Lenders must strive for personalisation in the digital age

2 December 2015

Research by lending technology provider, Nostrum, has revealed that consumers increasingly value honesty and integrity ahead of speed and monthly cost when choosing a loan provider.

The major theme emerging from Nostrum’s third annual report into Consumer Attitudes to Digital Finance (which surveyed 2,000 adults) found transparency (84 per cent) is now second only to low interest rates (92 per cent) as the factor consumers consider the most important when sourcing a loan. The third most important factor is speed (73 per cent).

Several factors point towards an increasing preference for digital lending. Just 14 per cent of those surveyed could remember their last bank branch visit, while 53 per cent of those surveyed now use a mobile banking app.

People are also now more willing to accept the role of social media data in loan underwriting. 49 per cent of those surveyed aged 18-45 say they are open to the notion of lenders using social media as a means to make credit decisions. This represents a significant increase on the 40 per cent of the same age group who expressed a positive response to the same idea in 2014.

Richard Carter, Nostrum’s Chief Executive, comments: “The challenge to lenders is not just to provide lending facilities digitally. To appeal to existing or potential customers they need to be honest, transparent and able to provide a personal experience, all with a competitively priced product.

“Creating a personal touch and operating in a way that resonates with the consumer’s own core values, will differentiate in an increasingly busy marketplace.

“From a lender’s perspective, it will be pleasing to see customers acknowledging the role social data can play in underwriting. This may represent a recognition that consumers acknowledge their personal data will need to be shared in order to receive a higher degree of customer experience. At the same time, it indicates that if the lender is deemed trustworthy, providing this data will not be a huge issue.”

Aire Labs Co-Founder, Aneesh Varma, says: "We are encouraged to see this research provide further evidence that so many consumers are now highly engaged digitally when looking to take out finance. I'm particularly interested to see that consumers are increasingly comfortable with the use of new data in underwriting lending decisions. It's important for the lending industry to use this data to leverage new technology and make inclusive and appropriate credit decisions."

On the subject of increased digital acceptance, Richard Carter adds:

“Our survey found general indifference to questions about technology in finance, which in previous years have bought stronger reactions. This in combination with the ubiquitous presence of smartphones and increasing market penetration of tablets and mobile banking apps confirms that consumers have stopped viewing digital lending as the future, and are increasingly comfortable accepting it as part of their day to day lives.

“We see this as an opportunity and a threat for existing lenders, as it makes potential market entry by some of the biggest tech and social brands ever more plausible and likely to succeed.”

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