9 Surprising Loan Servicing Trends
“Think like customers, not like lenders” was my motto during my 30 years as a lender. But it’s getting tough. Customers are changing faster than ever.
We recently worked with Aite Group on an extensive study to learn more about how customers view and pay their loans. The billing and payment experience is the top driver of loan servicing satisfaction. So focusing here will create more smiling customers.
We learned that one VP increased customer satisfaction by 50 percent through enhancing his company’s billing and payment experience*. Could 2017 be your year to make big jumps in customer satisfaction?
To make happy customers, align your business with these nine trends.
McLaren coupe 570s comes in 20 different colors. Americans own 20 pairs of shoes. The number of TV channels in the average American home grew 50 percent to 189 channels.
“Have it your way” applies not only to colors of cars, shoes and TVs. But also to how customers pay the loans they used to get those cars, shoes and TVs.
Customers expect these choices when they pay you:
- Timing options: one-time and recurring payments
- Channel options: mobile, web, phone, mail, walk-in payments
- Funding sources: debit card, ACH, cash, check, money order payments
Customers are voting with their thumbs and mouse clicks. They increasingly want to pay you at your website from their mobile phone and computer. By 2019, customers are expected to pay 57 percent of loans at your website (average of all types of loans).
To get your business case approved, put the customer at the very center. But don’t take my word for it, read Capital One’s Business Case for Accepting Debit Card Payments.
significantly more than the other generations. Generational differences create longer lines at Niagara Falls due to all the selfies. Age differences will also determine which lenders survive.
Every other generation is decreasing in number, but Millennials are growing.
To better serve and understand Millennials, we must step into their shoes. So pull out your smartphone, snap a selfie and then go to your website. View your bill and try to pay with a debit card. What’s your experience like?
Customers also expect personal and interactive messages from you. As customers use electronic statements more, they also expect more features. Now it’s time to add one-to-one marketing messages and videos.
As we just saw, you must serve a wide variety of customers. Raise loan servicing satisfaction with one-to-one messaging in loan statements. Imagine the possible messages you could send:
- “You’re 30 days delinquent, click here for a personalized payment plan”
- “You will pay off your car loan next month, click here to see next year’s models”
- “Homes in your area appreciated 10 percent last year, click for home equity loan rates”
Three out of every four loan statements are expected to be electronic only by 2019 (average of all loan types). Lenders will turn higher digital engagement into higher profits by adding personalized marketing offers in electronic statements.
Tip: delivering personalized messages requires data stored in many different systems. Use an eBilling system that integrates the output from all your systems. This saves you from having to integrate your systems.
To satisfy customers while saving on postage, upgrade your eBilling system with
- Video and audio messages
- Text and email reminders the bill is due
- eBills designed for smartphones, tablets and laptops
Millennials are more likely than other generations to receive both paper and electronic bills. If we don’t move fast, Millennials could become set in their ways and inflate your costs for years.
A mobile app that takes disappearing pictures got a $20+ billion valuation. That’s a higher valuation than Keybank, Fifth Third Bank and Ally Financial. 150 million people use Snapchat each day to send disappearing pictures of their new car, home improvements or fun with friends from school.
Radical change also came to how customers pay for their car, home and schooling. Now 35 percent more customers pay their loans with debit cards rather than checks.
Customer behavior has really shifted.
This is easy to see in the story of a lender who five years ago received more payments via ACH than debit card. But Americans started desiring greater convenience. Debit cards have since grown at a 37 percent CAGR. Debit cards now account for over 80 percent of electronic payments at this lender.
Read how this lender won over customers with easy payment options.
Customers like the ease of recurring card payments. In fact, 13 percent of wireless bills are paid automatically with a card. Lenders have been slower than wireless companies to accept automatic card payments due to cost concerns.
But customers reward lenders with 50 percent lower delinquency rates for recurring payments.
Lenders are beginning to recognize customers’ desire to set up recurring card payments. 4 percent of loans today are made with a recurring card.
What will motivate customers to switch from phone to online loan payments?
- Getting an immediate online confirmation of payment
- Ability to pay with a debit card online
- Eliminating/reducing fee for paying with a debit card online
- eBill delivered via email with link to online payment
The COO at one lender made customers smile with easy recurring and one-time payments. They used a multi-channel marketing campaign to promote their new options, and the combination of new payment options and marketing worked. They shifted 10 percent of call center payments to self-service in one year.
Read their loan servicing success story.
A VP recently told us how they raised customer satisfaction 50 percent*. To make happy customers, they launched a new loan payment solution with:
- Debit card and ACH payment processing
- Mobile, web, interactive voice response and call center bill payment options
- Tight integration with their loan servicing software to reduce call center time
Making it easier for customers to pay also increased dollars collected by 10 percent.
*Results from the 2016 TechValidate survey entitled “Bill Payment Solution”
See the Full Survey Results
When I played minor league baseball I loved to make the fans roar with a clutch strikeout in the ninth inning. Now what would give me the biggest smile is for your customers to become your biggest fans in 2017. So we’re giving you the full survey results that I summarized above.Access full results
Related Blog Posts
Why It’s Time for Women to Rise UP
As a senior software engineer at ACI Worldwide, Rawan Shawar helps to guide her team’s priorities and enhance processes at both the team and organizational level. Recently, Rawan was selected by the organizers of Money20/20 Asia to be part the Rise Up Class of 2019.
Paying Tuition – How Can Universities Make It Painless?
Six in ten families feel anxious about bills, five in ten paid a tuition bill late in the past year, and university student financial services leaders have fewer staff and smaller budgets to help families with their bills.
Can Digital Payments Be Kind?
There is no doubt that the era of less (or minimal) cash is truly upon us. According to the Access to Cash Review, cash could fall to just 10 percent of all payments in the UK within the next 15 years.
Other countries, such as Sweden, have already seen significant changes – cashless payments have grown so quickly that only 10 percent of the 20 SEB banks in Stockholm now hold cash. Beyond Europe, China is leading the way with USD$12.8 trillion in mobile payment transactions in 2018.
Survey Shows Millennials Aren’t as ‘Digitally Savvy’ When it Comes to Tax Refunds
It was not so long ago that checks, stamps and envelopes occupied more than the junk drawer in most American households. But as electronic payments and text messaging grew, asking, “Do you have a stamp?” was more likely to be met with a confused look than an actual stamp.
And yet, a recent online survey by YouGov and ACI indicates that there’s still a place for checks when it comes to paying taxes or – at least for Millennials – receiving refunds.
Knowing New Customers – And How Shared Data Helps in Fighting Fraud
As the eCommerce industry continues its rapid growth, the lines between physical and digital shopping are becoming increasingly blurred. These changes are creating a number of challenges for merchants, not least around customer visibility and fraud prevention.
University Payments Made Simple for Students and Parents
According to Sallie Mae, a significant portion of tuition revenue for higher educational institutions comes from students (27%) and parents (44%), with students struggling more to pay their bills on time. As our team gets ready to head to New Orleans for Ellucian Live 2019, we looked at what’s new in the payments realm for higher education institutions, and what students and parents need to ensure their payments are made on time and with less friction. A recent survey from Aite Group, “U.S. Consumer Payments Experience: A Blueprint for Creating Positive Behaviors,” which surveyed 2,425 U.S. consumers, sheds some light on this topic.
SWIFT gpi: Leveraging Cross-Border Payments for the Real-Time World
SWIFT gpi represents the evolution of business done over the SWIFT network, bringing correspondent banking into the digital era.
I’ve covered this topic before, but with gpi now reaching the two-year milestone, it’s a good chance to reassess the progress that has been made – and what is needed to drive further adoption.
Reducing Fraud and Improving Customer Experience with Machine Learning
Julie Conroy is research director for Aite Group’s Retail Banking practice and covers fraud, data security, anti-money laundering, and compliance issues. Recently, Julie teamed up with ACI’s Marc Trepanier for a webinar, Key Trends in Payments Intelligence – Machine Learning for Fraud Prevention. I sat down with Julie to get her take on the topic.
Why Non-Functional Requirements Should be a Few of Your Favorite Things
It’s not unusual for me to be questioned by retailers as to why some payment solutions are priced differently or more expensively than others – in fact, it would be unusual not to be asked those questions when dealing daily with procurement and finance teams of major multi-national multi-channel merchants!