How interaction platforms and customer personalization help banks land more loan revenue

This article first appeared in the April BAI Executive Report. Gain more insights into building banking relationships through lending in Executive Report: Innovations in lending services.

A host of economic and global factors affect the average person’s borrowing power and create challenges for banks looking to capture more of the lending market. Banks cannot predict what the loan landscape will look like next, but they can bet on one constant: potential customers expect modern, digital experiences from all vendors—lending institutions included.  

The global lending landscape has had a tumultuous few years. Mortgage interest rates were at historic lows in 2020 and 2021, as the country grappled with the economic upheaval of the COVID-19 pandemic. Consumers were borrowing left and right. But the years since have been a 180-degree turn. As rates increased, borrowers changed tack, started taking their time and have approached loans with greater scrutiny. At one point late last year, U.S. mortgage applications hit their lowest in 28 years, according to the Mortgage Bankers Association, making real estate lending a sharply competitive arena for banks. And in the auto-financing sector, banks face competition from financial technology companies (fintechs), credit unions and other entities innovating ways to attract customers in this industry poised for disruption.  

Challenges to increasing lending-based revenue 

In the mortgage space, the J.D. Power 2022 U.S. Mortgage Origination Satisfaction Study found that lenders are missing opportunities to connect with customers by failing to deliver what they most desire: expertise, guidance and communication. “Currently, just 28% of lenders are successfully meeting all these key criteria,” the study states. Additionally, fintechs have been able to answer the call for modern application experiences faster and with greater success than banks that are slower to embrace digital technology.  

Banks can address these challenges with the right technology. Fintech has demonstrated the power of data-driven, AI-based solutions that allow them to pivot quickly and deliver customer experiences rooted in digital-forward customization. The J.D. Power study found that “while approximately 40% of mortgage customers indicate a willingness to complete the entire lending process via self-service digital tools, 67% are currently interacting with human representatives via phone.” By giving customers a seamless way to transfer between self-service and human-based help, banks will streamline the loan application process, land more loans and increase revenue.  

What’s next: Opportunities for banks to capture more borrowers

Despite the lending market’s recently shrinking nature, opportunities persist to capture more of it. These opportunities might seem less lucrative with consumers who are borrowing less, shopping around more or hesitating in the buying process, but banks should not be fooled by the shrinking market. Cementing trust with borrowers will set up banks for long-term revenue growth—if they do it right.

• Prioritize Digital Engagement and Seamless Experiences: Embracing digital engagement is the first step toward reimagining how banks interact with potential loan customers. Delivering seamless experiences across bank websites, customer service portals, chatbots, phone calls and other interaction points is crucial for success: any point of friction can lead to abandonment, including if a process is too complex or if a potential borrower cannot easily answer their question using self-service. Enabling borrowers to seamlessly transition among SMS, chat, video and other forms of communication reduces abandonment rates and increases loan conversions.
• Personalize Interactions and Data-Driven Decisions: As banks digitally enable lending processes, they should emphasize proactive experiences. Loans are no longer singular transactions—they are ways to cement longer relationships with customers, develop loyalty and drive up the customer lifetime value. Putting the customer at the center of the lending model will help banks reengineer their approach to loans and move from one-and-done interactions to holistic ones that meet a customer’s multiple needs. Data is the key to customizing product bundles and product expansion over time—and treating every customer with unique care. Digital customer experience solutions provide immense, valuable customer borrowing data so banks can gain a greater understanding of their needs. These solutions aggregate customer data through interactions, enabling banks to tailor customer service and increase conversion rates. Banks can also use data derived from their digital engagement solutions to predict customer needs and proactively target potential borrowers based on their behavior.

Empower your customers and reap the rewards

We’ve closely followed the surge in self-service and digital service and watched how digital sales funnels have evolved for today’s loan customers. Bank websites play pivotal roles in facilitating applications and increasing conversions, but issues such as an absence of real-time assistance and confusion regarding certain form fields contribute to users abandoning the process. How should these challenges be addressed?

• Go Channel-Less for a Holistic Experience: An interaction platform must transcend traditional channel barriers, shifting the focus from managing a multitude of channels to delivering a fluid customer journey. Instantly establishing a shared context and then transitioning between chat, voice or video creates an effortless and uninterrupted experience. This ushers prospects through their loan application processes with ease and improves their transitions among channels without disconnecting, restarting or reeducating reps.
• Close More Loans with Interaction Platforms: Lenders must use technology to guide borrowers through confusing loan application processes, making them simple. Even first-time applicants breeze through applications to closing with a cutting-edge platform that enables banks to decentralize support—meaning anyone in the bank can help a borrower in need, including those outside the traditional call center. With one- or two-way video, customers receive personalized experiences that engender trust. These platforms must provide valuable visual context during support calls so borrowers get their questions answered with greater clarity in less time. By marrying support calls with web-browsing sessions, banks provide customers with multilayered support that guides customers well past drop-off points to increase conversions. Banks can observe live to see customer issues before the borrower engages with support to get ahead of friction points.

Cut a competitive edge in the lending market today

Using the right technology, banks can turn high-value borrowing prospects into loyal customers by providing them with seamless, personalized experiences—all while empowering reps and reducing the cost of serving customers.

Banks can reduce digital abandonment, improve loan conversions and close more deals with higher-touch engagement—competing with fintech, credit unions and other entities that have overhauled their approach to lending to provide an equally competitive experience.

Emily Wilson is Senior Director of Product Marketing at Glia.