Over the last twelve months, 40% of consumers have abandoned bank loan applications. Lenders are lagging behind other sectors of the economy when it comes to length, clear communication of loan steps and approval time. But lenders need to focus on this operational efficiency immediately if they want to boost sales and reduce costs.
According to the FDIC, there are less than half the number of banks and savings institutions today that there were in 1990 – a drop from 12,343 to 4,880. Streamlining the loan application process is key for lenders to quickly regain their competitive edge – making their loan application processes easier to fill out – especially for non-branch clients. But how can this be done?
Borrowers Are Increasingly Mobile-First
Today, 79% of people check their phones within 15 minutes of waking up. And once they’re awake, they’re increasingly choosing to stay connected by incorporating the latest technology into their daily lives. According to research published by salesforce, 64% of consumers expect companies to instantly respond and interact with them.
This customer service expectation also applies to loan applicants, who expect seamless, complete and simple interactions. And they expect to complete their applications from anywhere, anytime.
Smartphone, Smart Loan
Research shows that the cell phone is the starting point for 80% of Internet searches. For lenders, providing a delightful, productive customer journey on the cell phone isn’t a nice to have – it’s a requirement. Here’s the reason: 43% of adults say that they regularly use their smartphone for financial management, including loans.
Below are some practical considerations for lenders to maximize the mobile lending potential:
- Keep it simple: Applying for a loan, even from a cellular phone must be convenient and simple. Consumers who feel that they’re wasting their time will simply opt out of an application process. Ease of completion is a major consideration for customers who are evaluating loan options. Today’s lenders must provide ‘best-of-breed’ loan applications that can facilitate a seamless process – even for customers on the go. Lenders that require applicants to download a mobile application from an App store or combine other devices like computers and emails add further barriers to completion.
- Minimize information required: Loan applications are designed for face to face meetings – they typically have dozens of fields and a lenders guiding hand to complete. However, on a cellular phone, those forms simply don’t work. Every extra field on your mobile loan application increases the likelihood of a customer abandoning it. When putting together a mobile-friendly form, make sure that every field is absolutely necessary to the application process.Then, make the form even easier to comprehend quickly by placing labels above each field. Doing so will ensure that your customers will only have to read vertically, instead of scrolling left and right.
- Pre-fill wherever possible: Simple technologies can eliminate the need for excessive typing on loan applications. Often times, a form will include different fields that respondents will answer in the same way. Instead of making users fill in these fields with the same information repeatedly, your organization can pre-populate them with the correct data. Moreover, simple integrations with CRM data ensure that when applicants open your loan application form, these fields will already have been filled in.
- Use engaging language: If an application is written up in a style that’s difficult to understand, applicants are more likely to become frustrated and abandon the process. Whenever possible, it’s a good idea to make the language used in your applications more conversational. For example, “Tell us about yourself” is more effective then “Please fill in your personal identification number.”
- Tailor the process: Any loan should allow for easy customization based on loan type. While this is a given for in-person loan applications, it is even easier in the digital world. Smart forms can ensure that application forms are tailored to the exact use case and take up less of a consumer’s time. Basic personalization of application process have increased online application completion rates by 10%.
Mobile’s challenges: The digital transformation that’s now taking hold in the lending world is not without its challenges. According to Monetate’s quarterly e commerce study , only 2.03% of smartphone users convert, compared to 4.19% of tablet users and 4.68% of desktop/traditional users. There’s still a significant conversion gap between mobile and traditional that needs to be closed as users continue to use their mobile devices.
To unlock the potential of digital lending, lenders need to prioritize their mobile loan application processes. By streamlining the customer journey and optimizing loan application processes for mobile devices, lenders have a potent way to boost completion rates and improve application yield.