Surviving the digital revolution

Using technology to create a more efficient, profitable, and engaged small business lending experience.

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3 REMOVE FRICTION FROM THE CUSTOMER JOURNEY

5 FOCUS ON CUSTOMER CENTRIC BANKING

7 LEVERAGE DIGITAL SOLUTIONS

9 PARTNER TO COMPETE

Surviving the digital revolution

According to the 2017 Digital Banking Report entitled, “2018 Retail Banking Trends and Predictions,” the most important trend in the retail banking industry for 2018 will be “Removing friction from the customer journey”. The number one

strategic priority will be to “Redesign/enhance the digital experience for consumers”. These two ideas go hand-in-hand: removing friction from the customer journey is achieved by investing in technology and cultivating an enhanced digital experience.

The small business lending industry is still embroiled in outdated systems and legacy platforms. Many traditional lenders have only taken the first step in going “digital” by placing a pdf version of their hard copy application online. But this hardly saves significant time or creates any downstream efficiencies.

REMOVE FRICTION FROM THE CUSTOMER JOURNEY

3Source: 2018 Retail Banking Trends and Predictions, Digital Banking Report

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Use digital engagement to remove friction from the customer journey:

1. Digital Upload Capability. Give your customers the ability to upload documents on a secure site. Printing documents, creating photocopies and making trips to the bank is a lot of time and money wasted for borrower and lender. Most important documents live online now, it’s much easier to upload them.

2. Automatic Early Notification. If a potential customer doesn’t meet your minimum underwriting requirements let them know automatically and early on in the process. Nothing is more frustrating for borrower or lender than wasting time working on a loan application that doesn’t have a chance. It’s a waste of everyone’s time.

3. Incorporate Data Feeds. If information needed about your customer is available from a reputable source, automatically pull that data into into your system. You don’t need to request it from your customer. The shorter your application is the better.

FOCUS ON CUSTOMER CENTRIC BANKING

The best approach for a bank, credit union or other traditional lender looking to upgrade technology and incorporate more digital touch points is to start by asking, “What would create a better

experience for the customer?”

Prioritizing Customer Service

For many banks, and businesses in general, this is counterintuitive – the urge is to start the task with an internal focus. What would save the company money? What would make the employees happier? How can we incorporate our existing technology? These are all important questions, but they must be answered in the context of your first priority, which is to make customers happy. There are many ways a lender can gain this critical customer insight, whether it’s through a survey, focus groups or customer interviews.

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Sometimes it can also be helpful for someone from the business to take the time and go through the entire application process themselves to understand first hand the points of frustration. In a world where Amazon can deliver your groceries, electronics or clothes in just a couple hours, expectations of speed and ease of use have dramatically changed. Banks are not exempt from this new paradigm.

Historically, financial institutions have not made customer experience a priority. They didn’t have to because customer options were fairly limited and the general experience (paper work, bank hours, time commitment, etc.) didn’t vary from bank to bank. Well, times have changed and people have more choices than before. New shiny choices that are fast, easy and completely digital. In many instances, ease of doing business is more important to customers than price. The CEO of Indiana’s Peoples Bank SB recently shared in a Banking Exchange article, that they were seeing customers willing to pay as much as 15 percentage points more to an online lender just for the speed and convenience, which was a real wake-up call for them. For traditional lenders that want to survive the digital revolution, removing friction from the customer journey has to become a priority.

6Source: “Know who you are and what you do,” Banking ExchangeFigure 1. Bank’s FinTech Evolution. Reprinted from 2016 FinTech Playbook, Accenture and American Bankers Association.

Figure 1

Bank’s FinTech Evolution

Understanding which points in the customer journey are ripe for change will help traditional lenders identify and prioritize the introduction of digital solutions. While this is an exercise each

institution should complete to get a true understanding of where barriers exist, there are certain struggles common among all banks that have not upgraded their application process in the last five years.

5 ways a lender can improve the borrower experience with digital solutions:

1. Elimate Paper. Reducing or eliminating the use of physical paper creates an incredible efficiency. Paper forms and documentation create uneccesary work for borrowers and lenders.

2. Create a “smart” application. Ensuring your online application is more than just a copy of your existing paper or pdf application is important and a change many traditional lenders struggle with. Mirador has completed hundreds of hours of borrower research and user testing to create the most efficient and adaptable application

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LEVERAGE DIGITAL SOLUTIONS

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process possible. Using progressive decisioning, Mirador’s platform guides borrowers through the digital loan application with ease. The Mirador platform consistenly boasts a conversion rate (open to submitted application) of 60% or higher, nearly double the industry standard of 25%.

3. Create a smart online process. A true “smart” application is dynamic, only displaying to customers the questions they truly need to answer and changes based on response. The same question should NEVER have to be asked more than once. If there is an opportunity to pull data from a reputable source rather than requesting it from the customer, this can add a lot of value and time savings. By automatically retrieving data and information there will be less room for error and it can speed up the entire process.

4. Centralize communication. Forget all the e-mails, phones calls, text messages, voicemails, etc. – move all communication to one system so there is no more confusion and an entire history of communication, can be retrieved in an instant. With centralized communication each stakeholder clearly understands which steps are complete and what should happen next.

5. Use artificial intelligence and machine learning to make better decisions. While many banks focus heavily on credit score, there is so much more information available that can help to predict the success of a small business loan. Platforms that can connect to this information, analyze it and make a decision instantly based on previous outcomes (predictive analytics) are the future of lending. When a lender can incorporate this type of intelligence into the application, the entire process speeds up ten fold. The results can mean a better outcome for borrower and lender.

Introducing more digital solutions to the customer journey is easier than ever before, even for mid-size and community banks, CDFIs, and credit unions. The fastest, easiest and most cost effective way to completely upgrade a small business lending experience is to partner with a fintech

company that has proven results. Mirador is a completely digital small business lending platform that has processed over $1 billion in loan requests and can boast serious results. Lenders that use Mirador’s platform experience an average 59.9% application pull-through rate, 69% lender time savings, 40-50% increase in loan volume and $1,550 average cost savings per loan. It takes a borrower about 10 minutes to complete the Mirador loan application process vs. the traditional 30+ hours of confusion many endure with traditional lenders.

Removing friction from the small business lending customer journey has never been more important. By working together with cutting edge fintech companies, like Mirador, banks and credit unions can maintain their rightful place within communities while also offering a delightful customer experience.

PARTNER TO COMPETE

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Process

ProductPeople

Technology Based Growth Oriented

User Experience Driven