Solving the mystery of dropping online applications

As a credit union’s engagement with members and potential members occurs within digital channels, data models begin to reveal information about a series of puzzling mysteries. One such conundrum is the persistently high app abandonment rates among mobile and online users.

Forrester analysts have reported that online banking app abandonment rates are at an all time high. As our team created a digital loan solution for credit unions, we had lengthy conversations with consumers and lenders to better understand why potential borrowers were not seeing online applications until submission. What we heard boiled down to three main realities.

First, the online channel is by nature designed for self-help. Self-service in the digital age presents a double-edged sword for lenders. On the one hand, the prospects of anonymity and availability 24/7 lead many warm leads to cross the virtual door. On the other hand, the absence of social pressure to continue with a transaction makes it easy to stop whenever someone is inclined to do so.

A member who is starting to buy a car, for example, can access a credit union‘s digital loan solution just to use the payment calculator. If they leave to go and check the online inventory of a local dealer, the system may classify that as an application abandonment.

Second, consumer expectations for a sleek, simple and intuitive user experience design are at an all-time high. This is especially true when you are dealing with an established relationship. Members have an absolute expectation that their credit union’s digital banking services will pre-populate the data when logged in. They want technology to recognize who they are, where they are, and what they need – and hand-deliver personalized content without having to search for it.

When consumers are disappointed online, their already short attention span becomes even shorter. They’ll just be bounced back to another provider, which is often as easy as opening another app. CUNA Mutual Group research indicated that most credit unions would be happy with an online application that would take consumers five to ten minutes, provided the number of follow-ups with the borrower was minimal.

Third, and perhaps the most philosophical in nature, is the mindset of the lender. As our team chatted with staff at auto, real estate, and personal loan unions across the country, we began to see online abandonment rates being seen as a cost of doing (digital) business. In other words, there was a tacit acceptance of the high levels of failed transactions in the digital channel. Still others were totally unaware of their dropout rates. It is difficult to resolve a problem when the problem is not known or recognized.

Many credit unions at the forefront of digital transformation have deployed online and mobile strategies with a basic recognition that there would be a series of micro-failures along the way. This is a good thing, as it has undoubtedly enabled the staff to make innovative discoveries centered on the members and the experience. Online dropout rates shouldn’t stay in the accepted failures category for too long. This is because they can be improved, both in small and large ways.

Here are some talking points your loan team can consider when building a plan to stem the tide of online dropout rates:

• Investigate metrics. Is Your Digital Lending Solution Reporting Abandonment Rates? Is it the same for all types of users? Does this take into account the pain, the gains, the needs and the tasks to be accomplished of your various members at various points in the borrower’s journey? Are there any adjustments that can be made to give you a more accurate picture of who is leaving and why?

• Deploy a human-centered design. Even for credit unions with digital lending solutions that offer great data and reporting, it still helps to talk one-on-one with members who have used the solution. The idea is to empathize with a variety of users so that you can better understand the quitting triggers – whether they are on-screen or based on life circumstances. Maybe your online calculator is set by default for a 24 month loan, making car payments astronomically high. Perhaps users are caught off guard by disclosures or questions about GAP insurance. Is there a way to automate the follow-up of warm leads, whether it’s through personal outreach or an email sent 48 hours after the user leaves?

• Think back to “acceptable”. Determine the level of dropout rate you are currently experiencing. Is this level acceptable? Otherwise, set a new standard. Considered through the three realities above, are there any improvements that can be made, and how well do you expect those improvements to do?

Credit is one of the last companies to feel comfortable asking so much of their customers. As mortgages, automobiles, personal loans, and many other types of loans migrate to the digital realm, lending institutions of all types are forced to evolve to survive in a less tolerant environment. Post-pandemic consumers have lost patience with clunky and hard to navigate websites and apps. The fintech disruptors know this and have honed their skills and experiences for the on-demand economy, virtually eliminating the consumer hassle associated with borrowing money.

Unfortunately, consumers’ desire for fast, convenient, and personalized lending experiences paves the way for credit union members and others to have less than healthy financial relationships. With so many lenders vying for their attention, it’s easier than ever to ditch even one consumer-centric lender for another provider. Seen in this light, tackling dropout rates is shifting from a topic you might investigate in the future, to an immediate goal-driven imperative.

Kevin polinsky

Kevin Polinsky Senior Director of Sales AdvantEdge Digital, a mutual CUNA Madison, Wis.