Turn Credit Declines Into A Win-Win

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The pandemic has left millions of people needing credit at a time when lending standards are tightening. The result is a lose-lose situation: consumers receive a negative credit decline experience and financial institutions miss out on a lending opportunity. How can this be turned into a win-win?

Start by deconstructing the credit decline process: Most consumers are first encouraged to apply for a loan or credit card. The application process can be invasive, requiring significant time commitment and thoughtful and accurate inputs from the applicant.

After all that, many consumers are declined with a form letter or message that has little to no advice on what actions they can take to improve their credit worthiness. It’s no wonder that credit declines receive a poor Net Promoter Score (NPS) of 50 or, often, much worse. But on the flip side, forward-looking institutions could use this opportunity to provide post-decline credit advice. This is a compelling opportunity for several reasons:

  • Improved customer satisfaction. One financial institution learned that simply offering personalized coaching, regardless of whether or not consumers used it, increased their customer satisfaction by double digits.
  • More future lending opportunities. Post-decline financial coaching can help prospective customers position themselves for future borrowing needs, even beyond the product for which they were initially declined.
  • Increased trust. Quality financial advice helps build trust. A J.D. Power study found that, of the 58% of customers who want advice from financial institutions, only 12% receive it. When consumers do receive helpful advice, more than 90% report a high level of trust in their financial institution.

Provide cost-effective, high-quality advice
Virtual coaching tools powered by artificial intelligence can help banks turn declines into opportunities. These coaches can deliver step-by-step guidance and personalized advice experiences. The added benefit is easy and consistent compliance, enabled by automation. These AI-based solutions are even more powerful when they follow coaching best practices:

  • Bite-sized simplicity. Advice is most effective when it is reinforced with small action steps to gradually nurture customers without overwhelming them. This approach helps the prospective borrower build momentum and confidence.
  • Plain language. Deliver advice in friendly, jargon-free language.
  • Behavioral nudges. Best-practice nudges help customers make progress on their action plan. These nudges emulate a human coach, providing motivational reminders and celebrating progress.
  • Gamification. A digital coach can infuse fun into the financial wellness journey with challenges and rewards like contests, badges and gifts.

Virtual financial coaching, starting with reversing credit declines, represents a huge market opportunity for banks and their customers. Learn more about the industry’s first virtual financial coach.

Why Nailing the Customer Experience Comes Down to Empathy

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While this pandemic has brought many challenges to the financial industry, it’s also brought the opportunity of accelerating customer adoption of your digital banking services.

But it’s also presented an opening for your bank to build genuine customer loyalty and turbocharge your net promoter score.

Difficult times bring out the best and the worst in both people and companies. It’s easy to offer amazing service when things are going well, but it’s how you treat your customers during tough times that builds, or breaks, loyalty. American poet and civil rights activist Maya Angelou said, “People will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

Right now is your opportunity to make your customer feel valued, supported and secure. To do that, you need to be empathetic to your customers and your staff.

Consider your customers. They’re stressed.

This is a stressful time for them. Many are financially strained and need advice on the new programs and policies put in place to help them. They’re socially isolated and trying to avoid public places in an effort to stay safe. So, naturally, they’re increasingly banking through your digital channels — but that’s stressful too. How do I use mobile banking? Is it secure? How do I make sure I don’t send money to the wrong person?

To navigate these tricky waters, your customers need access to knowledgeable people who can guide them through your technology, and help them understand how to use your products and services.

Your frontline is your bank. It’s through your frontline that your customers experience your bank. And these are difficult times for frontline staff, too. Many are working from home, and have had to switch roles to handle the increased volume of remote support requests.

At the same time, they don’t have the in-person support of their colleagues, and they don’t have the same toolsets at their disposal. And new programs and policies are being rolled out faster than ever. All this at a time when many of them are experiencing personal difficulties.

You need to provide them with the knowledge, skills, and tools to deliver an exceptional customer experience. For the knowledge and skills part, they need practical training, which has been made more difficult by the pandemic. Instructor-led trainings are off the table, your learning management system could be better. You need an engaging and effective way to train remote staff so they can offer the right solution at the right time for your customers.

One of the biggest holes you need to plug is the lack of employee knowledge and familiarity with your digital products — the very ones you customers need to rely on right now. Many of your staff don’t bank with you, so they’ve never experienced your digital tools. If they’re not familiar with your tech, how can they be expected to promote and support it? To empower them, you need to train them on your tech and give them tools to help customers navigate transactions.

It all works together. The goal during this pandemic is to deliver an exceptional customer experience, to make customers feel secure and valued during a difficult time. Banks that can pull this off will build coveted long lasting customer loyalty. My contention is that empathy is the key to success.

Your customer experience is curated by your frontline employees. If you can remove stress from their jobs with training and support tools, they’ll be in a better position to help your customers. Investing in your frontline and showing them that you care about them will make them feel valued and help you build staff loyalty.

A well-trained, supported and secure frontline will do a much better job of helping your customers get through these tough times. Armed with the knowledge, skills and tools they need, frontline staff will be able make prescient recommendations that promote your products while making the customer feel confident and secure with their banking situation.

In the long run your customers won’t remember the details of each transaction and how it was handled. They’ll remember whether their bank added to their stress, or gave them one less thing to worry about during a trying time.

Make the Most of Your Account Opening Process

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accounts-9-29-18.pngIt used to be that bank onboarding best practices included a firm handshake and maybe a stuffed toy or T-shirt. In 2018, it’s a little more complicated than that.

Today, customers have a long list of expectations that add up to nothing short of complete personalization across all the many moments — and micro-moments — they face. Customers may have picked this checklist up elsewhere, but they see no reason why those same rules wouldn’t apply everywhere, including when they open a new account at their bank.

In a mobile-everything world, the one-size-fits-all solutions won’t work. New research from Deloitte shows customers want personalized, simple and complete communications. Essentially, they want you to know what they need, when they need it, so you can make it as simple as possible for them. They’re no longer willing to sift through generic self-service tools, and the more your institution can guide them with specific content that comes in their moments of need, the more you will win their loyalty — and dollars.

Meeting these new expectations is increasingly the only way to engage your customers — engagement that’s necessary for high Net Promoter Scores (NPS), revenue growth and profitability. The industry — and onboarding best practices — have started to change.

CX trends are changing onboarding best practices
For the financial services industry, the math is clear. The lifetime value of a promoter is 2.5 times higher than that of a detractor. At the same time, a detractor is 2.3 times more likely to switch to your competitor.

Delivering a positive experience is the best way to create more promoters, particularly during critical moments like your bank’s account opening process, which is the bank’s first impression.

A 2017 Deloitte study makes plain what people are looking for in onboarding programs for banks. The 3,000 customers surveyed who had recently opened bank accounts said they wanted improvements in two fundamental areas, during and post-account opening:

  • Speed
  • Communications

Overall, digital customers say the opening process was unclear and took too long. Worse, once they had opened an account, they felt abandoned. Many banks didn’t follow up with basic information customers felt they needed. That silence was one of the biggest causes of customer dissatisfaction, forcing customers to follow up on their own or forgo information they wanted.

How to apply best practices to your bank
So, we have two main directives for improving the bank customer onboarding process: speed and communication. And we know how customers want that communication to feel: personalized, simple and timed to their needs.

Now you just need to deliver it.

While banks are worried about sending too many communications, customers are asking for guidance. The second they open an account, you have an opportunity to start a relationship by delivering clear and concise instructions that notify them of missing information and next steps to help them complete the process. Then, when the account’s open, you can stay in touch, and help them become familiar with their account and the services your bank can provide.

Data shows this approach works. Leading student lender Citizens Bank increased new accounts by 10 percent and decreased time to completion by 40 percent using automated mobile engagement with its digital customers.

The right communications — timed to arrive when customers reach specific points in their journeys — can improve the customer experience. If you deliver personalized solutions on day one, you can answer customer questions before they ask, offer information about their accounts, recommend new products or services, and point them to tools and content that help them complete actions quickly and easily. This kind of prescribed, proactive approach to service reduces customer effort and builds trust along the way.

The benefits of a better onboarding strategy
Customer surveys like Deloitte’s clearly show an increasing emphasis on easy and convenient interactions. If you want to win customer loyalty, you need to deliver an effortless customer experience now. Not only will a better onboarding experience create stickiness and turn your customers into promoters, it will set an expectation of useful communication. When your customers start their relationship with personalized mobile communications — rather than generic emails, or worse, having to hunt through your website — it teaches them they should pay attention when you contact them.

By meeting that expectation, the potential value for that account can stretch as big as your offering. You can promote additional products, suggest expansions on the products they have and offer rewards when they recommend a friend. As long as you continue to make those experiences personalized, useful and easy, you can continue to nurture your customers and realize maximum value.