The saying goes, ‘make hay while the sun shines.’ For lenders, this spring/summer could well have been hay-making weather. The consumer borrowing rise in May suggested a certain comfort level with debt. Couple that with a spending increase and it seemed that consumers were also making hay, not saving for a rainy day.
Tapping the rich stream of consumer spending confidence is a competitive business. To stand out in a crowded market lenders need to consider how they package and design their products and services for customers.
According to a 2015 PwC report on the status of consumer lending in the U.S., changing demands, regulatory changes, and the digital revolution are changing the way lenders need to approach their customer strategy. Online has very much come of age, with the majority of consumers preferring it throughout a loan process, regardless of whether this is for an auto, home, student or personal loan.
In fact, when it comes to mortgages, the report showed that preference for online had increased considerably – in 2013, most consumers liked to start the process online but then fall back to ‘traditional’ methods but in 2015 most preferred the entire process to be online.
This isn’t something most lenders currently support, although the potential for it has come to the fore in recent times through ‘Rocket mortgage’ from Quicken Loans. Offerings like this stand to redefine the mortgage process.
To satisfy customers, lenders need to look to tactics such as offering loan applications online or via mobile apps, simplifying the process through automation, competing on quality of service, and integrating financial management tools into offers. For example, offering ‘app-like’ experiences makes it easier for lenders to educate younger borrowers about their options and allows them to compare rates to give them confidence that they have chosen the right offering.
Findings of the PwC report also highlight the importance of the lending process, stating, “Other than economic factors (for example, interest rates and closing costs) or having an existing relationship, borrowers believe the most important factor in choosing a lender is the speed of the process.”
Through automation of services, lenders are able to mitigate risks while at the same time providing customers with rapid responses on loan applications. Digitization and customer service are critical to meet the high standards customers have come to expect, while streamlining time to delivery and reducing business risk for lenders.