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Mobile Lending: The Expectations of Modern Borrowers

cell phones education

Contemporary borrowers want to be able to price, decide. and act on loans from their phones.

It’s a stark truth that some credit unions and community banks simply haven’t adapted their processes so that they fit into the palm of a smartphone user’s hand. This, even though the dominance of smartphone use in web browsing is an irreversible trend that is only going to grow over time. Financial institutions cannot afford to ignore the increasing expectations of cell phone–dependent clients—and doing so is probably a lot less expensive than they think.

The Cost of Forsaking Process Adaptation

mobile bankingWhen financial institutions opt out of updating their account opening and loan origination software, they aren’t saving money so much as risking their reputations. A bad mobile experience tells your customers that their needs aren’t your priority. How many of those digitally sophisticated customers can you afford to lose?

And lose them you definitely will as they follow the Pied Piper tunes played by other lenders who are excited to pick up your slack. You see, everywhere you look are lenders who realize the value of going mobile and are positioning themselves to take your place. Make no mistake: Quicken Loans’ 2018 Super Bowl commercials with Keegan-Michael Key had their sights set on the lenders who are lagging behind in client-focused tech upgrades.

Quicken Loans wants to peel away young, affluent customers who judge the aptitude of lenders based on their ability to answer their questions and deliver a product through a language of graphics and swipes.

In case you didn’t see them, the ads feature a young couple sitting in an office across the desk from a bald, middle-aged loan officer. “Yeah,” he says as the couple exchanges confused looks. “You can get a mortgage that avoids PMI, but there’s no way to avoid MIP on an FHA. Now there’s …”

Mr. Key, playing the role of a translator, rolls out on a desk chair and shows the couple a cell phone. “Hey, this will help,” he says.

The next frame shows the Rocket Mortgage homepage, as the narrator intones, “Rocket Mortgage by Quicken Loans makes the complex, simple. Understand the details and get approved in as few as eight minutes.” As the camera moves back, the couple dismisses the loan officer in favor of the cell phone. The message here is clear: Your competition understands that borrowers want clarity and convenience, and your challenge is to be sure that you are meeting those expectations.

Mobile: The New Must-Have

For financial institutions, technology upgrades are a requirement for staying ahead of the market and meeting customers’ expectations. Lenders with online lending programs optimized for mobile phones are following advice their grandparents might have given: Meet people where they are, not where you want them to be.

smartphone and mobile banking

The question all lenders should continuously ask themselves is whether their current loan origination system maximizes their customers’ online experience, allowing you to lend anywhere, anytime. That is the central service standard lenders need to meet and the single objective when starting or improving your online lending experience.

Gaining Momentum With Mobile

A 2018 study by the Pew Research Center found more than three-quarters of adults have a smartphone. While distribution is roughly even between men and women and among racial and ethnic groups, the distribution by age, income and education shows wide gaps. Smartphone ownership is:

  • 94% of ages 18-29
  • 89% of ages 30-49
  • 73% of ages 50-64
  • 46% of ages 64 and over

Those with college degrees or annual income over $75,000 have smartphone ownership rates exceeding 90 percent, while those without any college education or incomes below $30,000 have ownership rates below 70 percent.

cell phone usage

Mobile lending has become the method of choice for many of the young, affluent customers—the very people who will soon be the backbone of your portfolio. A 2015 Federal Reserve study found that 38 percent of all bank customers, a calculation that includes those without a cell phone, used mobile phones to at least get information about their accounts. By 2018 that number had grown to surpass 50 percent. The trend is obvious and not to be ignored!

It’s not hard to imagine some of the primary reasons people might switch banks. One of the first that comes to mind is moving to find better interest rates and lower fees. But an almost equally compelling reason for many age groups is to get a better digital experience. Forty-seven percent of customers aged 25 to 34 reported they would switch for online/mobile services, compared with 54 percent for lower fees and rates. This is an extremely narrow gap that demands immediate attention.

cell phones education

Maximizing customer convenience is just as important as advertising low rates and fees. If you require a driver’s license as a stipulation for a loan, these borrowers don’t want to be told to stop by your branch or even scan and email stipulated documents. Instead, they expect to be able to take a picture of documents with their phone and send it to you within a few seconds—which is what you should want too.

And while age matters, these studies also show that mobile usage is increasing sharply among all age categories and incomes, including among older consumers. Your institution’s future is at stake if you’re not keeping up with the convenience borrowers expect, and providing that level of service requires advanced technology. You want to meet your customers where they live.

What do the ubiquity of mobile phones and the increase in their usage mean for financial institutions? For those who refuse to ride the trend’s wave, it could quickly mean devastating customer attrition. We know this thanks to a 2018 study by the University of Southern California’s Center for the Digital Future, which found that more than one in three bank customers under age 45 would switch their primary bank for “better online/mobile services.” Are you ready to lose one-third of your customers to a better experience?

These trends are clear. How are you addressing them? Talk to us—we’d love to discuss your mobile strategy.


Written by Jim DuPlessis. First published at TCI Credit.


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