Five ways lenders can use data to perfect their disbursement and collection processes

The ability to make better quality decisions while streamlining costs is driving payments digitalisation in the lending sector. Gone are the days when a level of imperfect reconciliation is ‘normal’, disputes are ‘a cost of doing business’, and the payments department is simply seen as a necessary cost centre that is required to manage this, and not worthy of much attention. Customers have grown accustomed to knowledge at their fingertips, and in the case of lending, rapid disbursement and collection provides businesses with the tools to deliver a more seamless customer experience.

When it comes to perfecting the payments journey, happier customers translate into higher win-rates for the lender, and therefore increased revenues. Deepening customer engagement by leveraging data-driven payments can educate lending businesses about their customers and provide an experience which has the highest chance of success. 

How can lending business use data to perfect their payments processes?

1. Making faster, near real-time decisions

Sophisticated payment processing platforms will include real-time transaction reporting and data analytics which provide a panoramic view of the lender’s payments activity, improving visibility over incoming and outgoing payments while honing the ability to make efficient decisions. By replacing manual processes with automated tools, lenders can also reduce interruptions on payment cycles for repeat billing.

2. Increasing collection success to drive financial stability

Lenders should use data insights to provide clarity about customers that are likely to default on payments or who will need their loans modified. Certain payment processors provide insights to their lending customers about the optimal time to take customer payments and offer speedy settlement (T+0), helping to maximise success rates and improve liquidity. Some providers can also utilise extended decline data and account updater solutions which reduce cost-intensive manual updates.

3. Refining new product offerings

When looking to build new products and services, payments data can help lenders create solutions that are tailored to meet customer needs. Payments data can refine a lenders ability to understand their customers, meaning new products can be offered at strategic times to maximise the chance of commercial success. This is particularly relevant with lenders who use recurring or subscription-based models.

4. Perfecting the customer experience

The key thing lenders can do with the wealth of payments data now available is build a more sophisticated understanding of their customers. When lenders better understand their customers through real time insights generated from data about their payments activity, they can engage with them at the most appropriate moment to maximise commercial opportunities and provide that customer with a positive experience.

5. Leverage LMS insights & experience

Working with a payments processor who is integrated with loan management & lending platforms can provide valuable insights, sector experience and a real-time service. This equips lenders with a genuine understanding of their customers, gathering information on affordability and vulnerability. Lenders can also feel reassured that their payments partner can support the whole ecosystem of loan applications through to collections and reconciliations.

In conclusion, implementing a payments solution which is data-driven can be instrumental in sustaining profitability and longevity for lenders, as well as helping them to fully understand customer needs, preferences and behaviours.