10 Things You Need to Know About Loan Servicing
“We are in hyper growth,” a senior lending executive told me. “Now we are building up the ability to service these loans.” However, tomorrow’s profitable loan growth will not come from today’s strategies. Loan servicing executives plan big changes according to our recent survey.
1. Payments value chain will consolidate. 58 percent of consumer finance companies want to reduce the number of fee collectors in the payments value chain.
2. Loan servicing execs prize disruption. Removing intermediaries from the payments value chain ranks higher than targeted offers and eBilling in priority.
3. Financial institutions plan collaboration. 71 percent of consumer finance companies are evaluating connecting directly to banks to eliminate or reduce reliance on today’s payment networks—illustrating how they may reduce fee collectors.
4. Banks want to help lower lenders’ costs. 85 percent of banks want to work with consumer finance companies to help lower costs.
5. Both sides of the value chain want partnership. The lender accepting the payment and the bank the customer pays from show a willingness to change today’s payments paradigm.
6. Lenders will engage customers in real-time. Real-time money movement will occur when the slow ACH and card networks are disintermediated. Bill paying systems will power revenue growth with real-time offers built on the foundation of faster money movement.
7. Security headaches won’t hurt as much. The battle against hackers will not disappear. Security breaches will decline by reducing the intermediaries transmitting sensitive card numbers.
8. Card acceptance will sky rocket. Today some lenders limit their acceptance of debit cards for loan payments. Reducing the fee collectors will make accepting debit cards even more affordable in the future.
9. Revenue growth requires embracing change. Loan servicing drives revenue. 90 percent of highly satisfied customers say they definitely will use their lender in the future.*
10. Bill paying systems rank first. Billing & payment experiences determine more than 50 percent of a customer’s satisfaction with their lender.* Changing with the times to offer convenient, secure and cost-effective payment experiences is crucial.
Will you disrupt or be disrupted? Disrupted companies like Kodak and Blackberry pop into my mind. Their strategies did not change as fast as the turbulent market in which they competed.
*Source: J.D. Power.
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