Guide to Being an Effective Future-Led Lender

With the ascension of digitisation and the struggle to forge enduring connections in the face of evolving consumer needs, lenders are reimagining the future. As emerging technologies and alternative data sources open up a world of possibilities, savvy lenders are increasingly leveraging data analytics to make better decisions, protect against fraud and tailor their interactions to better serve customer needs. 

At every phase of the customer journey, from the pre-sale awareness stage to post-sale advocacy, lenders are rewriting the playbook for engagement and retention. The bar has been raised for easier, seamless, more secure banking journeys that increase customer lifetime value.

Our The Future-Led Lender Guide delves into the critical areas where lenders are future-proofing their digital operations and winning the battle for customer loyalty. We have organised these into five key pillars: Communication, Customer Experience, Time to Yes, Nurture and Advocacy, encompassing the end-to-end customer journey. 

Here, we look at the core themes within each pillar, including the challenges lenders encounter in delivering integrated, high-quality experiences – and how big data, machine learning and artificial intelligence (AI) enable new and innovative solutions.

Pillar # 1: Communication – attract the right customers

A future-led lender has an in-depth understanding of their customers, from their needs and spending habits to their repayment ability. By enriching the data collected from their own channels with quality second- and third-party data, they know how to identify prospects that closely align with their preferred customer base.

Data-driven personalisation tools empower lenders to engage prospects at the right time, moving them through the sales funnel with the right messaging. With technological advancements enabling the rapid transformation of raw data into actionable insights, scalable personalised connections can occur in real-time and continuously adapt to evolving customer behaviours.

Overcoming challenges: We look at common obstacles to attracting the right customers, such as marketing leads rejected for not aligning with risk appetite and poorly targeted campaigns that alienate prospects.

How to be future-led: Then we explain and give use-case examples of how data, analytics and technology solutions can help lenders find and attract more of the right customers:

• Identify new market opportunities through credit insights, consumer behaviour analysis, peer benchmarking and trends data
• Use customer segmentation to gain deeper insight into target audience sub-sets
• Harness look-alike modelling to identify ideal prospects
• Leverage AI for personalised marketing campaigns.

 
Pillar # 2: Customer Experience – satisfy and delight users

Creating a high-quality customer experience is paramount for future-led lenders. They place customers at the centre of their digital lending and service delivery processes, ensuring seamless and secure interactions across all platforms. Compliant, informed and inclusive credit assessment and verification decisions reduce onboarding friction and foster trust for a better user experience. 

Data security is considered integral to user experience. Data-driven decisions and advanced fraud prevention solutions prevent  threats and act on fraud attempts quickly while preserving the customer experience and boosting conversions. 

Overcoming challenges: We look at common obstacles that derail the customer experience, such as form abandonment due to complex processes and due diligence delays. And the challenge of balancing regulatory compliance and fraud threats with user experience. 
 
How to be future-led: Then we explain and give use-case examples of how data, analytics and technology solutions can help lenders satisfy and delight customers:

• Adopt fraud assessment and identity verification technologies that work behind the scenes without impacting the customer experience
• Implement multi-layered fraud prevention approaches that identify patterns of fraudulent behaviour and proactively detect anomalies and fraud signals  
• Use auto form-fill with integrated external data sources
• Incorporate biometric technology that reduces onboarding friction and builds trust.

Pillar # 3: Time to Yes - simplify & speed up lending decisions

Future-led lenders prioritise swift yet accurate credit decisions that shorten the time to approval. The automation of workflows and real-time extraction of applicant information reduces redundancy and data entry costs. Pre-configured policy rules and automated criteria that match the lender’s risk profile reduce time wasted with the wrong customers and increase straight-through processing for lower costs. 

Advanced analytic technology and predictive data complement credit scores, providing a 360-degree view of a customer’s credit risk and financial position. With this more reliable information, lenders can reduce default rates or increase approval rates without taking on additional risk. 

Overcoming challenges: We look at common obstacles that impede decision-making, such as manual processes and disconnected digital systems. 

How to be future-led: Then we explain and give use-case examples of how data, analytics and technology solutions can help lenders simplify and speed up lending decisions:

• Switch to new-generation credit scores with enhanced predictive capabilities 
• Use machine learning, AI and Cloud-based computing to process large volumes of disparate data across multiple sources
• Leverage bank transaction data for fast, informed affordability decisions
• Implement a digital decisioning platform that caters for different risk profiles and has customisable rules for improving pass rates.

Pillar # 4: Nurture – Create successful financial futures

Educating borrowers and enabling them to make informed financial decisions is a hallmark of future-led lenders. These lenders leverage predictive credit score models, consumer-permissioned data, and advanced analytics to gauge risk more accurately and provide explanations for credit decisions. 

Treating customers holistically and offering personalised reasons for credit approval or denial motivates applicants to make sound financial choices. Extending affordable credit to a broader audience fosters financial inclusivity and builds borrower trust.

Enriching conventional credit data with alternate sources can identify which ‘new to bureau’ or thin file applicants have the potential to honour their loan commitments with on-time repayments. This improved risk separation capability helps lenders increase their volume of profitable loans without an associated hike in the rate of fraud or non-performing loans. 

Overcoming challenges: We look at common obstacles to nurturing client relationships, such as opacity in credit decisions and low customer financial literacy.

How to be future-led: Then we explain and give use-case examples of how data, analytics and technology solutions can help lenders shift the emphasis to improving customer financial wellbeing:

• Use credit scores built on explainable AI (XAI) for transparent credit decisions
• Enrich conventional credit data with alternate data sources for more accurate lending decisions and personalised outcomes
• Employ innovative applications of transaction data to evaluate the spending and saving practices of first-time credit applicants
• Incorporate a biometric identity verification solution combining verification and authentication elements to verify identity in a single, seamless interaction.

Pillar # 5: Advocacy - Build lasting customer relationships

Future-led lenders view a new customer as the beginning of a long-term relationship. They support customers throughout their life stages by proactively anticipating their needs and helping protect against bad debt. Through omni channel communication platforms, they craft engaging and personalised connections that create brand stickiness for customer retention.

Untapped opportunities for cross-selling are identified using data analytics to gain insights into customer needs and preferences. Creditworthiness is assessed with better  accuracy, and real-time alerts spot behaviours and triggers indicating early financial stress, enabling lenders to minimise their risk exposure and proactively offer targeted assistance. 

When delinquencies occur, fair and humane customer engagement and seamless processes take precedence. This mutually beneficial post-sale connection fosters loyal customers who become repeat buyers and vocal brand advocates.

Overcoming challenges: We look at common obstacles to customer advocacy, such as missed cross-selling opportunities and difficulty in consistently identifying vulnerable at scale.

How to be future-led: Then we explain and give use-case examples of how data, analytics and technology solutions can help lenders build lasting customer relationships:

• Employ omnichannel communication platforms with built-in analytic tools for personalised outreach
• Leverage data analytics to identify right-offer, right-customer cross-selling opportunities
• Use analytic tools and financial vulnerability indicators to understand at-risk customers across portfolios 
• Adopt new-generation credit scores to help customers avoid defaults and assist customers in hardship.

This is a preview of Equifax’s Guide: The Future-Led Lender: Powered by Data, and Driven by Customer Experience, which contains insights and real-world use cases to help you harness the benefits of differentiated data, innovative analytics and advanced technology. View the full Guide here.

Contact Equifax today to learn how we can help fuel your growth as a Future-Led Lender.