By Martyn Beer, General Manager – Lending Solutions, Sandstone Technology
We might yearn for the days when consumers used to pick up the phone or walk into a branch to research, compare and ‘purchase’ financial products, because at least we had a chance to convert them at the touch point. Now they can easily and far more efficiently browse the internet to “find” and, now more than ever before, ‘purchase’ a financial product that suits their needs.
With financial institutions now offering similar products and with promotional material able to be accessed by consumers at a click of a button, converting website browsers into customers is both a significant challenge and a “real time” opportunity for financial institutions. There is a catch though…..you’ve got less than ten seconds remaining attention span.
So, if there is a difficulty associated with differentiating your product from your competitor, how can you win the battle for conversion? Providing a seamless transition to an online application process as part of the product offering via your website would seem to be an answer. Why risk losing ‘browsers’ to your competitors when you can simply take them off the market whilst they are in your web space?
In a matter of minutes we can book an overseas holiday, do our weekly shopping, complete our tax return or locate our next home online. If that home came with a mortgage “attached” and a simple “click through” to an online application, why wouldn’t you spend the extra 10 minutes? If that application effort produced a real “Approval subject To Verification”, why wouldn’t you just keep going, especially if the financier “offered” to take the pain of changing lenders away from you?
What prevents this from happening right now? Online loan applications are mostly like online deposit applications – forms based. Hence many financial institutions are yet to be convinced that they should offer consumers a facility to apply for loan and deposit products via their website? Nobody can prove conclusively that consumers will organise their mortgages via the web. Twenty years ago, nobody thought mortgage margins would reduce below 3.75% or that brokers would account for 40% of mortgage business either until some enterprising types did it. Those enterprising types with first mover advantage are now an integral part of the competitive landscape.
Another question being asked is why it has it taken so long for consumers to be convinced that applying for financial products online is as seamless and straight forward as other internet based activities? At Sandstone we would contend that filling out a “web form”, requesting every possible combination of data that an assessor needs to make an “informed” conditional offer after three days, might just have something to do with it. If it takes a consumer about an hour to research, plan and book a multi-country overseas holiday, why would they spend hours applying for a loan with no immediate result? Our research tells us that they simply won’t.
In short, it’s a catch twenty two. Bankers see no evidence of it working and borrowers think the experience is rubbish. However, with the arrival of sophisticated electronic verification of ID, addresses and asset values, it’s entirely possible to deliver significant customer experience improvements whilst managing acquisition in a risk controlled environment satisfying even the most conservative risk metrics.
Even more exciting for lenders is the ability right now to provide direct to consumer access to the entire lending value chain integrating with loan origination processes inside banks which now makes the case for investing in direct to consumer mechanisms to sell lending products over the internet a compelling one. With significant cost reductions (you only deal with 100% qualified borrowers), customer service improvements and approval time reductions on offer (the customer controls their own experience), it’s only a matter of time before online application facilities are as commonplace as internet banking solutions. I would urge lenders to consider the position of those previously mentioned “first movers” – can you afford not to be?
Tedious, cumbersome and unintuitive online application processes leading to high abandonment rates and a poor customer experience are now a thing of the past. Nowadays if you want to stay ahead of your competitors, your direct to consumer channel needs to:
- Be intuitive and guided and relevant – only ask for what you need!
- Be interactive and provide instant feedback to users
- Enable Electronic identification verification of ID, addresses and asset values
- Provide appropriate levels of approval (Conditional, Subject to and Full)
- Put the customer in control of “their process”
- Verify as much as possible real time
- Provide tools for customer “choice” and comply with compliance requirements
For more information on Sandstone’s online banking and lending automation solutions, please visit Sandstone Technology.