Leaders in Lending
Leaders in Lending

Episode · 1 year ago

Delivering a Better Digital Experience to Earn Trust & Loyalty


Building trust and loyalty in the digital age is an ongoing challenge many businesses face.

The question always comes down to: What investments should you be making to enable a digital experience that will leave your customers wanting more?

Jeff Keltner, Senior Vice President of Development at Upstart and the host of the show, shares his thoughts on what your financial institution needs to succeed in the modern world.

Jeff discusses:

- Three things a financial institution needs to offer their customers to earn loyalty

- Improving beyonddigital experiences that don’t meet expectations

- Three tips for enabling the digital experience

- The evolving value of the high-touch, person-to-person experience

Mentioned during the podcast:

- Episode 27 w/ Vince Passione from LendKey

- Episode 22 w/ Mark Pregmon from USAA

- Episode 7 w/ Jim Deitch from Teraverde Management Advisors

- Episode 3 w/ Robert Pirelli from TCF Bank

- Episode 2 w/ Cathy Myers from First Financial Bank

To hear more from Leaders in Lending, check us out on Apple Podcasts, Spotify, or on our website.

Listening on a desktop & can’t see the links? Just search for Leaders in Lending on your favorite podcast player.

And I think the question that many financial institutions have is how do we transition that trust, that loyalty on that relationship from a world where that was based on person to person relationships in a singular physical branch into a digital world? You're listening to leaders and lending from upstart, a podcast dedicated to helping consumer lenders grow their programs and improve their product offerings. Each week here, decision makers in the finance industry offer insights into the future of the lending industry, Best Practices around digital transformation. In more let's get into the show. Welcome to leaders in lending. I'm your host, Jeff Keltner. Today I don't have a guest, but I want to share with you a couple of thoughts, based on many ongoing conversations I've had, both in this podcast and in my regular conversations with a variety of financial institutions, about a couple of topics that are can repeat discussions. Things seem to come up over and over. I was struck by this theme in my recent episode with Vince Passion from Linkey, when he said how do you show me that you know me, and it really got me thinking. One of the through lines of every conversation I have with financial institutions is the question of relationships and trust and the kind of that the relationship that's built between the FI and the consumer. And I think the question that many financial institutions have is how do we transition that trust, that loyalty on that relationship from a world where that was based on person to person relationships in a singular physical branch into a digital world? And I've really got asten a lot of time thinking about this topic. I want to share with you my perspective on what I think it takes to earn that kind of trust and loyalty in a digital age and then what kind of investments institutions I'll be making to enable that for their customers. So, in my mind, is opposed to kind of well call real estate and relationship with individuals. I think there's really three things that an institution needs to be able to offer their...

...customers to earn loyalty. One is good, too, is better. You can offer all three. That's kind of the best, but I think those three things are can I offer you better rates on the products right? Can I offer you better processes? Mark Pregman said in our episode, you need to make things fast, easy simple. Can I do that better as your existing relationship by ancial institution? And third can I give you better advice, better offers? And one of the other kind of through lines in this was how do we leverage our relationship to proactively position things to customers? And I think Jim died in my our episode when I talk to him, said, you know, how do you grasp the customers whole balance sheet and make the right advice and products available to them? So I think those are the three things in institution needs to focus on delivering to their customers if they want to earn the right to not only have one one product with that customer, but multiple product relationships. Better rates on the products they offer, better processes and how they can go through that experience, and better vice on products you might not be thinking about her which products are a great fit for you. And I got a mortgage and I actually rate shots. So number one, can you give me a better rate? And I found that an online an online lender, could give me a better rate than my current banking institution and I was willing to take that. So and to my banks credit, they said, Hey, Jeff, we can't match that rate, you should take it. But a couple of years later they called me and said, Hey, Jeff, rates have come down. We think we can refinance you at a lower rate and so better rates. Good job, good advice, they called me. So that was great, but they're the experience started to go off the rails a little bit, right. So you know the banks as I said, Hey, I'd be interested in understanding what my rate could be and how much money I could say let's let's do this, let's try it out. So it's a great and they emailed me a digital application, best in class, recently revamped digital experience. It's good start. And of course the first thing that the form asks me is what's your name? Where do you live? And I said, well, I live in the house and I'm trying to refinance. So all this information that institution I had been banking with for a number of years had about me was not represented to me right, and so my experience was now saw I was typing in all this information that they had. What's your annual income? Right? So now the process wasn't...

...great. Only did they not prefill information, but then when it came to documentation, I was asked uploaded driver's license. Well, you've already done KYC on the already. Have you know, my investments with you, my my checking account with you. I was asked to upload a bunch of, you know, past jobs and information on my wife's s Corp and all this information that wasn't really relevant and meant much of which the institution already had or could have determined from the information they had. You don't need my bank statement's you're my bank. You can. You can just look at those information. But that wasn't that easily available right. And so all of a sudden I'm in a world where I'm going through a process. It looks like the process for an institution with which I don't have a relationship. So didn't deliver on a better process. And then it is we're getting through the process. I kind lot of people get a helock along with their mortgage for a liquidity is. She's like a can I get a helock to and I said, Oh, I guess you could do that. So they missed the opportunity to actually advise me that when you're getting any mortgage you can get you a helock to. I so let's let's finish the mortgage and talk about don't we finish the mortgage and I go, how about the Helock? They didn't follow up. I did, and I so here's the application and if you want to guess how it experienced, it it looked a lot like my mortgage application. What's your name, where do you live? What's your income? All the questions I had just finished filling out, and a process that I thought was too painful in two days later to get a related product, a Helock, on the same house that I'm, you know, getting the mortgage on. It was like I had never interacted with the institution before, right, and that's the kind of experience that I think too often is is being delivered to our consumers and it results in a lack of loyalty. And so I think you can see there. You know, maybe they got better rates, but they didn't deliver on a better process, they didn't deliver on a better rate and the original mortgage. They didn't deliver on better advice and helping me make smart choices. And because of that, while I got my mortgages there, I didn't get the Helock and, and I'm not you know we really going to leverage that institution, probably for other products going for because I was kind of unimpressed...

...with the experience. And so I think that's a lustrative of the kinds of experiences that many institutions are able to deliver to their consumers today, and I think that's the challenge. Is, in a world where you're walking into the branch and you're talking to a person you know, that experience is maybe okay because your loyalty isn't based on that simplicity of experience. But in a world where I can wrate shop on lending tree from mortgages and a world where anybody can give me a digital process in my home right, whether they know me or not, then I need to actually deliver better and that digital experience then another player and order to earn repeat business from a customer, and I think that's the thing that we're seeing. So of course the natural question becomes, if I want to do this, what are the kinds of investments I need to make or decisions I need to take in order to enable those kinds of experiences, and that's a really interesting question and I have I like threes, so I've got three pieces of advice that I think are really relevant to the question of how do you invest in the technology, in the infrastructure to enable you to deliver on these three core capabilities to earn loyalty, better rates, better processes, better advice and proactive offers right. And so we go through these three things I think every financial institution ought to be thinking about as they build out their road map for how do I enable a digital experience? So number one, I think the natural inclination for many, and you can see this and that mortgage process I went through, is to digitize your current process. It's digital now because I asked you for the same twenty five documents, but I ask them for you in a Web page, is opposed to in physical form and a branch. And now it's digital. But the reality is much of the information and that I was being asked for, or that you need from any consumer in the context of a loan application or any kind of account application really is either information that is available digitally through a simpler mess of method and uploading a document. You know, ID verification, income verification, these things can be done with a variety of behind the scene services and not...

...take a picture of your driver's license or upload a pdf of your bank statements. You can simplify that experience a lot if you think about starting from scratch, and it's two simple examples, I think, are using interconnected services like plaid to look at bank account transactions, using your own interconnectivity to your existing depository system, if that customer has a relationship with you, to mean that we don't have to ask the customer to walk away from the computer, go grab a document or go to another website and download a pdf and re upload it. That process has a ton of friction and it results in a lot of customers not completing the process, and so the more we can keep them in that session in design a process that understands what's capable on that technology layer, the better off we're going to be. Another good example is the you know, not digitizing. Maybe your current process has a hard pull up front that's not standard in the digital world and if you digitize that process is opposed to thinking about in the context of an online application, what is the right process that I should build for this particular product? I think you're going to leave a lot of opportunity on the table in terms of the value you can deliver for customers and how well you can make that process work. And so I think really thinking from what we'll call first principles. My conversation with with a number of people on this podcast, I've talked about putting the customer in the middle of your conversation. So we really got to start with that question of what does the customers process need to look like? If I'm the customer walking into this experience, what would I expect and what could we do? Not what is my technology limitations or what is my existing process or my existing requirements from a credit committee, but but rethink those things and ask the question, what's the best experience I can build for that customer? And if you start with that customer in mind and building the ideal experience for them, that I think you'll get to a very different place and saying how do I take what I do today and pull it online? And unfortunately, if you do the ladder you often end up with a very hard road to go and actually improve those processes because it's a lot of infrastructure gets laid and it's harder to change a collect plumb in your house once you put the walls up. Man,...

...it's hard to change and so doing that right the first time makes a ton of difference. The second piece of advice I have is related, which is you really need to focus on and best in class experiences for the individual offerings that you have in this is a tough one. I commiserate with financial institutions because it's a difficult decision on. Do I want to have fifty providers on a technology side that each focus on one little thing, or do I want to have one throat to choke, one partner who can kind of do it all? And it's a delicate balance. But I'll just say that in the digital experience there's a huge difference between okay and really optimized for this product. And often when we have a vendor who tries to be a loan origination system for all kinds of loans, as an example, they're going to use the same process for each but of course the process you need for an unsecured loan or a helock or a mortgage or a car loan are very different. In building an optimized auto ending experience integrates into dmvs to identify vehicles, maybe without asking for a vent, versus building a mortgage product and maybe can tie into automated appraisal systems, of valuation systems or building an unsecured system the maybe wants to be totally automated because you don't have those kinds of security requirements to look at collateral. Those are very different experiences and I think, at least today, most of the monolithic vendors don't have highly optimized experiences in each of those asset class areas. And so when you go with a single solution again you're kind of starting with the institutions needs and capabilities of mind and not as much with what's going to deliver the best experience for the consumer. And ultimately it's that best experience for the consumer that drives loyalty, that drives retention, that drives repeat transactions with an institution right that drives trust. And so if you're focusing on the trust, you really have to again put that customer at the middle of your debates, of your conversations, of your planning, and figure out how do I deliver the best experience, and that should drive the decision. If that's a single vendor, awesome, but really you have to make that decision with what can I do to deliver the best experience for the...

...consumer, for my customer, and what are the places that the pieces of parts, the partners that enable me to do that? And I think often you'll find that that is not a single solution. Is going to be a couple, right, is going to be a couple of solutions, but that each of those solutions are so much better at what they do that is better to have those than a singular and again, I know this is a tough decision. There are real limitations for every institution in terms of the number of partnerships they can manage, the technology they can integrate. But I think it's easy to underestimate the value of a highly optimized solution. And the more you can think about getting to that ultim optimized solution for each product, each product that's important to you, the better you're going to deliver on that promise to your customer. Right, the better going to show them that you know them. In the third area, I think that is really important to invest in and I think this is something that's will call below the waterline and many instances, and so it's easy to kind of forget or neglect or or get left behind as you're thinking about the consumer facing applications I'm going to get brand new mortgage origination or autolone origination or personal own or a small business origination in your commercial real estate. Is what I'll call the connective tissue between these systems. Because, just like my experience in the mortgage it's great if I've got a highly optimized experience. I wouldn't argue that was but you know, hop the highly have them experience. But if I walk into that highly optimized experience and can't bring in all the information that I have about you as a customer into that experience I've I can't pre you know, not ask you your name and your date of birth and your address because I know those things, then I'm under utilizing my ability to really provide value to my customers and to show them that I know them, to highlight simplify the process for them, but also to highlight for them the relationship that we have and the trust has been built in my ability, as a your current partner in your financial institution, to actually deliver a better experience. And so investing in how do I take the data that's being generated and any individual system, be at a core system, crm system alone origination system, right and make that data available both to other...

...systems, right, so I can prepopulate an application, I can have you know crm that I'm running data marketing on and to do proactive offers that understands the current products that you have. All those things are super valuable and I need to make those connected to not only other systems but also, really importantly, make them available to my teammates and the places they are so that when I walk into a branch or, I call a call center or I open up my mobile phone and I'm talking to a person or interacting with different system that it has a complete picture of the relationship I have with the institution, whether that's for underwriting purposes, right, to understand how I can better underwrite your risk because of the relationship we have in the information I have about your repayment on current loans that you have, your depository behavior, of the investments that you have at my institution. Those help me better understand risk of you a better rate, simplify your process. I shouldn't be asking about those I know them. I've got to make sure that information is available to those systems but also available to your team members, right, that your team members, your call center employees, your branch employees, can actually reflect all the things you know about that customer and their conversations, the number of loans I have, the investments that they have, the checking account that they have. They can, they can look at that and actually understand the complete picture and I think this will what kind of last point on this is one of the other through lines. I talked about this with Rob Prelli and Cathy Myers and our episodes, is kind of the evolving value of the high touch experience, of the person to person human interaction experience that we can deliver, and I think that is still incredibly valuable, but it's shifting and how we want those employees to operate, because now so much of the processing transactional information I checked by balance. I wanted to posit a check, I want to apply for a product, I need to provide an ID or provide some information. Those things can be done in a digital or an automated way. We want to make it possible maybe to do that in person, but most consumers are actually opting to leverage their phones to do it from their couch at home. They're very...

...fine transacting in a digital way without a human interaction, but when it comes time to say, hey, why do I want to healock to go with my mortgage? How should I think about how I'm investing my finances? Should I roll my k into an IRA when I leave my employer or not? How do I think about a money market account versus money in my checking account? How do I plan for retirement? What, what term do I want on my mortgage? And what is this arm and I, Oh, and I don't understand. What are my options are? Consumers need us to help them navigate that world of financial offerings, of financial products. And when we offload the transactional, the administrative, the processing burden from those employees, we open up the opportunity for those employees to really engage in deeper, more advisory type conversations with the client. But to do that well, they need access to this complete picture of this three hundred and sixty five view of your consumer. I really do think that the winning players in the financial institution world in the future won't be those that are fully automated, pure digital, nobody to talk to. All of us, myself included, have moments I got I just want to call somebody and ask a couple of questions. So I understand that I'm making a good choice and what I'm doing here, whether it's refinancing a mortgage or investing for retirement or, you know, financing of a new vehicle, whatever it is, I there are moments where I go I just don't understand my options and I want to call somebody and have that conversation. And so enabling your team to do that, in part by training them to do it and part by enabling them with the data that they need to be able to have a full picture of that customer and give the best advice possible and also enabling them with the data about what that customers already doing. I think that is the moment when you're adding the most value, where you're leveraging those people resources and the most value added way, and you're doing it because of the technology investments you've been able to make, the infrastructure you've built that's offloaded some of that work so that your employees can that it. And the great thing is you find not only are customers happier when they can call in and say hey, I need some advice and get good advice, employees are...

...happier when that's the thing that they're doing. It's a much higher value added activity for them. They enjoy it much more and I think you know, while this was really a discussion about my my advice around, you know, investing in digital loyalty. I think loyalty will still be earned in part by being able to provide that human touch, that high quality advice, and your investments and digital aren't really opposed to that. They're working in conjunction with that. They're part of how you deliver that high quality, high touch experience in the call center, in the branch, on a text, whatever the mode may be. But it's done because you've made the right investments in a data connectivity tissue. You've provided the best experiences to automate the transactional parts right, you've really optimize that experience and now your staff and your customers can leverage the more expensive but maybe higher value added time of person to person interaction to have those really advisory conversation. So that's my advice. Now to sum it up, if you've made it this far, I appreciate it, but you know, I think you know, for those who are looking to earn loyalty in the next age, you've really got to focus on you know, how do I offer better quality products, better rates to my consumers? How do I offer better, simpler experiences to consumers because of the information I have about them right and how do I offer them better advice? Maybe tell them when they can refinance a mortgage or an auto loan or credit cards in a personal loan? How do I give them the best advice that can possibly have? In to enable that, you really have to invest in key technologies in three areas, starting from from first principles on customer experiences and not just digitizing the processes you have, investing in making sure you're getting the right experiences for each products are going to offer and not kind of peanut buttering over with a singular solution that's not that good for each because you really have to have optimized solutions for each each kind of product, and then making sure you have that data connectivity tissue that brings all those systems and, importantly, the systems and experiences together so that you can deliver not only the best digital experiences but the best human experiences to customers as well. And I think the institutions that are able to do those things are going to be the real winners in the future. Up...

Start Partners with banks and credit unions to help grow their consumer loan portfolios and deliver a modern, all digital lending experience. As the average consumer becomes more digitally savvy, it only makes sense that their bank does too. Up Starts AI landing platform uses sophisticated machine learning models to more accurately identify risk and approve more applicants than traditional credit models. With fraud rates near zero, upstarts all digital experience reduces manual processing for banks and offers a simple and convenient experience for consumers. Whether you're looking to grow and enhance your existing personal and auto lending programs or you're just getting started, upstart can help. Upstart offers an into in solution that can help you find more credit worthy borrowers within your risk profile, with all digital underwriting, onboarding, loan closing and servicing. It's all possible with upstart in your corner. Learn more about finding new borrowers, enhancing your credit decisioning process and growing your business by visiting UPSTARTCOM Ford Banks. That's upstartcom forward banks. You've been listening to leaders and lending from upstart. Make sure you never miss an episode. Subscribe to leaders and lending in your favorite podcast player using apple podcast. Leave us a quick rating by tapping the number of stars you think the show deserves. Thanks for listening. Until next time. The views and opinions expressed by the host and guests on the leaders and lending podcast are their own and their participation in this podcast does not imply an endorsement of such views by their organization or themselves. The content provided is for informational purposes only and the discussion between the host and guests should not be taken as financial advice by companies or individuals.

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