Honing the Customer Experience in Digital Lending: Best Practices

A one-size-fits-all approach that doesn’t cater to individual borrower needs and circumstances, redundancies in the application process via cumbersome application forms, lack of transparency and communication - these are just some of the areas banks and other lenders can improve with a focused effort. 

Importance of Customer Experience in Digital Lending

For modern banking customers, being able to apply for loans from any device and receive updates in a timely manner is the essence of a great digital customer experience.
For digital lenders, it‘s a differentiating factor. 

More and more businesses are realizing the importance of delivering a streamlined digital lending process that eliminates friction and automation for faster transactions from start to finish. Making the banking experience as user-friendly and efficient as possible not only boosts customer satisfaction but also fosters loyalty. 

Regardless of their size, banks that want to compete will need to achieve the optimal balance between what are arguably the three pillars of customer experience in digital lending:

• Speed
• Simplicity
• Convenience

To ensure that the unique requirements of every customer are met, their best bet is to stick to tried-and-true practices that make a potent digital lending strategy.

Best Practices for Maximizing Customer Experience in Digital Lending

Based on a data-driven approach, here are key standards that every bank should implement for a smooth lending journey:

Promote automation

The idea here is to revamp traditional loan applications and servicing forms by automating the processes and associated communications.
Numerous lenders are already deep in leveraging automation, especially in terms of loan origination for easier underwriting. They employ sophisticated platforms to collect data, perform credit risk assessments, verify documents, and execute loan applications. The area of exception management is also included, where alerts about adverse action and declination letters are generated per regulatory standards.

On a smaller scale, some lenders offer prefills for loan applications with known information about the customer they previously obtained (e.g. from a scanned document). Doing so goes a long way to enhance the customer experience, saving customers valuable time and reducing the chance of them leaving in the middle of the activity.

For banks and lenders, automation also offers a highly tangible benefit of increased efficiency. Almost 90% of them believe the ability to scale automated processes rapidly will be critical to their success over the next three years.

Create a mobile-first experience

In a world where convenience and accessibility are key growth factors of mobile banking and financial services, optimizing the lending experience for mobile devices is vital. This particularly holds for younger borrowers who attach great significance to speed and efficiency in their day-to-day operations.

With smartphones being the preferred choice for many customers, including SME owners, customer experience in digital lending needs to include a mobile-responsive design so they apply for loans and manage accounts from anywhere, at any time. It also must be flexible enough to adapt to customers’ unique needs (defining a desired term length, rate, amount borrowed, etc.) to avoid restarting or abandoning the process.

Provide transparent and consistent information

While traditional lenders such as banks and credit unions (particularly local ones) benefit from established brand recognition, simply relying on this advantage is insufficient in the present-day competitive digital landscape.
It’s fairly common for convoluted terms and industry jargon to put off potential borrowers and prevent them from completing applications. In fact, 62% of younger generations are likely to switch providers based on poor communication. 

So, make sure to provide clear and understandable information all the way, from eligibility criteria to fees and processing times, and be upfront about all associated charges. Doing so will foster trust and build confidence.

Develop an omnichannel presence

Print and mail may have served lenders well in the past, but the current financial landscape demands a more omnichannel approach. The proliferation of communication channels and customer touchpoints necessitates tools that facilitate real-time, anytime interactions throughout the lending lifecycle.

It’s simple math: the more channels you offer for communication, the more likely your customers will be to use them and carry out their applications. Providing diverse options like chatbots, social media, email, and others empowers customers to choose their preferred channel, improving overall satisfaction and convenience.
Engaging with customers across multiple channels also supplies valuable data points, enabling lenders to anticipate future needs and behaviors, ultimately leading to the development of more relevant products and services.

Leverage integrations

Integrations play a pivotal role in crafting a seamless and efficient lending process for both customers and banks. Their primary focus lies in minimizing the burden on applicants by reducing manual data entry and eliminating repetitive tasks through digital lending technology.
When an existing customer seeks a loan or credit, the Loan Origination System (LOS) can instantly retrieve their details, contact information, financial statements, and so on, from the bank's core system. This not only saves time but also ensures accuracy by eliminating the need for manual input.

The benefits of integration extend far beyond data entry. Through strategic partnerships and integrated systems, banks can streamline various tasks within a single platform, such as verifying tax returns, pulling credit reports, and generating flood certifications.

Additionally, these integrations consolidate all data into a single location, creating a unified approach that cultivates a smoother workflow for both employees and customers.