ABA Banking Journal
No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
SUBSCRIBE
ABA Banking Journal
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
No Result
View All Result
No Result
View All Result
ADVERTISEMENT
Home Retail and Marketing

Borrower Experience: How to Avoid Falling Short

July 16, 2018
Reading Time: 4 mins read

The Consumer Financial Protection Bureau issued a proposal on Friday to provide flexibility for lenders around the collection of applicants' demographic data under the Home Mortgage Disclosure Act (Regulation C) and the Equal Credit Opportunity Act (Regulation B).

By Steven Martin

Business borrowers today have high expectations for their financial institutions. They want speedy processes, digital options and responsive service. And if banks expect to compete and grow, they should be examining the pain points in the borrower experience they provide. A satisfactory borrower experience cuts across the entire process—from the initial search through the funding of the loan—and all the steps in between. Here’s what you need to consider.

Start with the borrower search.

Improving the borrower search is one of the easiest areas to optimize without investments in new technologies. So it’s a mistake to overlook it when designing a business lending process.

Consider the kind of helpful information business borrowers are looking for. At the earliest stages, borrowers need to know:

  • Whether you lend to their industry
  • What you have on offer
  • How things work

How you communicate these details will provide a first glimpse into whether you’re a good bank to work with.

It’s not just the website that needs to be considered. Borrowers often rely on friends, family and advisors to get information. Some banks have found cultivating centers of influence—such as CPAs and attorneys—as one way to improve the borrower’s search process and drive the right traffic to their bank. Banking centers are another obvious place to share information with borrowers.

Outbound marketing campaigns should be specifically focused on prospects that align with the bank’s target industries.

By being clear with the market, you may limit the number of applications that won’t work for you, thereby freeing your staff from processing applications that won’t get approved.

Avoid application aggravation.

The application process can be a minefield of potential pain points for the borrower. Even now in 2018, many banks still struggle with how to collect information in a convenient way. Here’s a list of ways, from least convenient to most.

  • Paper applications – The most inconvenient method for the borrower but also an efficiency-killer for the bank. Paper apps need to be transcribed into a system, and many banks struggle with managing the paper (scanning, indexing, storing, etc.).
  • Fillable forms – This is more convenient for the borrower, but not much better for the bank.
  • Real fields on a website – This is often a good first step, and many banks have found ways to connect the fields a customer fills in directly with their loan origination system.
  • Dynamically created data entry systems – This capability has been widely used in mortgage and consumer lending and is only now starting to be used in business banking.
  • Prefilled forms – This is by far the most convenient method for the borrower, and it can be a great differentiator for the bank. When the customer has a pre-existing relationship with the bank, why ask them to complete fields for which you already have the answer?

The application process can also be optimized to eliminate unfeasible applications quickly and without much effort. For example, if a borrower’s industry or geography falls outside of the bank’s credit box, the application can be stopped early. Likewise, good application processes can detect fraud early and prevent the application from proceeding.

Make better, faster decisions.

It’s also a mistake to take too much time turning around a decision and terms on a loan. These delays have consequences.

  • Creating anxiety for the borrower
  • Allowing time for competition or alternatives to gain an advantage
  • Chewing up internal resources

You also risk creating ill will on top of the decline, if the decision is “no” and the applicant had to wait a long time to find out. When the answer is no, make an effort to explain to the applicant what they can change to get an approval the next time. That’s good customer service.

But a key to growth is to make decisions faster. Consider the technologies and processes that can make that possible.

Provide transparency into diligence and docs.

Every lending situation is different. If your loan requires more diligence and specialized document creation, you could be adding time and frustration at this stage, too. Sometimes it’s the appraisal that takes a while. Sometimes the borrower contributes to the delay. But it doesn’t matter who is causing the delay—the borrower experiences it as part of your process.

Transparency is your best option for improving the borrower’s experience during due diligence steps. For example, if you are ordering an appraisal, share with the borrower what steps are involved, because most borrowers simply don’t realize how many steps there are. Then keep the borrower informed of the status: appraiser selected, appraisal scheduled, appraisal reviewed internally.

That way, borrowers can keep up with the process and understand that the bank is not dragging its feet.

ADVERTISEMENT

Loan documents are another source of annoyance for borrowers. Banks should focus on avoiding mistakes by having high data integrity and quality checks, eliminating as many physical signatures as possible, and looking to reduce and simplify the number of documents.

Booking and funding

This last phase is actually working fairly well at most banks and therefore may not need much attention. However, it is worth noting that the best funders out there now are depositing money into accounts the same day or next day. This is the speed borrowers are looking for. By tackling each point of friction in the process based on these borrower expectations, your institution will be best poised for improved loyalty and growth.

Steven Martin is vice president at Sageworks, a financial information company.

Tags: Business loansCustomer expectationsCustomer experienceLending
ShareTweetPin

Related Posts

How customer primacy drives value in 2025

How customer primacy drives value in 2025

Retail and Marketing
July 17, 2025

Shifting consumer behavior and increased competition redefine what it means for banks, but the payoff can be great.

ABA urges FCC to combat illegal call spoofing

ABA urges FCC to impose call authentication requirement for non-IP networks, mandate IP transition

Compliance and Risk
July 16, 2025

ABA joined six trade associations in urging the FCC to adopt a proposal to create a new call authentication requirement designed to limit criminal access to the U.S. calling network.

Capturing These Three Data Types Can Transform Your Fraud Monitoring

ABA Fraudcast: How the ABA Foundation helps banks protect their customers

Compliance and Risk
July 16, 2025

As more older Americans are major targets for criminals, Safe Banking for Seniors is an effective program to inform and defend against targeted scams.

Director’s Briefing: How a Maryland bank’s CEO is prioritizing strategy and governance

Director’s Briefing: How a Maryland bank’s CEO is prioritizing strategy and governance

Directors Briefing
July 14, 2025

Why deliberately separating CEO and board chair roles is a good idea. And the value of strategic planning ahead of a major asset threshold.

How to Hyper-Segment Your Customer Communications without Losing Control

Marketing Money Podcast: The 30-month plan to future-proof bank marketing

Retail and Marketing
July 11, 2025

How aligning marketing with executive and business-line goals can make a massive impact.

Using Artificial Intelligence to Make Sense of Mountains of Data

Three myths about AI in banking

Technology
July 3, 2025

Common myths and misperceptions might confuse about what to expect and misdirect investment and efforts.

NEWSBYTES

House passes bills on stablecoins, digital assets, CBDCs

July 17, 2025

Business inventories hold steady in May

July 17, 2025

Mortgage rates rise

July 17, 2025

SPONSORED CONTENT

Navigating Disruption in Ag Lending – Why Tariffs Are Just the Tip of the Iceberg

Navigating Disruption in Ag Lending – Why Tariffs Are Just the Tip of the Iceberg

July 1, 2025
AI Compliance and Regulation: What Financial Institutions Need to Know

Unlocking Deposit Growth: How Financial Institutions Can Activate Data for Precision Cross-Sell

June 1, 2025
Choosing the Right Account Opening Platform: 10 Key Considerations for Long-Term Success

Choosing the Right Account Opening Platform: 10 Key Considerations for Long-Term Success

April 25, 2025
Outsourcing: Getting to Go/No-Go

Outsourcing: Getting to Go/No-Go

April 5, 2025

PODCASTS

The future of careers in risk and compliance

July 17, 2025

Breaking down the bank-related provisions in the big budget bill

July 10, 2025

Podcast: Inside ABA’s new Treasury Check Verification System API

June 25, 2025
ADVERTISEMENT

American Bankers Association
1333 New Hampshire Ave NW
Washington, DC 20036
1-800-BANKERS (800-226-5377)
www.aba.com
About ABA
Privacy Policy
Contact ABA

ABA Banking Journal
About ABA Banking Journal
Media Kit
Advertising
Subscribe

© 2025 American Bankers Association. All rights reserved.

No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive

© 2025 American Bankers Association. All rights reserved.