Build Borrower Trust in a Digital Age

By Kim Weaver

As we cross into 2018, mortgage and auto lenders alike find themselves planning how to make the best use of their budgets to deliver a more efficient lending process—while also providing a compelling borrower experience.

It’s a welcome change for the financial services industry to finally be able to spend again on strategies for market share instead of regulatory compliance changes. However, lenders need to be careful to plan their initiatives using current borrower expectations—not assumptions from plans put on hold when the all-encompassing regulatory focus consumed most lender investment.

Consumers have the ability to connect with lenders in ever-increasing ways (hello, personal digital assistants!). As a result, the quality of these interactions has become a critical differentiator.

The value of personalized connections and advice cannot be overstated. For the majority of people, their home or automobile represents the biggest purchases of their lives.

Fiserv recently conducted research exploring borrowers’ behaviors, attitudes, and satisfaction with loan processes. According to Expectations & Experiences: Borrowing and Wealth Management, prior experience with lenders influences choice of lender for subsequent loans. Some 74% of borrowers say past experiences with lenders have a moderate or great impact on future lending choices, an increase of 13 percentage points from last year. However, only 9% of borrowers have called their lender directly about correspondence or documents in the last six months. And more than half of borrowers use automatic payments to pay loans.

With so few direct interactions between borrower and lender, it can be difficult for the lender to gauge customer satisfaction, much less deepen the relationship.

Three steps to success for lenders.

The challenge for lenders is to establish trust with new and existing borrowers when navigating the complexities of buying a house or car—while pairing leading-edge digital experiences with a personal touch. Lenders who focus on three specific areas with borrowers will have the greatest success in forging a deeper relationship with them—the kind of relationship that can lead to repeat and referral business. Those areas are:

  • Education
  • Communication
  • Reputation
  1. Education builds trust.

When it comes to applying for a loan, consumers cautiously evaluate their options to ensure they are making a sound financial decision. Rates and overall cost are important. But with lending practices in the news so much over the past few years, consumer perceptions of how the lender is likely to treat them also influence their choices significantly.

Access to a greater array of lenders, financing programs, and rates can make the process of searching online for a loan daunting for even the savviest and most experienced borrower. Survey data revealed that 30% of millennials say they research financing before making a major purchase. Lenders should see that as an opportunity. Educating the borrower from the beginning of the process right through to the end of the financing term provides lenders with many chances to establish trust in the lender-borrower relationship.

Our research also shows that borrowers are growing in confidence when it comes to applying for a loan online. Year over year, we’ve seen:

  • A four-point increase in the number of borrowers who would be comfortable applying for an auto loan online—with now over half belong to that group.
  • An increase of three percentage points to the number of borrowers who would feel comfortable applying for a mortgage online—which now stands at 47%.

As borrowers work through the process of looking for a loan online, these considerations come into play:

  • 30% say the option to pause their application in order to speak to a live representative would help them feel more comfortable completing all aspects of the loan application via smartphone.
  • 27% say the same about completing the process via a tablet.

The key is providing the customer with different ways to access information and communicate with you that also give transparency to loan processes. If they prefer to speak to someone, they should be able to talk to a human in addition to engaging digitally.

Human-to-human interaction and the digital experience can work together and reinforce the lender’s value. This is especially true when both parties are working from the same real-time information. Experienced representatives—coupled with self-help digital tools that maintain the consistency of information across channels—reinforce transparency and help consumers make decisions. That builds trust.

  1. Ongoing communication reinforces trust.

While consumers are increasingly using multiple channels to manage their loans, the specific activity they are engaged in influences their preferred channel choice. For example, borrowers said their top choice for quick questions about their loan accounts is a mobile device. Such questions would include:

  • Reviewing payment amounts
  • Due dates
  • Remaining balances
  • Official payoffs

However, when borrowers have a payment question, they prefer to speak to a customer service representative via telephone. And when accessing their lender’s website for more detailed tasks, 74% prefer to use their computer.

Survey respondents also said they were agreeable to performing various digital tasks to speed up the process. This willingness increased between 10-16% from the previous year for specific tasks like:

  • E-Signing documents
  • Uploading documents
  • Verifying loan application information

This continuing trend of broad adoption means digital lending tools (self-service borrower portals) facilitate personal and educational interaction with borrowers applying for new financing. This also extends into loan servicing—a borrower can go online to update financial information, including any supporting financial documents, and begin to explore options for loan modifications or refinancing.

Lenders therefore require an agile, integrated infrastructure that enables borrowers to interact on their own terms, at any time, from any device. When asked how they wanted to receive documents from the lender, 38% of borrowers said they wanted paper copies mailed to them and the ability to access them on the lender’s website.

Paper-based communication remains an important method to reinforce relationships, and with QR codes and similar methods to connect digitally, it’s easy to blend paper and digital channels. By offering paper, digital, and human interactions, lenders can better connect and communicate with their borrowers.

  1. Trust but verify to protect your reputation.

In addition to rates and fees as deciding factors for choosing a lender, 70% of respondents said that reputation is an important factor. A good reputation is difficult to build but, unfortunately, easy to dismantle. Look to social media for feedback on your customer experience and invite your own feedback with customer surveys. Compare your experience and loan offerings to your competition.

Customer service, company reputation, and a knowledgeable staff are all powered by human interaction. Successful lenders use technology to combine the best of both worlds: personalized service with real-time, accurate information and consistent customer experience.

Security is, of course, top-of-mind for today’s consumer, and concerns over security flaws are the major barriers to comfort of consumers using smartphones or tablets to complete aspects of the loan process. Deliver digital confidence through robust identity validation—both the borrower’s and the lender’s—during the application process and throughout servicing, including bill payment.

Welcome calls, letters, emails or text messages are excellent mediums for letting borrowers know what to expect during the different phases of the borrower-lender relationship, and for reinforcing the transaction.

Finally, real-time account status with a single view of the borrower is vitally important, as this ensures that whether they log into their account, call, or show up at a physical branch or dealership, they are safe in the knowledge that you have a current, accurate snapshot of their situation.

Kim Weaver is director of Product Strategy, Lending Solutions, at Fiserv. She is responsible for the strategic direction of the digital lending solutions offered by Fiserv, and has been in the lending industry for over 20 years. More information about Expectations & Experiences can be found here.