4 Ways to Increase Application Pull-Through Rates
Consumer lending has evolved dramatically since the days of hand-scribbling paper applications at the local bank or credit union. The rapid growth of fintech has caused a disruption that can no longer be ignored. Financial institutions that offer lending services must adapt to new ways of doing business or risk getting pushed out of the market. A lender’s ability to eliminate friction in the digital application process has become essential to give borrowers the efficient approval and funding process that they expect. Four strategies, in particular, can convince potential borrowers to hit the “submit” button and increase a lender’s application pull-through rates.
1. Offer Rapid, Seamless Comparison Tools
Customers expect choice and simplicity in everything, including the consumer lending experience. Today’s borrowers shop around for the best product, comparing variables like rate, term and penalties. They want to be able to make these comparisons without filling out a full application. Consumers expect the origination system to have an embedded pricing engine that can sort through all available options based on minimal data entry. To boost close rates, manual data entry that is not absolutely essential should be eliminated from the pricing engine. In many cases, visually-driven click-through options can speed potential customers through the pricing process while providing a more appealing consumer experience.
2. Accelerate Application Intake with Data Feeds
Lenders should also avoid asking questions that can be answered through information feeds from data providers. Information fetch comes at a cost, but the revenue upside of higher application volumes should offset the cost of the feeds. As with pricing engines, the manual entry fields required to approve a consumer loan should be reduced to the lowest possible number. In many cases, only three instances of manual entry are needed to start an auto loan application pre-approval process: first name, last name and social security number. If the solution is configured correctly, it will automatically pull all of the other information needed to make a pre-approval decision, from credit reports to assets, income and bank information.
3. Adopt Automated Pre-qualification
Automated pre-qualification involves setting pre-determined business rules – like credit score and income requirements – to automatically approve or deny an applicant. When pre-qualification business rules are in place, it frees critical bandwidth from existing manual processes. While many institutions currently execute consumer loan applications in a straight-through process, providing full approval digitally in real time can unlock significant advantages for lenders.
4. Leverage AI to Enable Smart Automation
In addition to automated pre-qualification, machine learning and AI-enabled automation can further improve the application experience for customers. With AI/ML, decisions traditionally made by a human underwriter are instead made in real time by a data-driven program that follows business rules that are set in place by the institution, while also constantly learning and evolving under supervision from the underwriting team. AI/ML can dramatically speed up the approval process for potential borrowers who do not automatically pre-qualify. AI can also be used in providing counteroffers, orchestrating the loan application workflow and automating income calculation.
Bring it All Together with Seamless Communication
Investing in embedded and integrated systems unlocks tremendous potential in the form of time, cost savings and a better consumer lending experience. All events in a loan origination system should be conducted in real time, with alerts sent automatically to the right stakeholders. With seamless communication, these automated workflows and real time responses reduce friction within an institution’s consumer loan application process, leading to lower applicant attrition, a higher number of pre-approved applicants and increased funding rates.