Lending by Design: Turning Consumer Insights Into Action

As 2019 kicks off, we find ourselves firmly entrenched in the Consumer First Era. Yet, it’s not enough to merely recognize the consumer is in the driver’s seat. To successfully gain and retain loyalty, today’s lenders must wholeheartedly adopt strategies that best and thoroughly fulfill consumers’ needs.

While lenders understand this trend, matching banking priorities to the needs of various consumer segments can be difficult. According to the Bank Administration Institute, banks and other lending entities are focused on enhancing the mobile experience, better using consumer data to improve product and service recommendations, providing tools and options that offer customization, and improving the in-person experience at branches.¹

And though customers have similar notions — customized solutions, an omnichannel experience, better in-person exchanges at branches and a seamless mobile experience¹, their priorities vary by segment. Just look at generational needs:

• Millennials — Improve omnichannel experience, enhanced mobile channel, tools to customize¹
• Gen X — Tools to customize, enhanced mobile channel, transform branches¹
• Boomers — Tools to customize, transform branches, improve omnichannel experience¹

That said, while all consumers are in the driver’s seat, Millennials seem to be in charge of the GPS. They’re the largest and arguably most influential generation of today, and most of them are now in their prime years of economic activity. So, lenders must modify methods to appease this younger group. If you don’t have Millennials on board, you’re in trouble. And to say they’re fickle is perhaps an understatement. Think about this — 88% of Millennials would switch banks merely for a better digital experience.² 

Across the board, consumers don’t view traditional banks as particularly innovative — at least not as much as FinTechs. Many banks have said they’ll likely collaborate with FinTechs — some with the ability will even acquire — in order to provide the kinds of fast, easy services they’re known for. And while banks admit feeling the competitive pressure from FinTechs, some don’t believe they’ve learned anything from them — which seems almost contradictory. Because of the success and continued growing popularity of FinTechs, there does indeed seem to be something of value to glean. At the very least, banks can take away that they really do need to operate more efficiently, seamlessly and digitally — with a deeper understanding of their customers… and that takes data.

Consumers vary in their willingness to share data, but they all agree they want to feel like they’re in charge of their data and definitely want to see the benefits: an improved experience, more appropriate and timely offerings and products, better rates, etc. So, lenders really need to leverage the information gathered and work for the consumer. But whether data is shared or not, there’s still the consumer expectation that lenders recognize their needs. It’s when lenders show a lack of understanding of who the consumer is that frustration sets in.

As mentioned, the omnichannel experience is one area where improvement is needed. With consumers using more than one device as they journey through transactions, they expect the trail of information they’ve provided to be available and conveniently accessible. They also want banks, like other service providers, to note their preferences and behaviors so they can anticipate their needs, not just fulfill them. Consumers want customized solutions served up at the right time. And if you can offer products or services they hadn’t considered or realized they needed yet — that’ll score you some brownie points.

Going farther, a decent percentage of Millennials and Gen X seeking fast, easy, intuitive and less-costly services are actually willing to do all their banking online — no brick and mortar branches.¹ But be warned, it’s critical your account opening procedures are SEAMLESS, or they’ll abandon and move on without hesitation. This can make balancing a smooth experience with effective security and fraud protection a challenge. While financial institutions are held to higher regulatory and compliance standards than other service providers, to these discerning yet rather impatient, younger consumers — that’s not their problem.

Gone are the days of happily sitting back and waiting for customers to walk through your doors. Some of today’s financial institutions don’t even have doors! Lenders need to be proactive, get aggressive and prove to consumers they’ll meet and service them where, when and how they demand. Then, they must go beyond the norm and implement solutions that allow them to analyze consumer behavior and preferences to intuitively present tailored services and products that strike the right chords.

In large part, doing the above successfully comes down to identity. On one hand, knowing who customers are helps you target the right people to optimize marketing efforts and spend. You strive to only make offers that resonate, and you sure don’t want to make poor offers repeatedly — that’s annoying. On the other hand, activating identity information helps reduce risk and fraud — two major concerns that when not addressed can wreak havoc on your bottom line and reputation. A solid contact plan using identity across the omnichannel experience should elicit greater results on both the lender and consumer sides.

It’s safe to say competition in lending has never been fiercer, so doing all you can to up your game isn’t just smart, it’s imperative. The more you know your customers, the more you can please them, continuously. That’s how you build and sustain loyalty in a world where loyalty can quickly become a passing fancy.

¹ BAI Banking Outlook Webinar: What’s Next 2019 Outlook, Nov. 2018
² 2017 SalesCycle Report