As with most things in the world today, members are increasingly moving from in-branch interactions with their credit unions to almost exclusively managing their accounts online. Most credit unions have responded to this trend by integrating their loan application into their digital banking platforms. Definitely a smart move. However, you can’t check the box and be done.
According to the Financial Brand’s recently published State of the Digital Customer Journey report, more than half of the financial institutions (FIs) surveyed lost more than 75% of the leads generated from digital channels. Or, as the Financial Brand summed up: these FIs were losing two potential loans for every one loan successfully closed. Why? You, along with most financial institutions, are doing a decent job putting compelling offers and products in front of your members, but the digital application experience itself may be a roadblock. To put this problem in perspective, Forrester estimates that over 97% of consumer loan applications started online are ultimately abandoned.
Addressing this problem is critical to realizing meaningful growth from digital banking channels. Through SavvyMoney’s experience working with credit unions to transform compelling, highly-targeted loan offers into actual growth, we’ve identified 5 steps you can do to optimize your loan application conversion rates online.
STEP 1: Create a performance baseline.
In order to make improvements to performance, you have to establish a baseline. We recommend tracking the following Key Performance Indicators (KPIs) to keep a pulse on digital engagement.
- Monthly Active Users (MAU): Number of users who access their online banking accounts at least once within 30 days
- Feature Adoption: Number of online banking capabilities and features (paying bills, checking balances, transferring money, etc) your members are using per month
- Application Abandon Rate: The percentage of users who start a loan application within your online banking platform but never complete the application.
- Conversion Rate: Percentage of online banking users who complete a loan application over a given time frame.
Once you establish a baseline, work with cross functional stakeholders to set realistic goals that can be measured with consistency over time.
STEP 2: Think Like Your User
Remember, the users accessing your application via the digital banking platform are your existing members. That means they’ve already been authenticated and you should already have access to every piece of information and, in most cases, the credit data you need to make a loan decision. Members expect to be able to engage seamlessly with any channel. That means the branch, call center, and digital platform all have a 360 degree view of the member, including most of the data you are likely asking for on your loan application.
STEP 3: Consider the Digital User Experience
According to Business Insider, nearly 90% of US banking consumers use mobile banking for financial account management and for 70% of them, mobile is the primary channel used to manage accounts. This shift has only been accelerated by the pandemic. The point is that most of your members are likely accessing their accounts from a mobile device. This emphasizes the importance of ensuring that your loan applications are built to be 100% responsive.
STEP 4: Cut the Length
According to The Financial Brand, research has shown that if a member can’t complete a loan application in under five minutes, the likelihood they’ll abandon the process can be 60% or higher. They want an application process that can be done with a few swipes on a mobile device.
This means keep the application as short as possible. Eliminate any questions that ask for information already in your database (address, SSN, etc) or obscure information that your member won’t have readily available (current estimated vehicle value or the remaining balance on their car loan). This will simply cause unnecessary friction which leads to abandonment.
And according to WPForms (as reported by FinancesOnline), once a member stops filling out a form, you’re unlikely to get them back: roughly two-thirds are gone for good. On the positive side, another WPForms resource found that pulling just one form field can increase conversions by 26%—so imagine the potential if you pull even more.
STEP 5: Win them Back
While you are unlikely to recover all abandoned applications, there are definitely some that are still not lost for good. If you detected interest at some point, retargeting is a highly effective way to intelligently target and market to members based on previous engagement. For example, if they started but never completed an auto loan application, consider adding a cross-sell message for a car loan to their online banking portal while also following up with an email that has a link to continue where they left off. Sometimes your members just need an extra push.
We know that generating support and securing resources to address each of the steps outlined above is not always easy. The good news is that there are highly effective third-party solutions out there that can help navigate this challenge. For example, SavvyMoney’s market-leading solution offers a loan application that is only two questions long and optimized for the conversion/risk trade-off. The best part is that the API-based application integrates with the most popular consumer loan origination systems so you can ensure that your members have a seamless digital experience.
On top of this, SavvyMoney’s shortened application is embedded into a smarter credit score solution for your members. In this tool, they can learn about their credit, see personalized money-saving offers, and get a near-instant approval if you’ve built auto-decisioning into your loan origination system. On the back end, your credit union gets a robust analytics platform that can provide personalized marketing campaign lists and retargeting data to get those abandoned applications processed and those loans funded.
Don’t forget to join CUInsight and SavvyMoney for our free webinar titled, “Leverage Credit Data to Create a Strong Digital Lending Strategy“, on Wednesday, August 24th. Register yourself and a colleague here.