A recent Digital Banking survey showed trends that increasing number of consumers are preferring online or mobile loan application process. In 2021, 76% of banks and credit unions supported online application process compared to 66% in 2020 and 52% in 2019. Digitalization and in particular the pandemic has triggered dramatic changes in customer expectations of anytime, anywhere, any channel engagement with lenders. In a way, today, omni-channel engagement has become business as usual for delivering enhanced and personalized borrowing experience for consumers. Omni-channel platforms can be a strong catalyst for financial institutions and lenders to drive customer engagement, build enduring customer relationships and embrace customer lifetime value. This raises a question: How can we realize customer loyalty, which has a direct impact on the customer lifetime value?
Net promoter score (NPS) and customer satisfaction surveys are few of the tools being used by financial institutions to track customer satisfaction. With increasing focus on customer-centric processes, ready availability of customer data, and use of cutting-edge technologies, financial institutions have all the tools to improve customer experience, build relationships and drive loyalty.
For financial institutions or lenders to differentiate their service, the core focus should be on speed and agility of the lending platform. This is possible when, coupled with the right technologies, the platform brings modularity and componentization to its product structure and architecture. Some of the key technological components in a lending platform that can help financial institutions enhance customer relationships and lifetime value are:
- Self-service portals. Consumers expect 24/7 availability of financial services delivery. In the age of instant gratification, customer orientation and empathy for instant need fulfillment provides an important cue on how self-service channels including mobile, online, IVR, chatbots, etc. can offer tremendous opportunities for driving customer experience and mindshare. Its observed there has been a gradual movement from branch visits to adopting a self-service digital model, with the pandemic giving the push in the last few years. For customers, self-service portals have simplified the borrowing process, enabled faster loan application process, and improved loan servicing experiences. Many of the financial institutions have strengthened their customer facing channels and are proactively engaging with their customers. For example, Bajaj Finserv provides a feature rich customer service portal for its customers to have seamless engagement and transactions across their borrowing journey. However, despite many banking and financial institutions launching good self-service onboarding journeys, the post onboarding services are still not end to end straight-through-processing (STP) journeys. This is primarily due to backend platforms not supporting such seamless servicing options. This has been one of the reasons why many large financial institutions still ask customers to visit physical branches for loan servicing. For ensuring an end to end customer delight, it is not only just onboarding service but the day to day operational service that needs to give the best possible frictionless experience.
- Analytics for customer intelligence and cross-sell. Consumers today expect contextualized and personalized attention to their needs. With the advent of AI and ML, for financial institutions the job of understanding consumer behaviors and adapting to their needs has become a lot easier. This opens up tremendous possibilities for financial institutions to make real-time decisions, explore cross-sell opportunities and transform their lending operations. Real-time monitoring of customer data improves decision making and enhances customer lifetime value. An exceptional analytics capability can be a great tool for engaging customers, reinforcing their experiences, shaping up relationships and strengthening loyalty.
- API enabled lending operations. APIs have become the cornerstone of the Apps economy. According to McKinsey’s global survey on the State of APIs in Global Transaction Banking (GTB), more than 50% of B2B APIs are internal operations focused. The study indicates in the coming few years, the ratio will be heavy on external connectivity of banks with third parties. In the context of ever-changing regulatory and compliance requirements, rapid technology advancements and digital-savvy customers, APIs are enabling financial institutions and lenders to bridge traditional internal silos, develop new products and services, drive operational efficiencies and unlock business value. For organizations looking at building the Super App, with back-end integrations to other Apps, APIs are very important.
In today’s world of rapid disruption and competitive agility, a financial institution’s lending operations should be able to quickly adapt to new realities. A technology agnostic, highly configurable and a future ready lending platform can help financial institutions adapt to the changing business environment and quickly reconfigure workflows to align operations to improving customer engagement, reinforcing customer experiences and shaping relationships.
While selecting a lending platform, the key question financial institutions should ask – Is the lending platform future ready and configurable to improve customer loyalty and increase lifetime value?
