Building Trust and Transparency: The Role of Communication in Fostering Positive Member Experience in Lending

Kris Frantzen
Kris Frantzen – Senior Product Manager – North America

From the moment a borrower expresses interest in getting a loan to the final repayment, your communication strategies shape their perception of your lending process. Many financial institutions underestimate the impact communication can have on their ability to deliver a positive experience. The moment a borrower feels confused or stressed due to inconsistent communication, you risk losing them to one of the many fintechs in the market.  

George Bernard Shaw once said that “the single biggest problem in communication is the illusion that it has taken place.”  

Does your institution communicate effectively with applicants and borrowers? And the million-dollar question, do they feel the same?  

For many credit unions, consistent, empathetic, and transparent communication within their loan origination process is a struggle. So, I wanted to deep dive into how you can deliver a positive member experience through communication and differentiate yourself from the competition. 

What is member-centric communication?

There has been an industry-wide emphasis on digital transformation and the modernization of banking operations – however, the foundation to success regardless of the latest banking trends is happy borrowers. 

Member-centric communication involves tailoring interactions and messages to align with the unique needs, preferences, and concerns of borrowers. It shifts the focus from a transactional approach to fostering meaningful connections, placing borrowers at the core of the lending experience. 

Your members should be at the center of everything you do including your communication strategy. Whether it is the details of your products, updates around a loan application, or the messaging used in your marketing collateral, your members should be at the center of it all.  

A true member-centric communications approach, embraces four key elements: 

  • – Transparent and clear messaging 
  • – Proactive and timely updates 
  • – Personalization and empathy 
  • – Multi-channel engagement 

Building Trust through Transparent Communication

Transparent communication is the cornerstone of a positive experience in the lending industry. By clearly presenting loan terms and conditions, educating borrowers about the loan process, and communicating compliance and data privacy measures, your institution can foster trust and confidence among their members.

When seeking financial assistance, borrowers often find themselves trying to comprehend complex loan terms and conditions. To help build trust, lenders should be as straightforward and clear as possible. This means providing thorough explanations of your loans features and fees including interest rates, repayment schedules, and any associated fees. Embracing transparency also includes committing to full disclosures around any charges and penalties borrowers may face.

Another way to build trust is to empower your borrowers with knowledge about your loan process and what it entails so you can remove any doubt and help them feel confident enough to complete it. This could be done by offering step-by-step tutorials, offering guidance and support, or simply having a resource hub where they can find answers to some of the most frequent questions.

Implementing proactive communication

Have you ever experienced that frustrating moment when you discover you have a doctor’s appointment in the morning because you didn’t get a reminder? Or when the only way you can get updates on an application you submitted is by calling support? Reactive communication like this only leads to anger, frustration, and confusion. Rather than waiting for borrowers to initiate contact, proactive communication involves reaching out to borrowers preemptively with relevant and timely information. In lending this looks like: 

Providing regular updates on loan status and progress 
When the applicant hits submit, they are excitedly thinking about the new car, home, or debt they’re going to clear. And if they don’t find out if they got approved instantaneously, they’re probably checking their email anxiously waiting for the decision. Sending them updates to let them know where they are in the process helps reduce any uncertainty, encouraging a sense of trust and partnership. A simple text message letting the applicant know that their documents have been received or that their address was updated lets them know that the relationship between you and them is more than transactional.  

Follow up and support 
Just because the funds are dispersed doesn’t mean the relationship should end, in fact it should be just the beginning. Show your borrowers you truly care about their financial wellness and wellbeing by following up and offering them tailored support. Whether it’s personalized offers regarding their circumstances or offering assistance and guidance for loan repayment.  

Personalization and Empathy in Communication

Beyond the transactional aspects of lending, borrowers now demand experiences that feel personal and relevant to their current circumstances and aspirations. Personalization and empathy in lending go hand in hand, in shifting from standardized approaches to tailored solutions that address borrowers’ unique needs. 

Showing empathy during challenging times 
We may not be in a pandemic anymore, but the empathy that was encouraged for banks to display during that time is still very much needed.  

Empathy is more than an admirable character trait that we should practice in our daily lives, it is an essential element of providing an exceptional experience. Borrowers have a myriad of reasons why they are looking to take out a loan and they hope that their financial institution will demonstrate a genuine understanding of their situation and provide tailored solutions and support that aligns with their needs. By empathizing with borrowers’ circumstances and concerns, financial service providers can foster a sense of trust and partnership. 

Your ability to effectively show compassion, empathy, and support throughout your lending journey can set you apart from your emotionless competitors. 

Using data to personalize the experience 
We’ve mentioned in a previous post that one of the most valuable things you can do is use your data to get a better understanding of your borrowers outside of the information they’ve provided on their application. Use your data integrations to take all the information you can find about your members (past product purchases, recent searches, and interests) to offer them products that align with their current circumstances. If you’ve tracked that they visited your Auto Loan page a few times, that should be the offer they are receiving in your outreach, rather than a non-relevant offer for your low-interest home loan. 

Communication lays the foundation in creating a positive member experience in the lending landscape.  By embracing effective and strategic communication strategies through the entire lending journey, you can make your members feel valued, informed, and empowered. 

How Can Temenos Help

Temenos next-generation loan origination system is an innovative application for both direct and indirect lending that has raised the bar in automated solutions. With its powerful decisioning, highly configurable applications, and extensive third-party integrations, Temenos Infinity Loan Origination will truly take lending to the next level. 

Kris Frantzen
Kris Frantzen – Senior Product Manager – North America