negatively impacts the borrower experience.
The good news is that the right technology exists for financial institutions to modernize and streamline the lending process and many institutions are already taking steps to accomplish this. To help your financial institution remain competitive as the market continues to change, there are a few basic and easy steps to meet your customers’ heightened expectations and significantly improve the lending experience.
Eliminate Friction in the Application Process
The first major step to reducing friction in the lending process requires a quick and painless loan application. Some banks and credit unions have digitized part of the process, but there are portions of the application that still require a visit to the branch or mailing physical documents. According to research from the American Bankers Association, of the banks that offer digital loans, only 47 percent have digitized document uploads and only 41 percent support e-signature. To truly improve the application experience, financial institutions must ensure customers can complete a loan application online in its entirety.
Your institution should also utilize auto-fill technology for applications, as this will vastly reduce manual data entry for prospective borrowers. This involves integration with the financial institution’s core system, which pre-fills the loan application with key data that is already on file at the institution. By incorporating an auto-fill feature, you can ensure that more loan applications are completed the first time, submitted and ultimately, process more loans.
Additionally, adding a save-and-resume function will improve the convenience of completing an online loan application, as individuals can save their progress and finish the application at a later time if needed. For instance, if an applicant needs to obtain supporting documentation, being able to resume the application in the future is helpful. This also enables the institution to save the applicant’s contact details and then follow up with the applicant at a later date, mitigating abandoned loan applications.
Lastly, an effective online loan application should offer an e-signature function so that applicants can sign loan documents digitally. If the borrower is able to complete an application online, why should they have to step into the branch to sign loan documents?
Increase Transparency with a Borrower Portal
To further reduce friction in the lending process, add a borrower portal that applicants can use to receive status updates about where their loan is in the approval process. A borrower portal can also let applicants know if they need to upload any additional documentation to facilitate the approval, eliminating the need for a series of follow up phone calls and branch visits in order to turn in documents. What’s more, it can be programmed to directly send emails and other messaging updates to an applicant, which increases transparency and ensures your customer feels like a partner throughout the lending process.
The financial institutions that fail to adapt to the digital expectations of consumers will ultimately lose market share to more agile institutions and emerging players like alternative lenders. By moving toward a more digital lending experience, your financial institution demonstrates its commitment to providing borrowers with the convenience, transparency and fast, excellent service that today’s consumers expect and demand.
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Posted on Friday, April 9 10:00 AM