Mastering customer-centric communication to elevate the lending experience

Kris Frantzen, Senior Product Manager – North America, Temenos

From the moment a borrower expresses interest in getting a loan to the final repayment, a bank’s communication strategies shape the customer’s perception of its lending process. Many financial institutions underestimate the impact communication can have on their ability to deliver a positive experience. The moment a borrower feels confused or stressed due to inconsistent communication, a bank risks losing them to one of the many fintechs in the market. 

For many financial institutions, consistent, empathetic, and transparent communication within their loan origination process is a struggle. How can banks deliver a positive customer experience through communication and differentiate themselves from the competition? With customer-centric communication.

There has been an industry-wide emphasis on digital transformation and the modernization of banking operations. However, the foundation to success regardless of the latest banking trends is happy customers.

Customer-centric communication involves tailoring interactions and messages to align with the unique needs, preferences, and concerns of borrowers. It shifts the focus from a transactional approach to fostering meaningful connections, placing borrowers at the core of the lending experience.

Customers should be at the center of everything a bank does including its communication strategy. Whether it is the details of products, updates around a loan application, or the messaging used in marketing collateral, customers should be at the center of it all. 

A true customer-centric communications approach embraces three key elements:

• Transparent and clear messaging
• Proactive and timely updates
• Personalization and empathy

Building trust through transparent communication

Transparent communication is the cornerstone of a positive experience in the lending industry. By clearly presenting loan terms and conditions, educating borrowers about the loan process, and communicating compliance and data privacy measures, financial institutions can foster trust and confidence among their customers.

When seeking financial assistance, borrowers often find themselves trying to comprehend complex loan terms and conditions. To help build trust, lenders should be as straightforward and clear as possible. This means providing thorough explanations of loan features, including interest rates, repayment schedules, and any associated fees. Embracing transparency also includes committing to full disclosures around any charges and penalties borrowers may face.

Another way to build trust is to empower borrowers with knowledge about the bank’s loan process and what it entails to remove any doubt and help customers feel confident enough to complete it. This could be done by offering step-by-step tutorials, offering guidance and support, or simply having a resource hub where they can find answers to some of the most frequent questions.

Implementing proactive, timely communication

We've all encountered the exasperating situation of realizing we have a morning doctor's appointment because a reminder wasn't received. Reactive communication like this only leads to anger, frustration, and confusion. Rather than waiting for customers to initiate contact, proactive communication involves reaching out to borrowers preemptively with relevant and timely information.

For example, when an applicant hits submit, they are excitedly thinking about the new car, home, or debt they’re going to clear. And if they don’t find out if they got approved instantaneously, they’re anxiously waiting for the decision. Sending them updates to let them know where they are in the process helps reduce uncertainty, encouraging a sense of trust and partnership. A simple text message letting the applicant know that their documents have been received or that their address was updated lets them know that the relationship is more than transactional. 

Then, follow up. Just because the funds are dispersed doesn’t mean the relationship should end, in fact it should be just the beginning. Whether it’s personalized offers regarding their circumstances or offering assistance and guidance for loan repayment, show customers you truly care about their financial wellness by following up.

Beyond the transactional aspects of lending, borrowers now demand experiences that feel personal and relevant to their current circumstances and aspirations. Personalization and empathy in lending go hand in hand, in shifting from standardized approaches to tailored solutions that address borrowers’ unique needs.

Showing empathy and personalization

We may not be in a pandemic anymore, but the empathy that was encouraged for banks to display during that time is still very much needed. 

Empathy is more than an admirable character trait that should be practiced in daily life. It is an essential element of providing an exceptional experience. Customers have a myriad of reasons why they are looking to take out a loan and they hope their financial institution will demonstrate a genuine understanding of their situation and provide tailored solutions and support that aligns with their needs. By empathizing with borrowers’ circumstances and concerns, financial service providers can foster a sense of trust and partnership, and set themselves apart from emotionless competitors.

Finally, one of the most valuable things a bank can do is use its data to get a better understanding of customers. Leverage data about customers’ past product purchases, recent searches, and interests to offer products that align with their current circumstances. For example,  if a bank tracked a customer’s interaction with its auto loan page, that should be the offer the customer receives in the bank’s outreach rather than a non-relevant offer for its low-interest home loan.

Communication lays the foundation in creating a positive customer experience in the lending landscape. By embracing effective and strategic communication strategies through the entire lending journey, banks can make their customers feel valued, informed, and empowered.