According to the Adobe 2013 Mobile Consumer Survey, roughly 29% of men and 42% of women reported shopping for financial services using their mobile device, but only 8% actually applied for a loan or opened an account through that channel.
Mobile-oriented members may very well be researching your products day and night. But if they like what they see, are you providing them with the tools needed to take immediate action? After all, when that phone disappears back into their pocket or purse, there's a strong likelihood that your chance for new business may disappear right along with it.
Xceed Financial Credit Union ($851M, El Segundo, CA) is one of the rare institutions to have effectively put an end to the mobile lending stopgap. With an astounding 11.3% loan growth as of 1Q 2014, this institution is successfully attracting — and more importantly, closing — an impressive number of loans though this ultra-efficient touch point.
By relying on both mobile-optimized webpages, which allow members to apply for almost any product or service imaginable, as well as a mobile application that specifically targets auto loan borrowers, Xceed is effectively turning this channel into a branch held in the palm of your hand.
In the following interview, Ray Shams, the credit union's chief operating officer,explains what fellow cooperatives should know if they want to achieve the same results.
When did Xceed Financial first begin to explore the possibilities of lending through its remote channels?
Ray Shams: We launched CUNA Mutual's LOANLINER in 2009 and have been using it ever since. Our objectives at the time were to provide members with an easy-to-use option as part of our mobile strategy and to begin offering all Xceed Financial products and services through the mobile channel. Our predictions about mobile have come to pass, as we're seeing it become more mainstream every year.
What percent of your total loan applications come from these channels? How many of those are approved and funded?
RS: About 30% of our total loan apps come through our online and mobile websites. Currently, members can apply for all types of Xceed Financial products that way, except for business loans. However, we're finding that auto, line of credit, and personal loans are most popular with our members.
Our stats show us approving 41% of the loan applications that come through these pages, with a 59% funding rate. This channel is truly realizing its promise because it is possible for the member to close the loan without ever having to come into an Xceed Financial center.
Were there any barriers or hurdles you had to overcome to reach this level of activity?
RS: The main barriers to overcome were:
Getting the technology right. It has to deliver the promised simplicity and convenience, or consumers will feel they've wasted their time and may not give you another chance.
Educating members about these options. Early adopters are easy, but most people are wary of new technology, especially when it involves sensitive financial information.
What does the mobile application process look like from beginning to end?
RS: The time taken for either an online or mobile loan application is comparable to a typical in-branch application. Of course, mobile pages are optimized for a smaller screen, but other than that, the loan application process is similar to that online.
At this point, members are not yet able to use their phone cameras to capture data or prefill mobile forms. But our experience is that members who choose this channel are not put off by a smaller screen.
We also work hard to overcome the lack of personal interaction by keeping a Contact Us link prominent on each page throughout the application process. Since we're so accessible, we have less risk of a member getting frustrated and dropping the application.
When a member does click on the Contact Us link, they have several options. They can call a toll-free number, choose to start a live chat session, or send us a note via email and an associate will contact them by email or phone call, whichever they prefer. As with other features, our goal with the Contact Us link is to facilitate whatever mode of communication is most convenient for the member.
Forgo The Forms To Get There Quicker
At the 2014 Spring Finovate conference in San Jose, CA, several cutting-edge companies presented new ways to fill out forms efficiently on a mobile screen. However, one provider — California-based CUneXus — took a different approach by eliminating the need to fill out an application altogether. Instead, the company uses data from financial institutions to create preapproved loan offers based on the borrower’s credit score. The rates change automatically as the borrower modifies the loan terms. The prequalified borrower then agrees to the loan terms with a single click.
How do you handle the back-end activities like confirming identity, executing the loan document, etc.?
RS: We use different methods to confirm an applicant's identity, depending on whether he or she is already an Xceed Financial member. Members who apply online or via a mobile device are asked to supply the last four digits of their Social Security number, along with their full account or membership number. Once that information is collected, our system automatically fills in their information.
If an applicant is not yet an Xceed Financial member, we confirm the person's identity after membership but before funding.
For consumer lending, Xceed offers members several options for executing loan documents, and members can go with whatever is most convenient for them. They can also combine different methods.
We're finding more and more members prefer electronic transmission. For these members, our processors send the loan documentation via secured email, and the applicant then signs and returns the completed paperwork the same way. Documents can also be faxed to and from the applicant, and of course regular US mail and overnight FedEx are also options.
When did you start using the AskAuto mobile app and why?
RS: This is the only loan application currently available through our Xceed mobile app. We launched it just a few months ago, in January 2014, and we're pleased with how it's going. We've had 99 members download the app. In addition, 86 members are actively using it, and we've funded 22 loans through it.
We see AskAuto as an enhancement to our overall auto lending efforts, providing another avenue to originate loans and add value to credit union membership by making it easier for members to shop for cars and get their financing nailed down.
This car-buying solution from CUNA Mutual fits within Xceed's mobile application and allows members to scan vehicle identification numbers to get information about a particular make and model. Members also can view data, such as EPA estimates or average retail price, for comparable vehicles. When members find the right car, they can apply for financing directly from the app.
What other priorities or strategies outside of lending does Xceed Financial have for the mobile channel moving forward?
RS: Our plan is to completely integrate all Xceed Financial products and services into the mobile channel and provide a seamless experience for members by having single sign-on access, regardless of which vendor provides the service for us.
We're also researching video chat for mobile, which we think has promise, and we would like to launch a mobile payments product, similar to the Starbucks pay-by-phone app and Google Wallet. We think it's critical for credit unions to stay on the cutting edge of these technologies or risk losing relevance to their members.