Covid-19 has been a catalyst for change. A huge global nudge in the direction of doing things online. Because of this, borrowers expect easy online applications.
Get this right and loan books grow.
Get this wrong and 58% of people will never use your services again. Worse still, 6 in 10 of 25 – 34 year olds will tell other people about the poor experience.
NestEgg looked at a sample of 5,000 loan applications made in the three months before the pandemic. Already 80% of applications were arriving online. Unsurprisingly by the time lockdown was underway this crept up to 95%. Since lockdown has fallen only slightly to 93%. This is despite most of our credit union clients re-opening branches.
The message is clear. The ‘new normal’ is online.
Keep it simple
Amazon, Netflix and Uber set the benchmark for easy-to-use online services.
The amount of information an applicant must enter to trigger a loan decision based on credit bureau and open banking data is actually very limited. Some questions might only be useful for accepted loans or to help when assessing refers. These are best asked during follow up or later to ensure easy online applications.
It takes just 24 clicks to apply for a loan on NestEgg. To open a new savings accounts takes 36 clicks. To open an account at Monzo takes 45 clicks. With Barclays it’s 81.
NestEgg sequences the questions to get a decision as quickly as possible. To avoid drop off it is important that any application process can be completed in the shortest possible time. Should someone drop out, our Doc Request feature enables a loans officer to request supporting documents (like wage slips) after an application has been made. Conveniently these are then viewed alongside the loan application.
Easy applications don’t increase the risk of higher bad debt. Nor do they deliver poor outcomes for members.
A recent survey at Central Liverpool Credit Union found that members ranked the ease of application 9.7 out of 10. The overall service was rated 9.4 out of 10. Furthermore, 80% of members said that the Credit Union helped them to be more confident with money management.
Since going live with NestEgg, bad debt has fallen and the loan book has grown.
Grow the loan book
NestEgg’s decision workflow is an optimised, tried and tested application processes that minimises drop off. It’s really easy to integrate with your website.
Importantly NestEgg enables people to join and borrow at the same time. The priority is to get the loan application in. An individual can join a credit union once they’ve accepted a loan or offer to open a savings account. There’s no reason to create dormant accounts or pay for ID checks for people that walk away if they’re declined. And that’s if they get that far. Research suggests that 1/3 of people will abandon an online purchase because it requires them to sign up for an account first.
Between January and May 2021, the number of applications for loans more than doubled compared to last year. Over the same time the value of loan applications almost tripled.
Covid-19 transformed the Credit Union’s delivery model. Now fewer than 5% of loans arrive face to face. The average age of a borrower has fallen from 34 to 28 during the first five months of 2021. And this is more than the impact of the pandemic. The Credit Union was as busy as ever during the first lockdowns.
Our partnership with NestEgg is key to growing and developing our loan book, bringing noticeable member benefits and improvements whilst making our workflows easier to manage. We have already seen our average loan size increase coupled with a reduction in processing costs which makes us more sustainable in the longer term. Rob Shearing, CEO, Wolverhampton City Credit Union
And Wolverhampton City Credit Union isn’t an isolated case. Since January this year NestEgg clients have seen 25% growth in loan applications compared to the same period in 2020.
Ready to grow?
Sign up our services now and you can be ready in September. Get the loan book back on track after lockdown. Our approach is flexible. Take a look at how we run online applications for Knowsley Mutual or Castle & Crystal Credit Union too.