Implementing a simplified loan application process is a big step towards a streamlined client onboarding experience and increasing existing customers’ satisfaction. Supporting online or mobile loan applications isn’t just a fad: at Randolph Brooks FCU, members acquired online are 49% more profitable than traditional enrollees and at Hanscom FCU, they hold 230% higher loan balances on average.
Considering that increasing revenues and driving customer stickiness is a major concern for all banks, implementing online loan application best practices not only helps you retain existing customers but attracts new customers as well. In this post, we’ll examine four loan application best practices you can implement to increase completion rates.
4 Key Loan Application Best Practices
1. Give loan applicants the option to apply anywhere at any time.
One of the distinct advantages of applying online is the flexibility it offers applicants. They don’t need to take time off work to visit a branch office; they can apply when it’s most convenient for them. This best practice extends to creating a loan application process that’s optimized for online or mobile.
For mobile particularly, you’ll need to develop a loan application process that’s short, simple, and utilizes appropriate text and layouts that adapt to any screen. Don’t assume you can just transfer your existing website’s loan application form to mobile − that’s a guarantee for failure. Optimizing for mobile means reducing scrolling, using drop-down menus, and setting up the application for touch rather than typing. Paying attention to these important guidelines is key to reducing abandonment.
2. Educate the customer beforehand about the application process.
Before applicants start filling out the loan form, explain the application process, documentation that will be required, and estimated time to complete the form. This will help them be better organized, and they’ll know what information to gather before they start. It can also help reduce interruptions to the application process, which could lead to abandonment. According to Forrester, completion rates are around 10% for loan applications, so it’s smart to remove any potential barriers upfront that could negatively impact completion.
3. Screen applicants and collect key information before back-office processing.
Streamline the loan application process by allowing applicants to upload scanned images of supporting documents, such as a driver’s license or paystub, or to snap pictures using their mobile phone’s camera. The time-savings for customers are enormous compared to bringing the physical documents to a branch office and customers expect these types of features to be supported. Using digital documents from the beginning of the loan application process also spells big benefits for your bank. Your staff will spend less time pushing paper and chasing documents when they’re already digitally available.
Another important step is to collect the applicant’s essential information and pull their credit report to quickly screen for the appropriate loan products. By presenting applicants with qualified terms, rates, and monthly payments in real-time, you’ll minimize abandon rates and increase loan closings.
4. Don’t forget that not all customers are tech-savvy.
Not everyone who owns a computer or mobile phone is a technical wizard. Some customers might find the whole online or mobile process confusing and cumbersome. Help them out by saving the information they’ve entered into the loan application and then redirecting them to an alternative channel such as their nearest branch or the phone to get assistance. Also, if you detect that a customer has abandoned the loan application without completing it, proactively follow-up and offer help.
If customers do end up visiting a branch or contacting your call center for assistance, it’s important to offer an omnichannel experience so the information they’ve already entered is available. There’s nothing more frustrating for customers than repeating the personal information they’ve already entered online.
Following these loan application best practices is key to creating a great user experience that results in high online and mobile loan completion rates. By offering your customers the option to apply online or via their mobile phone for loans, you’ll be the bank they’ll want to do business with.