With warmer weather on the horizon, many of us are thinking of ways to do a thorough spring cleaning. Time to throw out, donate or sell all the items you no longer need or forgot you had. From those jeans you’ll never wear or the appliance you bought because it looked great in the ad but never used. Don’t forget to throw out those antiquated loan application questions.
Wait…what? Seriously, they can sabotage your credit union marketing efforts.
Yes, much like the gifted fruit cake in the back of the fridge or the bell-bottom jeans boxed up in the attic, your loan application may just have collected a few cobwebs. In fact, odds are the application doesn’t even “fit” anymore.
Clear out those outdated, ill-fitting loan questions. When a consumer visits your site or branch, your first impression may very well be your loan application. For many members, this can be a daunting task with numerous pages, voluminous questions and a huge time commitment. Even worse, you already have much of the information for existing members, so why ask again?
And while many credit unions do help those the banks won’t and charge an appropriate rate to do so, based on the averages, charge offs were low across the board – 30 basis points for credit unions and 26 basis points for banks (seasonally-adjusted). Before we pat ourselves on the back, let’s evaluate why credit union charge-offs were so similar to the banks. How can we make more loans, help more people and take more risk?
To receive more applications and make more loans, streamline your loan application to just what you need to decide whether a loan is approved or declined. Of course, outliers will pop up, and you’ll need to speak with a few members to ask deeper questions. You’ll need to connect the dots on riskier loans to make them make sense. But think about the loans you are already approving: How much information do you request upfront versus how much data you need to make a decision?
In many cases, we are creating friction in the member experience. Asking too much, scrutinizing too much, receiving too few and frequently approving too few. Think about what your credit union really needs to make most decisions. Income, social security number and a current address. Delete what you don’t need like prior address, prior employment, current obligations, etc. Unless you truly need it to decide approval, why ask for it? If you already have or can get the information needed, why ask for it again? Many applications still include a table for members to enter their current loans and other obligations when much of this information will be included in their credit file.
Here are a few examples of what could be eliminated if you do not actively use it making a loan decision:
- Prior employment
- Prior address
- Current obligations
- Current assets
- Redundant questions for existing members whose information you already have
- Vehicle information (if members use your application to prequalify)
We see this time and time again with our credit union marketing clients. They are doing the right thing by marketing, spending a considerable budget for digital advertising and other placement, and we can see how many prospective or current members are visiting the site and clicking “Apply Now.” When we examine how many of those convert to completed applications, there is a gap. Sometimes the members get distracted but often they simply decide against completing the lengthy application, the multitude of questions and the sheer time commitment – especially if they assume they’ll be turned down. We can reasonably expect fewer completed applications to funded loans, but when the number is 40%, 50%, of even higher than 60%, we have to consider that ill-fitting, outdated loan application.
If we can streamline the process, more applications will be completed, more members helped and improved margins to your bottom line. Yes, you may see your charge-off rate increase, but with appropriate pricing you’ll see your income go up as well.
Help your credit union help more members by cleaning up your loan application and make applying for a loan the easiest task your members have on their to-do list today.
At Your Marketing Co., we leverage our 15 years of experience across dozens of clients to set your credit union marketing up for the best results. Let’s talk!