The lending levels at the consumer revolving (loan facility enabling the borrower to withdraw, repay and withdraw the credits again), non-revolving (student, personal loans and mortgages), and smaller business fields are steadily rising and will continue to remain so in 2023 as well.
Also, the latest United States government data says that since COVID, the country is witnessing record numbers of new business formation applications. The start-up sector is driving the boom with its massive growth numbers (as per the March data, the nation is having some 71,153 start-ups, the largest by any country)
Here comes the crucial role of the lenders. While they have this incentive to maximise their profits, they also need to keep the boom going by making the loan approval process absolutely hassle-free.
Innovation is the key here. This article will shed some light on the lenders and how they maximise their profits while improving the borrowers’ experience.
Embrace tech to reduce lending application time
Whether buying homes or requiring capital to start businesses, consumers are not ready to wait for lengthy procedural things on lenders’ part. All they want is quick application answers. The faster the lending company comes back with the replies, the more deals they can close. To reduce procedural delays, the lending industry can look towards income verification platforms. An application called Truework helps lenders with verifying the income details put by the customers on the loan application forms in a matter of seconds.
Rely on electronic documents to cut down on procedural delays
If you are an old-school lending company still believing in things like having too many papers at your offices for routine procedures, please, get smart. As per a report from the information management association AIIM, companies using electronic documents and paper indexing methods are eliminating the need for more staff and operational costs. This is also reducing the physical data-entry tasks. The lending staffers can also spend less time maintaining applicants’ data. This method is enabling the lending institutions to not only process the loan application documents at a much faster pace, but they are also increasing the profit amount by avoiding tasks such as collecting papers, taking photocopies of them, storing and forwarding them manually to desks, while completing each stage of the loan origination process.
Upgrade your digital game
As per the latest data, in the US alone, digital market users will be more than 200 million by the end of 2022. So the message is very clear for the lending industry, make your presence strong in the virtual world.
A good solution towards this can be to tie up and invest in an app that provides an easy user interface for loan applicants. Very soon things like visiting bank branches to apply for loans, doing paperwork, and procedural inquiries will be a thing of the past, thanks to the rapid growth in smartphone and internet markets.
Established players such as Bank of America, Capital One and Bank of Hawaii are already having top-notch banking apps.
Don’t ignore the power of social media marketing
The virtual world is not only growing at a terrific pace, but is also registering a steady increase in its consumer base, comprising people of all ages. Platforms such as Facebook, Instagram and TikTok are emerging as powerful marketing tools.
Now what the lenders do here?
Create business pages across these platforms, go for PPC (Pay-Per-Click) campaigns or paid social media marketing, run advertisements to find out your target audiences, including home, automobile buyers and people looking out for loans to start businesses. What COVID and the global lockdowns in the last two years have done is make people stay active on the internet more and more to combat home confinement blues. This factor has contributed to online ad spending reaching new heights in 2021.
Another medium can be organic social media marketing. Put up free, informative marketing content on Facebook, Instagram, TikTok, Twitter and LinkedIn, and engage your customers.
However, if a Hootsuite blog is to be believed, organic marketing has restrictions as only a smaller percentage of a brand’s followers can see those advertisement posts. On Facebook itself, these campaigns reach only 5.5% of the company’s customers, despite updates in ranking algorithms patterns.
How about referral bonuses for the customers?
In the loan business, compromising on interest rates or installment fees as per the customer’s convenience is always a big no. Yet, the applicants having a good experience with the lenders always benefits the latter as the same customers will always prefer the concerned company first, if he/she has to take loans again.
So it’s imperative that these companies work on bettering the customer experiences, from the first to last points of paperwork and other procedures.
Canada-based Tangerine Bank has found a solution to this in the form of $50 referral bonuses to the customers, which not only gives the latter incentives to use the ‘Positive Word of Mouth’ to promote the lender amid their friend and relative circles, but also helps the bank to get new customers.
Monetary incentive-based referral programmes are becoming part and parcel of financial institutions dealing from personal savings to cryptocurrency. It’s high time that lending firms follow this method as well, to increase their profits.
Be it affording houses, cars or needing loans to start businesses, lenders have become a go-to option for people. The more hustle free the loan approval process is, the better it gets for the applicants. Having positive word of mouth always matters in any business, in terms of having a continuously expanding customer base. The same truth applies to the lending sector as well. The smoother the loan origination process is, it results in quick profits at the end of the day.