Enhancing insurance tracking with interactive texting
According to The Financial Brand, online banking usage jumped up to 30% in March and April during the onset of the COVID-19 pandemic in the United States. While a shift to digital is not a new trend, stay-at-home orders during this year’s pandemic accelerated digital adoption for both credit unions and borrowers alike as everyone learned to maneuver a volatile, uncertain economy. Borrower behavior pivoted to leveraging more mobile and digital options for contactless service transactions from businesses.
Tools such as text, email, and online portals enable self-service options that offer convenience for the borrower and enhanced efficiencies for financial institutions to gather information and mange requests in a timely manner.
Adaptable, Convenient Self-Service
Investing in digital channels offers your members a convenient way of communicating and additional preferences for exchanging and receiving information. With more channels, borrowers can choose, whether that be: text, email, chat, or phone.
These solutions can be utilized for:
- Borrower communication
- Service notifications
- Insurance verification
- Payment reminders
- Account management and self-service
Financial institutions implementing additional communication channels notice improved service operations with a reduction in inbound and outbound calls, providing borrowers with various ways to take action on their own. This becomes especially important as online and mobile usage continues to increase.
Email remains a go-to, cost effective communication channel for businesses seeing high customer engagement and return on investment. However, there’s a lot of noise to compete against in borrowers’ inboxes which can result in low response rates. Texting is an informal way to reach people in a channel they are familiar and receptive to, and is rapidly growing as an alternative communication channel that can quickly prompt a response:
- It’s estimated approximately 96% of Americans own a cellphone
- 80% of cellphone users own a smartphone device
- 90% of text messages are opened within the first three minutes
- 80% of cell phone users report that they open every text message they receive (according to Pew Research Report)
How can digital tools integrate with a CPI program?
Traditionally, the insurance tracking process involved sending letters when a borrower’s policy lapsed. These letters, although necessary for compliant disclosure, can lead to negative responses or confusion from the borrower in how to proceed with next steps. Digital communication through email and text can be a quick and familiar way for borrowers to immediately respond and update their policy.
By focusing on proactive communication and notifications before lender-placed coverage is needed, credit unions can reduce borrower noise, enhance member experience, and minimize penetration and false placement rates. At Allied Solutions, we’ve found approximately 8% of borrowers have not provided proof of physical damage insurance on their collateral. However, on average, only 1 to 3% will remain uninsured after being informed of their requirement to maintain coverage. Finding a successful method to communicate with borrowers while also prompting an action is a challenging balancing act. Digital communication channels can be an unobtrusive, but effective, way to obtain necessary information, such as verifying insurance with proof of coverage.
Looking Forward to a Digital Future
At Allied, we have implemented texting as a communication channel in our insurance monitoring and payments operations in addition to our other channels: email, automated web verification, and mail. Our borrower text messages act as instant, convenient notices to remind your borrowers of their insurance requirements and invite them to verify insurance through our self-service website, MyInsuranceInfo.com. To date, we’ve seen a success rate of 43% in receiving insurance via text messaging.
Texting as part of a collateral risk management program empowers your borrower to self-verify important loan information and lets them know if insurance is received and if additional action is needed. Digital tools provide self-service opportunities for borrowers to engage and take action. These communication channels demonstrate a shift towards more automation and digital tools to help effectively keep your borrowers protected and informed.
