Fierce Competition Calls for a Faster, More Personalized Borrowing Experience

These days, home buyers are refusing to settle for slow lending experiences. And who can blame them? Faced with a white-hot housing market, slow, confusing application processing can be the difference between securing their dream home and watching another buyer’s bid get accepted. Compared to their last best experiences in other industries, they wonder: “Why can’t my lender do that too?”

To better understand their growing CX frustrations, let’s take a closer look at the housing market challenges many prospective home buyers encountered in the last 12 months. In September, home days-on-market were still near record lows—down 11 days compared to the same time in 2020. Meanwhile, home prices rose by an average of 17% at the height of the 2021 boom. And in some cities, buyers turned to waived contingencies to beat out dozens of competing offers.

As a result, home buyer expectations for lending institutions have reached a critical inflection point. A cohort of shiny, new FinTech competition have already swooped in to serve home buyers with fast, simple access to the loans they need online. In fact, according to one survey, 58% of borrowers say the availability of an online application impacts their lender decision. But the rise of FinTech lenders doesn’t fully address borrower needs either. While speed is now the name of the game, home buyers continue to expect their lenders to help them coordinate the complex moving parts across the home buying experience with high-touch, 1-to-1 guidance.

For legacy lenders, this desire for high-touch predictive experiences provides an opportunity to compete with the FinTechs—but only if they make the necessary strategic CX enhancements necessary to capitalize on their existing resources. These enhancements can also help tackle a myriad of other emerging lending challenges including: (1) supporting loan officers with the tools they need to prioritize and maximize their efforts, (2) facilitating long-term customer relationships that proactively address ongoing lending needs and (3) maximizing revenue opportunities to combat the low margins that accompany low interest rates.

Here are three objectives lenders should focus on to prevent borrower attrition and solidify their CX edge:

1. Make relevant, personalized offers that provide context and continuity

Analytics and data centricity aren’t optional anymore. Instead, they provide the backbone of a personalized borrower experience. The key to many of the powerful retail experiences buyers encounter in their day-to-day lives are founded on a 360-degree customer data strategy that weaves together customized journeys and product offers that meet their needs and simplify their path to conversion. To make this possible in the lending market, financial institutions need a single source of truth for their borrower data—including transactional, demographic, behavioral, and proprietary data—that they can draw from to provide the right messages, in the right place, at the right time.

For example, imagine a prospect recently inquired about an interest rate or approved a credit check. In an analytics-driven environment, these actions would be able to trigger a personalized response to support the borrower and provide relevant content for their place in their borrowing journey. In turn, borrowers receive the predictive support they crave to make more informed lending decisions.

2. Speed loan applications and quicker borrower decision-making

Picture this: a prospective borrower needs to be pre-approved for a loan to put an offer in on their dream home. They approach their existing financial institution first because they expect them to have enough of the preliminary financial information to speed up the process and help them meet a tight offer deadline. Instead, they learn it will take a week or more to process their application and give them loan pre-approval. In that week-long period of time, the borrower turns elsewhere—including specialized FinTech lenders—who can turnaround loan applications quickly. They steal the deal.

So, how can the flow of data be streamlined to support a faster journey? For one, removing data siloes from the loan application process through a clear data and analytics strategy can help CRM and loan application platforms better share information—reducing the need for customers to fill out the same information multiple times. Additionally, having the right mix of customer support channels—such as chat bot, phone, text and more—allow borrowers to have their questions resolved quickly and seamlessly as they move along the loan application process. This “digital front door” approach to borrower communication empowers legacy institutions to replicate the high touch banker experience found in branch for the digital audience.

3. Become your borrowers’ long-term financial advisor

Customers like to work with the brands and companies they trust. One of the biggest advantages most legacy institutions have against their FinTech counterparts is that they can do it all—loans, checking accounts, savings, and digital payment. But even when many legacy lenders do win a borrower’s business, they often fail to build in the right mix of messages, services, and channels to turn one win into a lifetime of victories. Focusing on how your organization can support customers long term requires a comprehensive CX strategy that builds on the data best practices noted above and adds in the right channels and marketing automation to deploy it over the full customer lifecycle. This way mortgage customers can become re-finance customers or home improvement loan customers or even banking customers.

To accomplish this goal, lenders need to be able to look past the initial deal and map out the future state of their customer journey. Which triggers indicate a customer may be ready for an additional service? What are the most common pathways our customers take after they receive a mortgage? By exploring these journeys—and planning ahead for them—lenders can better support their loan officers and set them up for long-term customer success.

As FinTechs become a mainstay in the mortgage marketplace, legacy institutions face a pivotal moment. They can augment their reputation for high-touch, in-person experiences with digital strategies or they can watch their prospects slowly go elsewhere for faster, smoother loan applications. Those who choose option one will quickly realize that data-driven digital transformation can offer them a powerful opportunity to grow their business and exceed their borrowers’ expectations.