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
From API to AI to I: Banking Tech Gets Personal
Tired feet. Running out of business cards. Countless LinkedIn connections – sound familiar? This time of the year is conference season; the annual SIBOS (SWIFT) and Money20/20 USA gatherings spanning the autumn give attendees plenty of hot topics and talking points. My American colleagues refer to this season as “the fall.” I trust this to be an observation on leaves and fruit rather than a sequitur on the state of the fintech industry. Either way, it’s a good time to harvest, to take stock and to work out what we should be doing with the apparent abundance of innovative produce.
How Do You Drive Full Value from SWIFT gpi?
As part of SWIFT and ACI Worldwide’s joint mission to accelerate adoption of SWIFT gpi, ACI’s SWIFT gpi global marketing lead Zhenya Winter spoke with Daniel Lynch, Data Analytics and Payments Innovation Lead at SWIFT, and ACI’s Global Head of Real-Time Payments, Craig Ramsey, about some of the key questions raised by attendees of our second Global Webinar: Drive Full Value from SWIFT gpi. The relevancy of these was reinforced at Sibos 2019, the SWIFT community’s annual conference, which recently took place in London.
The Need for Financial Inclusion in Developing Countries
The payments ecosystem globally is changing – and the idea of financial inclusion is increasingly featuring as part of long-term strategy. At a glance, financial inclusion means that people and businesses have access to important financial products, services and data, such as transactions, credit cards, payments, savings and insurance, and that these are delivered in a sustainable way. The challenge for banks lies in being more inclusive and meeting social needs, while remaining profitable and increasing market share.
How to Maximize the Value of Partnerships Between Fintechs and FIs
The LATAM Open Banking & Fintech Partnership, organized by Connect Global Group, was held earlier this year in Mexico City, and ACI participated as one of the forum partners driving discussions on how to maximize value from collaborative partnerships between FIs and Fintechs. We explored the invaluable benefits of open API and strategies to differentiate the offerings of FIs and Fintechs, address consumer demands, and best practices for implementation aligned to regulatory requirements.
A Deep Dive into the Payment Tendencies in the Mexican Market (Part 2)
While the sheer volume and age of potential shoppers makes México an attractive market, there is another component to the viability of eCommerce: México is mobile. A recent study performed by the Asociación de Internet.mx, shows that México is one of 22 countries leading the trend toward mobile commerce, with young adults making 88 percent of smartphone purchases. The country has one of the largest mobile markets in Latin America, with one-third of all residents using smartphones.
A Deep Dive into the Payment Tendencies in the Mexican Market (Part 1)
The population of México is the second largest in Latin America, with 122 million residents, 39 percent of whom are considered middle-class. The population is relatively young, with an average age of just 27, and one-third estimated to be millennials, which is often a factor in driving the popularity of eCommerce. Last year, 56 million people accessed the internet in México, though despite the high number of internet and mobile phone users in the country, nearly two-thirds of the population do not have bank accounts (source: Banco de Mexico).
Women in Payments: It’s Time to Get Out of Your Comfort Zone
As we gear up for Money20/20 U.S next month, we are excited to shine a spotlight on Natalia Ruiz, manager, Payments Risk Solutions at ACI Worldwide, who was recently selected to be part of the 2019 Rise Up Academy. This global program created by Money20/20 addresses the gender imbalance in leadership positions within the financial services and fintech industry.
Universal Confirmations: Get Ready for 2020
With the arrival of universal confirmations, we sit down with some industry experts to find out more about what impact this will have on transforming cross-border payments. We’re welcomed by Fabien Depasse - Head of SWIFT gpi Customer Success at SWIFT and Craig Ramsey - Head of Real-Time Payments at ACI Worldwide.
How to be a Payments Trailblazer – The Seven Habits of Highly Innovative Organizations
The new Culture of Innovation Index from Ovum and ACI identified segments—from banks to intermediaries to merchants to corporates—at the cutting edge (of innovation) across the payments ecosystem. But what is most notable about those segments that have reached ‘trailblazing’ status is the apparent lack of commonality between them. No one segment, nor one region fosters better innovation. In fact, what’s driving these segments/organizations to be best of breed is their own culture of excellence. The only thing they have in common is their attitude.
How will SWIFT gpi Impact Latin America?
As the world continues to transition toward real-time, and technology continues to evolve, new challengers are disrupting the market with value propositions including real-time cross- border payments. The competition has inspired SWIFT to work with the industry and challengers to create the Global Payments Innovation (GPI) program, which radically changes the way banks interact with their correspondents and offers improved transparency and customer service to their customers.