How personalization can make loan payments easier and less risky

Even in a world of customized online and e-commerce experiences nearly everywhere we turn, many financial institutions haven’t made personalization a priority. That’s been frustrating to consumers who increasingly find loan payments difficult.

In a survey of more than 1,500 consumers, 3 in 5 (60%) said they wish managing and repaying loans was easier—a 36% increase since 2021. Respondents said they struggle to locate information such as account numbers or remember pay dates and passwords.

That’s where personalized CX can really shine, making payments nearly frictionless so they require only a click or two to complete.

Here’s how that experience would look for your bank or credit union’s borrowers, and how it would make loan repayment significantly easier for everyone.

The components of personalized payment

Making a loan payment online requires more steps than you might imagine, turning what should be easy and convenient into a stressful process. Your borrowers must remember when their loan payment is due, track down account numbers and passwords and navigate your website to get to their payment screen. Then they must determine the amount owed if it’s not automatically populated and enter their payment information.

Any of these factors can create roadblocks that slow the payments process and lead to frustration—or even worse, cause borrowers to pay late.

With the right payments platform in place, lending divisions at banks and credit unions can remove loan repayment barriers by using automation, artificial intelligence (AI) and machine learning (ML) to create personalized payment experiences.

Here’s what your borrowers can experience and what the survey data says about the value personalization brings:

Borrowers receive personalized monthly reminders

Your payments platform should enable you to schedule automated reminders that arrive a few days before the payment due date, tailored to each borrower’s preferences and payment history. You also can enable borrowers to choose their preferred communication method: email, SMS text message or push notification, ensuring that they receive the reminders in the way that suits them best.

When you choose a payments platform provider that leverages AI and ML, you’ll benefit from the system’s ability to analyze a borrower’s past behavior and send reminders at the most effective times and through the most engaging channels.

Nearly half (47%) of respondents in the bill payment survey said receiving a reminder when a bill is due would make it easier to pay their loans on time. Only 4% of respondents did not want to receive payment reminders. This demonstrates the strong desire among borrowers for personalized, timely communication to help them stay on top of their loan payments.

Personalized payment links take borrowers right to their payment screen

Look for a payments platform provider that can generate unique, personalized payment links for each borrower. These links, delivered via automated payment reminders or as QR codes on printed statements, allow borrowers to navigate directly to their payment screen without having to enter login or password information. The payment screen can be pre-filled with the borrower’s information and the amount due, streamlining the payment process and reducing the likelihood of errors.

In the survey, 58% of respondents said having the option to pay a loan by scanning a QR code was appealing, and 31% said the ability to pay without entering login information would make it easier to pay on time.

Dynamically populated information allows one-click payment

AI can locate the borrower’s most recent payment information and pre-populate certain fields, such as the amount due and their payment information. The borrower simply reviews the information and approves it to complete payment.

Nearly 8 in 10 survey respondents (79%) said it is important to them to have their payment details pre-populated.

When you choose a payments platform that leverages AI and ML, you benefit from the system’s ability to analyze each borrower’s payment history and preferences to dynamically populate their payment information.

An AI-powered system can also suggest optimal payment amounts, such as the minimum due or a higher amount to pay down the loan faster, tailored to the borrower’s financial situation.

By providing a one-click payment experience that is personalized for each borrower’s needs and preferences, your lending division can significantly improve the payment experience and increase the likelihood of on-time payments.

Pop-up information on products or services tailored to their needs

By utilizing borrower data and advanced analytics, your payments platform can present each borrower with personalized pop-up information and offers directly on their payment screen. These tailored recommendations can include relevant products or services that pertain to their specific account and financial situation.

For instance, for borrowers who have a history of making manual payments, the system might suggest signing up for autopay to simplify their payment process. For those with a high-interest loan, the platform could present loan refinance offers or debt consolidation programs that could potentially save them money or lower their monthly payments.

By clicking on these personalized pop-ups, borrowers can easily access more details and take advantage of offers that are most relevant to their needs. This targeted approach not only enhances the borrower experience but also provides your bank’s or credit union’s lending division with creative opportunities to cross-sell or upsell other products and services.

The value of this personalized strategy is supported by the survey results, which show 60% of respondents would like to receive personalized recommendations after completing a payment. By leveraging AI and machine learning to deliver tailored information and offers, you can improve engagement, build stronger relationships and, ultimately, drive more revenue for your financial institution.

Personalized CX: The right move for these economic times

Investing in AI- and automation-driven personalization makes sense for today’s increasingly mobile-minded consumers. It’s also especially important right now, with many borrowers experiencing increased financial strain. According to J.D. Power’s 2024 U.S. Consumer Lending Satisfaction Study, about three out of four consumer loan customers (73%) currently fall into the “financially unhealthy” category, up from 67% in 2023. McKinsey reported that 65% of customers are pessimistic about the economic outlook for the coming year, about a 10-percentage point increase compared to last year.

For borrowers, loan repayment is inherently stressful. The last thing they need is cumbersome payment experiences. When you streamline the steps through technology-enabled personalization, you’re likely to see improvements in on-time, independent payment as well as customer loyalty and satisfaction.

As icing on the cake, our survey found that 69% of loan payers who have a highly personalized payment experience would recommend their lender to others, and 79% say they would be likely to use the same lender again.

Investing in experience and expertise

Of course, improving and personalizing the payment experience requires banks and credit unions to invest in data science expertise. For some larger institutions, human capital can come from within, but for many outsourcing the task makes sense.

A payments platform provider well-versed in data collection and optimization, as well as AI and ML, is a strong, cost-effective option. That partner can introduce all the personalization strategies we’ve mentioned, as well as provide other options borrowers say are important to them, such as having their preferred payment types and channels available to them to pay their loans—including payment apps like Venmo, Apple Pay and PayPal.

Consumers have always appreciated getting personalized service. Why should loan repayment be any different? Banks and credit unions that make the move toward seamless, stress-free, personalized payment demonstrate they care about pleasing their customers and want them to come back for all their banking services long into the future. As the research shows, customers will reward them for their effort.

Jill Conrad is Senior Director of Sales at PayNearMe.