Digitally servicing consumer loan applications: What lenders need to know

Published: August 10, 2021 by Managing Editor, Experian Decision Analytics

A recent industry-leading analyst report looking at loan origination solutions found that lenders are experiencing high volumes of new loan applications, but many are struggling to process them. This alongside increased consumer demand for improved digital experience, and a shifting credit landscape means lenders are trying transform both to keep operating costs down and meet the needs of a changing market.

man and woman looking at device on sofa

This tracks closely to findings from our Global Decisioning Report 2021. We look at what is changing, and how the Now Tech: Loan Origination Solutions report advises lenders to move forward.

Consumers went online, and have high expectations of the digital experience

The pandemic shut down banking and retail locations around the world. Amidst the lockdown, consumers turned online to manage finances, connect with lenders, and buy essential goods and services. The crisis especially accelerated digital adoption for older consumers and created a new digital imperative for lenders wanting to meet customers’ evolving needs.

The rise of self-service and new payment methods

There was also an increase in the already growing demand for digital self-service in terms of applying for credit and seeking out repayment support. Consumers expect to be able to apply for credit when and where they need it, often using a mobile-friendly device. In return for convenience and security, consumers report that they’re more willing to provide additional personal data. Timely, meaningful credit and repayment offers, convenient interactions, and improved communication with lenders make the exchange worth it.

The convenience of digital channels is also creating the opportunity for new payment methods, such as subscription models and Buy Now Pay Later (BNPL). Both are occurring across a range of products and services, from cars to clothes to beauty essentials. Our Global Decisioning Report found that 27% of consumers reported purchasing products using BNPL programs. Traditional lenders will need to consider the needs that the emerging BNPL market meets. This includes making purchases easier for consumers by providing increased payment flexibility.

APIs, security, integration, and explainable AI

According to the Now Tech report, lenders should look for solutions that allow access to data via APIs for credit decisioning, have strong data security and privacy practices, integrate with third-party technology products and services, and leverage explainable AI for underwriting.

Allowing lenders to acquire customers digitally is key, and loan origination solutions provide a digital portal that can be accessed across devices and which supports real-time customer input, document uploads, data aggregation and analysis, and digital signatures.

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