What role does customer trust play in consumer lending, and for the relationship with your consumers in particular?
When it comes to consumer lending, customer relationships may cover many years (e.g. a personal loan for 7 years), so there are many moments that matter in establishing and maintaining a trusted relationship. For us, we offer customers products to help them at every life stage from Buy Now Pay Later, to sales finance, credit cards and lending (personal and motor loans) – our approach is to be responsible, fast and always ready to help.
Establishing trust starts with reducing uncertainty and increasing confidence you will deliver on your promise. We’ve found this to be critical in the application stage, where many consumers may be nervous about what to expect and how much information to provide before understanding a price (or rate). For us, this means providing a clear value exchange up-front, asking for the minimum we need to help inform a decision and honouring our commitment if they proceed.
Similarly, while speed is important to many consumers and a focus for us too (i.e. time to decision, time to cash), we find many consumers still want the option to speak to someone during the application process so they have confidence we understand their needs. Providing options, always being ready to help and putting them in control are ways we aim to show we care.
For existing customers, engagement with a loan product may be minimal given a fixed repayment schedule. However, delivering on your brand promise is really tested in scenarios such as a sudden change to personal circumstances (as best evidenced during Covid in 2020). Being there for your customers in these times of need and offering assistance can dramatically increase advocacy and loyalty.
The experience is the product for financial services, with application (or origination) just the start for establishing this trust. It’s about continually demonstrating how you care and the servicing or ‘in-life’ experience is a critical enabler.
Lenders who can establish this core level of trust are more likely to have customers who are more engaged, act as advocates and remain loyal.
Assuming you deliver on your promise and this ‘core trust’ is established, new technology such as open banking may enable a higher level of trust. For example, access to this data could help lenders personalise both new and existing products and experiences to meet consumer’s specific and potentially changing needs, further demonstrating how their best interests are at heart.
What are the most important pain points in the consumer lending customer journey?
One of the biggest customer pain points starts with a customers’ very first experience – applying for a loan. Providing financial information (income, expenses) is a critical part of the application experience, yet we find many consumers are uncomfortable and/or don’t trust ‘screen scraping’ tools, reverting to other ways to provide this information.
How do you think Open Banking can help improve the user experience in consumer lending?
I’m excited about what’s possible with Open Banking as we think about helping customers with their money, starting with the application experience. The immediate use case is to reduce friction/effort in providing financial information during the application stage, replacing the current ‘screen scraping’ approach which many consumers have told us they don’t trust (exacerbated by media commentary and some financial service providers’ position on this practice).
As more financial services providers use Open Banking, consumer familiarity, confidence, and trust in using this service will only help the industry. We all benefit from a shared and re-usable standard.
Beyond the existing application experience, I believe Open Banking can enable lenders to change their relationship with consumers through the typical lifecycle and provide more personalised product(s) and experiences. For example, Open Banking data could help lenders better understand consumer money habits and be more proactive in supporting/meeting their needs, in ways previously not possible.
This means actively partnering with customers to provide solutions which help put them in control of their financial goals. This moves the conversation and relationship away from a transactional product focus to a lifetime value and experience lens, genuinely showing care about helping customers.
Lastly, I believe it’s important we don’t make Open Banking the hero of the story for consumers, but rather, focus on the experience and benefits it creates for them. Consumers don’t care about Open Banking any more than they do about screen scraping – they just want their money.
This interview with Pete Young, General Manager at Latitude, was first published in our white paper ‘Trust and the future of consumer lending‘.
We think that future looks bright, especially for businesses who are able to leverage the latest innovations in Open Banking, payments and personal finance management.
It’s why we partnered with EML and launched Nuapay – a next generation, fully customisable digital wallet solution. We’ve integrated the best of Open Banking, payments and personal finance management and made it available on one platform, via API, SDK or white label app.