Mobile Lending: The Expectations of Modern Borrowers

mobile lending

Contemporary borrowers want to be able to price, decide. and act on loans from their phones. Make no mistake: Quicken Loans’ 2018 Super Bowl commercials with Keegan-Michael Key had its sights on lenders who might be a lot like you. Quicken Loans wants to peel away young, affluent customers who judge the aptitude of lenders […]

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mobile lending

Contemporary borrowers want to be able to price, decide. and act on loans from their phones.

Make no mistake: Quicken Loans’ 2018 Super Bowl commercials with Keegan-Michael Key had its sights on lenders who might be a lot like you.

Quicken Loans wants to peel away young, affluent customers who judge the aptitude of lenders based on their ability to answer their questions and deliver a product through a language of graphics and swipes.

The ads have a young couple sitting in an office across the desk from a bald, middle-aged loan officer. “Yeah,” he says, “you can get a mortgage that avoids PMI, but there’s no way to avoid MIP on an FHA. Now there’s—“

Mr. Key rolls out on a desk chair from behind the couple and shows them a cell phone. “Hey, this will help.”

The next frame shows the Rocket Mortgage home page, as the narrator intones, “Rocket Mortgage by Quicken Loans makes the complex, simple. Understand the details and get approved in less than 8 minutes.” The message here is clear, your competition understands that borrowers want clarity and convenience, and your challenge is to be sure that you are meeting those expectations.

The reality for some credit unions and community banks is that they can’t afford to adapt their processes to fit into the palm of a smart phone user’s hand. But the costs of avoiding the expense can be even greater than a line item in an operations budget. Lenders risk their reputation. A bad mobile experience tells your customers that their needs aren’t your priority. How many of those customers can you afford to lose?

Technology is not about being trendy. It’s a requirement to stay ahead of the market and meet your customers expectations. Lenders with online lending programs optimized for mobile phones are following advice their grandparents might have given: Meet people where they are—not where you want them to be. Does your loan origination system maximize your customers’ online experience, allowing you to lend anywhere and at any time? This is something you need to consider when starting or improving your online lending experience.

Mobile Lending and Smart Phone Usage

Mobile lending has become the method of choice for many young affluent customers who will soon be the backbone of your portfolio. A Federal Reserve Study found that 38% of all bank customers in 2015 were using mobile phones to at least get information about their accounts. The base for that comparison included customers who didn’t even own a phone, and other Fed studies indicate that number surpassed 50% in 2018.

A 2018 study by the Pew Research Center found more than three quarters of adults have a smart phone. While distribution is roughly even between men and women, and among racial and ethnic groups, the distribution by age, income, and education shows wide gaps. Smartphone ownership is:

  • 94% of ages 18-29
  • 89% of ages 30-49
  • 73% of ages 50-64
  • 46% of ages 64 and over

Those with college degrees or annual incomes over $75,000 have smartphone ownership rates exceeding 90%, while those without any college education or incomes below $30,000 have ownership rates below 70%.

A 2018 study by the University of Southern California’s Center for the Digital Future found that more than one in three bank customers under age 45 would switch their primary bank for “better online/mobile services.”

Among most age groups, interest rates and fees were by far the biggest reason to switch, but among those ages 25 to 34, the gap was narrow: 47% would switch for online/mobile services, compared with 54% for lower fees and rates. If you require a driver’s license as a stipulation for a loan, these borrowers expect to be able to take a picture of it with their phone and send it to you within a few seconds. It would not be wise to expect them to stop by your branch or even scan-and-email stipulated documents.

Maximizing customer convenience is just as important as advertising low rates and fees. And while age matters, these studies are also showing that mobile usage is increasing sharply among all age categories and incomes, including older consumers. Your institution’s future is at stake if you’re not keeping up with the convenience borrowers expect, and providing that level of service requires advanced technology. You want to meet your customers where they live. And if they’re moving, you want to be the first to greet them.

These trends are clear. How are you addressing them?

Author:

Written by Jim DuPlessis. First published at TCI Credit.

The post Mobile Lending: The Expectations of Modern Borrowers appeared first on Lending Times.

Implementing an Online Lending Program: It’s Easy, It’s Quick—and It’s Necessary

online lending

We’ve all been there:  Wasting too much time navigating crowded malls and waiting on countless lines in search of that perfect gift. When online shopping became mainstream, many shoppers waved goodbye to the inconvenience associated with traditional brick-and-mortar retail, and elected to make purchases over the internet. Savvy shoppers found that they can buy the […]

online lending

We’ve all been there:  Wasting too much time navigating crowded malls and waiting on countless lines in search of that perfect gift. When online shopping became mainstream, many shoppers waved goodbye to the inconvenience associated with traditional brick-and-mortar retail, and elected to make purchases over the internet. Savvy shoppers found that they can buy the items they want—usually at better prices—without ever leaving the comfort of their home.

The dynamics that make online shopping a much more convenient and pleasurable experience are also impacting the way consumers apply for loans. Technology-savvy customers would prefer to avoid the hassle of driving to the branch and completing mountains of paper work when all these processes can easily be performed through a laptop, smartphone or tablet. New technology has inspired a whole universe of online lenders that are successfully tapping into consumer trends by offering easy access to consumer loans at attractive rates—all without the overhead of maintaining branches. It’s a reality that only continues to gain momentum. For example, American Banker reports that online lending grew a staggering 700 percent over the past five years. And, Chase Auto Finance just reported that 20 percent of consumers have already secured an auto loan online, and 47 percent indicated they would do so if the technology was available.

The choice is that stark. Online lending is not a trend, it is mainstream. Banks, credit unions, and finance companies face a simple choice in dealing with this competitive threat:  launch their own branded online lending solution to satisfy the changing demands of customers, or don’t, and watch their customer base evaporate.

Adding online lending capabilities—and creating an optimal experience for consumers—is a necessity for any traditional lender. Implementing a program is not complicated or expensive—if you chose the right solution. It shouldn’t detract from branch activities; in fact, online lending allows financial institutions to extend core value propositions into the digital marketplace. There are just three simple rules to follow:  flexibility, convenience, and security. For lenders, flexibility is essential. The freedom to change lending programs and rules in short order gives the financial institution the opportunity to aggressively compete in a crowded marketplace. Consumers, for their part, want convenience. This means expediency, simplicity, and accessibility from any device and any location. In their mind, the application is the means to an end. So, creating an online experience that enables customers to complete the application quickly and securely helps them achieve their objectives. And, all parties in the lending ecosystem require strong authentication and security tools to verify online applicants and to keep their data safe.

Lenders looking to successfully implement online lending programs must evaluate several criteria to choose the loan origination system that works best for their needs. These attributes include:

  • A configurable platform that allows the lender to create, change and manage all lending forms, rules, decisioning parameters and workflows, without having to resort to time-delaying IT resources
  • Auto-decisioning capabilities that expedite loan approval
  • Robust authentication technology (ID) that utilizes advanced algorithms and big data
    A responsive consumer portal that is optimized for mobile devices, and securely stores customer data
  • Auto-save features that securely store customer data so that customers can start an application on one device, save it, and complete it on another device when they’re ready
  • A single sign-on that is integrated with the lender’s database, enabling all pertinent personal information to automatically transfer directly into the loan application
    The ability to cross sell ancillary loan products during the approval process
  • Enabling consumers to open new accounts, such as a checking, within the loan application process
  • Facilitating upload of documents, images and other loan stipulations from scanners and camera phones

All these features and capabilities represent the bare minimum that a robust LOS platform should deliver—anything short of these will put the institution at a distinct disadvantage. On top of that, the LOS vendor should have a strong support team that is experienced in helping lenders make the transition into online lending.

There’s no better time than now for traditional financial institutions to offer their own online lending programs. The market trends are obvious; it’s time to regain market share. Online lending is straightforward, profitable, and most importantly, what the market demands.

This article was first published at TCI Credit.

Author:

As co-founder and president of Teledata Communications, Inc., Bill Nass is responsible for the company’s sales, marketing, product development and strategic third-party relationships. Bill has over 25 years of experience in the lending sector, and is actively involved with several industry associations. In addition, Bill serves on the American Financial Services Association’s (AFSA) Associate Advisory and E-Commerce Committee. Bill holds a B.A. from the University of Maryland.