The last decade has seen an increasing online shopping trend: the emergence and now dominant presence of Amazon and other ecommerce platforms. With the success of digital shopping, the rise of online lending has also spawned many new companies looking to establish themselves within the industry.
Today we find that COVID-19 has encouraged those digital trends as customers seek services from the comfort and safety of their own homes. Online lenders now have the lofty task of building an online portfolio that satisfies the needs of customers while also competing with an increasing number of competitors.
Some online lenders may not know where to start. Here are 9 steps to building an online lending portfolio that will establish your business in the industry.
Step 1 – Establish your Lending Footprint
The first step that every online lender needs to take is to define your target market. An easy way to do this is by establishing your lending footprint. Will you focus on a specific region or be a nationwide lender? If you are a state-by-state, compliant lender, state regulations determine your:
- Maximum loan amounts
- Specific rates and terms
- Loan products
By resolving and completing this first step, your business has fixed the foundation of how your company will operate and offer loans.
Step 2 – Determine the Potential Strategies for Customer Acquisition
A successful business plan always includes the costs of acquiring customers. Once you understand your expenses, how will your business cover those costs? What are your target returns and how does your business model help you reach them? Lead generation and strong Search Engine Optimization (SEO) are important to a lender’s success but need to be properly managed as your company looks to generate revenue.
For example, to acquire more customers your business will need to decide which route you will take.
- Will you partner with a leads provider?
- Will your business use pay per click (PPC) advertisements?
- Will you optimize your web page to rank high on organic search results?
Step 3 – Implement an Underwriting System
To be a successful online lender, the speed of your application process is crucial.
If your process is cumbersome or lacks automation, customers will quickly find alternatives. A decision engine paired with data
, can expedite your entire process. Your loan management software should be able to underwrite a potential customer in seconds.
Two common hurdles online lenders face is the presence of “bots” and false identities in the marketplace. This is why fraud identity solutions can be so important to the success of your business. Fraudulent errors can become extremely costly. Luckily, there are lots of resources available to incorporate machine learning and artificial intelligence (AI) in your process to avoid unnecessary expenses.
Step 4 – Make It Easy for Customers
When a customer applies for a loan, ensure that the application process is as smooth as possible by eliminating unnecessary pain points. Collect just enough information required to make your decision. Avoid asking them to fill out a lengthy loan application. Provide simple and obvious steps for your clients to follow. The more complicated the process, the less likely that the customer will complete it.
Your loan management software should equip your business with an online application accessible to your customers through your website. Bring in partners that share the desire to simplify the customer’s experience.
Step 5 – Over Communicate
Online lenders already face regulations specific to doing business online. But you want to go beyond the requirements and clearly communicate transparency every time you interact with the customer. Your loan management software should provide your customers with an online portal to access their customer profile, the foundation of their business with you.By offering direct access for customers to their accounts, they always know where they are in your lending process.
If a customer’s loan is not approved, ensure you comply with NOAA regulations and notify a customer that the loan may have been declined. Timelines are also important to customers, so inform the customer the amount of time that each step might take.
Having clear loan terms will also support your business’ image of transparency. An easy way to overcommunicate in these areas is by automating messages such as NOAA or any other regulatory disclosures.
Step 6 – Promote Automated Messaging
Another important step to encouraging communication with the customer, is giving them the ability to Opt-In to email & SMS message triggers as soon as possible in the process.
This is a crucial step because communication can be simplified when customers are sorted into marketing and servicing funnels. Once they opt-in to messaging, customer communication can become more efficient. If they are only halfway through the application process, automated triggers can remind them and invite them back. Triggers can also remind customers of items you still require throughout the process.
Among items you may still lack:
- A signature on their loan documents
- A photocopy of their driver’s license
- Proof of employment
Create an automated system that not only reminds them of outstanding tasks but also offers support throughout the process.
Step 7 – Once the Loan is Funded, Become Service Oriented
Now that you’ve funded the loan, your mindset must shift from sales to service. Similar to before the loan was approved, automated messages can remind customers of upcoming payments. Your loan management software should also provide automatic repayment schedules via ACH or debit.
Any time you can offer self-service, capitalize on it. By offering self-service options, you simplify the customer’s experience. Your lending software should allow customers to log on and pay their loans remotely. These practices encourage successful customer behavior so that over time you build and retain a loyal customer base.
Step 8 – Continue to Engage the Customer
Once a customer has appropriately opted in to your marketing communications, present offers to them on a regular basis. Remind the client that you’re still there for their needs. Identify the high-performing customers in your portfolio and ensure your business continues to offer them products.
Among the Ways to keep them Engaged:
- Email product offerings
- Text holiday promotions
- Send coupons
- Send birthday celebrations
Step 9 – Partner with Companies that Share Your Vision
As you review this article, you will notice the need to partner with industry-proven vendors. When you’re investing in lead generation, communication, or payment methods, your loan management software should provide you with the flexibility to choose the best partners for your business.
Vergent LMS has partnered with industry leaders to offer hassle-free online loan management software. By using integrated partners, Vergent maximizes the ways to create efficiencies within your lending process. By creating new operational efficiencies, your team gains valuable time for other important tasks.
If you’re interested in finding a software that maximizes your success, click here to request a demo.