The New Standards in Online Consumer Loan Applications

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As online consumer lending is becoming increasingly pervasive, demand grows for technology that enables consumers to access financial services from anywhere quickly and easily. According to one recent study by PwC, consumers’ preference for applying for loans online versus in person increased roughly 30 percent from 2013 to 2015. While there will likely always be a need for businesses to keep some element of human interaction available, for lenders to remain successful, they must acknowledge and account for this market shift by ensuring their credit products are digitally accessible to consumers.

By Josh Finkelstein, Vice President of Marketing, Think Finance

Being reachable online is only a lender’s first step. As online lending becomes a more and more ubiquitous option for individuals seeking credit, it is critical for lenders to ensure their online application and processes are designed from the ground up to maximize simplicity, usability, and trustworthiness. While a loan application process was once generally accepted as an inherently tedious task requiring extensive paperwork and time commitments, consumers today will simply no longer tolerate that type of situation when there are easier, faster and readily accessible alternatives available to them.

At Think Finance, more than 15 years of experience in creating technology that powers online lending has taught us many important lessons on how to design an application process that achieves the dual-purpose of being consumer-friendly, as well as providing a lender the information it needs to make informed credit decisions. Here are three of the key learnings that all online lenders should be thinking about in 2017:

Keep it simple.

Lenders still using legacy credit application processes that overwhelm consumers are rapidly finding it more and more difficult to attract and retain customers, as competitors are earning their business by offering loan applications that are easy both to use and understand.

As a starting point, online lenders should review their applications to ensure that they only ask for information the lender is going to use for decisioning and servicing. Any question that isn’t critical to these two essential tasks should be a candidate for removal. Once that streamlining is accomplished, lenders can further simplify the process by using a “smart” application form that allows customers to come back to a partially completed application without having to start over from the beginning. From a consumer perspective, highlighting this feature makes the process less daunting from the get-go, as applicants know progress will be saved and they can come back later if needed. From a lender perspective, a smart application creates opportunities for improved marketing efforts by enabling reengagement with consumers who have only partially filled out an application, helping to maximize conversion rates.

While it may be tempting to make an application process appear sophisticated and elaborate – especially if a lender is targeting a younger, tech savvy audience for their products – in the end simplicity and effortlessness will always win out.

Reduce red flags and reinforce trustworthiness.

Cybersecurity continues to be a top concern for consumers who are regularly bombarded with digital scams. As a result, potential customers are often wary of providing personal information to unfamiliar entities online. To assuage these fears, lenders must go out of their way to assure consumers that their information is protected and the service they are considering using is safe.

Achieving this level of trustworthiness can be achieved in several ways. As a first step, online lenders should ensure all of their accreditations, certifications, security procedures and protocols, and privacy policies are highlighted for consumers. Displaying this kind of information prominently instead of burying it in fine print in a webpage’s footer can help reassure a consumer before the thought of security even enters their mind. Additionally, many search engines have advised website owners to migrate their site to HTTPS – secure encryption – from HTTP. This extra layer of security is another way to show the customer the security of their most private information is a top concern.

With so many stories floating around about financial fraud, consumers want to feel confident that they are working with a lender they can trust with their personal information.

Acquire new customers online; retain existing customers with an app.

The continuing growth of mobile capabilities and connectivity has left many online lenders scrambling to keep up with technological advances, and the evolving consumer expectations that go along with them. Think Finance’s own data confirms this trend: the majority of visitors accessing our clients’ lending websites today are doing so via mobile devices. However, some other online lenders have interpreted this demand to mean that they should focus on an app-first strategy. Our data says otherwise.

In our experience, consumers prefer to start a potential relationship by visiting a lender’s website to learn more about it and explore its product offerings. Only after they have familiarized themselves with a lender via their website – and even then, typically only if they actually become a customer – do they choose to engage via a lender’s mobile app.

Recognizing this distinction – focusing on providing a superior experience via a desktop and mobile-friendly website to acquire new customers, and pursuing an app strategy for retaining existing customers – is critical for an online lender to appropriate their resources and target their potential customer base effectively.

To remain successful in an environment of growing consumer expectations, lenders must adapt to the demands of their customers and meet them where they increasingly prefer to do business – online. When they do, they must also ensure that application processes are streamlined, trusted, and accessible in the ways consumers want them to be to remain competitive in an online marketplace increasingly crowded with new entrants. Embracing these three lessons is an important first step on that path to success.

*Josh Finkelstein is the Vice President of Marketing at Think Finance, a leading fintech innovator that provides software technology, risk analytics, and marketing services to online lenders.+