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There’s no doubt technology has changed the way consumers interact with brands. Today’s consumers have come to expect a simple, streamlined experience where they can complete a purchase without leaving their home. Financial institutions and lenders are not immune to this change in demand, and it’s necessitated a shift in our focus.
"Technology has helped the lending industry make great strides toward providing consumers what they actually want"
In the past, lenders relied on good interest rates or low fees to attract customers. Now, consumers opt for lenders offering the speediest, most convenient experience, while still expecting comparable prices and rates.
As Chief Lending and Retail Officer at SECU, the largest credit union in Maryland, I’ve seen financial institutions adapt to give consumers the simple application process they want. Technology allows financial institutions to provide convenience, new forms of communication, and greater consumer control.
Consumers are accustomed to browsing products online, check out with one click, and having deliveries on their doorstep before they come home from work. When the product you’re selling is a loan, it’s no different. Today’s consumers want a loan that offers the most painless process, and technology has helped to fill that need.
At SECU, for example, our consumer loan decision process is automated so that it feels more streamlined for the consumer. Before, loan applications required applicants to dig through old paperwork and submit pay stubs and W-2s to validate financial information. Now, data services can fill in a lot of information, reducing the number of initial documents that the consumer needs to provide. By gathering information on the back end, so the consumer doesn’t have to, we save them time and energy, making the process feel faster and more seamless than before.
Technology has also changed the way we communicate with our members. Communication isn’t necessarily face-to-face anymore, so financial institutions need to find new opportunities to create a connection with the consumer. Consumers today want to know the status of their applications or deliveries without asking—they don’t want to have to reach out to a person to do so. Even pizza deliveries today are monitored online by the minute to let consumers know where their order stands.
In SECU’s mortgage application process, for instance, we recently began configuring milestones in the application process into automated updates, which lets applicants know exactly what is happening with their loan while it’s being reviewed. When an employee makes progress on the application and signals that a milestone has been achieved—say, the appraisal has been received—it triggers an automated email to the applicant that communicates what happened and shares the next steps. For longer loan processes like buying or refinancing a home, these updates are critical for a consumer’s peace of mind and provide an opportunity to build on the brand relationship.
The ability to complete more of the loan application process independently allows applicants greater control over when and how they apply for a loan. Loan applicants can now apply for a loan, upload documents, get approved, and even sign for loans online. At SECU, for example, members can apply for a personal or auto loan completely electronically. The signing process is digitized through programs like DocuSign to save members a trip to the branch. Our self-service portal also allows applicants to see where they are in the process and keep all of their loan information in one place. This independence gives consumers more autonomy over their finances and more control over an important and potentially stressful process.
The advancements in technology that have made these strides possible also present new challenges. In lending management, the risk is our business—every loan approved is a calculated evaluation of risk based on the applicant’s financial information. Incorporating technologies into the lending process could increase the risks that financial institutions take. The ability to make things faster and more convenient for loan applicants is reliant on data services to fill holes in the information that is no longer asked of applicants. As lending technology evolves, it’s important that the industry carefully evaluates the service providers they work with and the data that they receive on applicants.
Technology has helped the lending industry make great strides toward providing consumers what they actually want. There’s no doubt that greater advancements will continue to push our industry toward a lending process that provides consumers with the level of convenience, communication, and control they are looking for.