Consumer Lending

Understanding today’s empowered borrower

In our Experience Radar for consumer lending, we asked borrowers about their consumer expectations for auto, home, student, and personal loans. We learned that borrowers’ expectations are being shaped by other industries that focus on customer satisfaction and operate in a collaborative environment.

We found disruptors continue to make inroads, particularly amongst millennials. These new entrants have joined the market with better technology—including mobile apps and financial management tools—that simplify the loan process and provide the fast loan experience that consumers want.

To stay ahead, lenders need to adapt to changing customer expectations, borrower trends, and new technology before new entrants can extend their customer footprint. Below, we discuss specific features lenders should consider for each loan type.

A fast end-to-end application process is the largest differentiator in auto loan financing

While flexible products and low closing costs are very important factors that consumers consider when looking for auto loans, these are largely driven by product strategy and economics. By far the largest differentiator for auto lenders is a fast end-to-end process, which is likely why dealer financing proves so popular.

Home borrowers value lenders that combine digital tools with knowledgeable advisors

While it's true that home borrowers prefer a more digital process today than they did two years ago, much of the data shows that digital and traditional channels have to be equally adept at servicing mortgage borrowers. In other words, many consumers want to research and apply for a home loan online, but when it comes time to the closing stage, consumers want to be able to talk with someone knowledgeable to address their concerns, if needed.

An efficient application process is an imperative in student loans

As the younger generation heavily values a digital process and instant gratification, it is important for lenders to provide a fast end-to-end process, quick decisions, and frequent status updates to student borrowers. There is an opportunity for mobile apps to be successful if they have features that allow the customer to lock in an interest rate, check an application status, and compare loan products.

Interesting facts

• Consumer Lending (also called retail lending) refers to making a wide range of secured and unsecured loans to consumers by banks for consumable items such as a car, boat, manufactured home, home equity loan, home equity line of credit, signature loan, signature line of credit, recreational vehicle, or share or certificate of deposit or Stocks...