Omnichannel and Short-Term Lending

[Editor’s note: This is a blog post from Don Gayhardt, President & Chief Executive Officer of CURO Financial Technologies Corp. CURO Financial Technologies Corp. is a gold sponsor at LendIt Fintech USA 2018, which will take place on April 9-11, 2018 in San Francisco.]

The digital revolution continues to change the standards to which businesses are held across every industry. Today’s consumers know exactly what they want from their interactions with any company. They expect excellent customer service when interacting with their preferred brands, including a seamless retail experience and consistently excellent quality, no matter if they are in a brick-and-mortar store, online, or on the phone.

Research conducted in late 2016 noted that three things were apt to cause the average customer to end his or her interaction with a company. These included being transferred between multiple employees when seeking a resolution to a problem, long wait times, and having to repeat themselves during a transaction process. To solve these kinds of discrepancies between customer expectations and the quality of service provided across multiple platforms, more companies are taking an omnichannel approach to the customer experience—especially in the financial services industry.

In finance, one promising sector that stands to benefit from omnichannel solutions is the lending industry, including short-term lenders. According to the Pew Research Center, an average of 12 million Americans look to short-term lending institutions for financial support each year. The services provided by this industry have the benefit of being easy to access, quick to procure, and convenient for people who need funds for unexpected expenses that stretch their budgets. By nature, short-term lenders and their clients stand to gain significantly from omnichannel solutions. Below are three questions and answers about how this novel approach to customer experience can benefit both short-term lenders and borrowers.

1. What does the omnichannel approach offer businesses and customers in the short-term lending industry?

It helps lenders embrace fintech and move beyond multi-channel operations.

To best understand what an omnichannel approach has to offer short-term lenders, it’s first important to understand the definition of this particular strategy. The term “omnichannel” refers to a way of integrating business touchpoints beyond “multi-channel”—a business strategy where a company offers its customers multiple avenues for conducting transactions, but the avenues remain mostly isolated from one another, resulting in varying quality across these platforms. When a company employs a multi-channel strategy, its customers are likely to encounter inconsistencies between the myriad touchpoints typical of the consumer experience, causing unnecessary complications that leave the customer feeling frustrated. In contrast, a company that employs an omnichannel strategy leverages fintech innovations to remove these inconsistencies across conventional and digital platforms in order to create a streamlined customer experience.

In direct response to customer needs, omnichannel lending gives short-term lenders the capacity to create a simplified, universally satisfactory experience when people use their services. Loan applications are finalized with greater ease, direct advice from the company is readily available, and more targeted product/service offerings can be made based on customer knowledge. The result is an overall superior experience for the customer. This approach is especially important for today’s consumers, who are accustomed to conducting transactions online, where their needs are anticipated through targeted ads and one-click purchasing from online retailers.

The simplicity of omnichannel operations gives customers a sense of unimpeded control over their finances. This stress-free aspect may be especially important to those who seek the services of short-term lenders, as many of these clients turn to short-term loans when they’re facing an unexpected cash shortfall. In addition to added customer satisfaction, the simplicity of the omnichannel approach can reduce costs overall. This is due to the fact that customer satisfaction rates are higher, which drives business, and operations are more efficient, resulting in a steady, conflict-free flow of business.

2. What obstacles stand in the way of the mass adoption of omnichannel lending?

A lack of understanding and adherence to an outdated view of consumers hold short-term lenders back from embracing the omnichannel approach.

The omnichannel approach is simple in concept, which may cause some to wonder why it is still the exception in the short-term lending industry, rather than the rule. This can be attributed to the fact that many short-term lenders see the technology necessary to develop an omnichannel platform as expensive and ultimately irrelevant to their business. However, this mindset could not be further from the truth—long-term investments in omnichannel technologies are now necessary to succeed in the industry. These companies’ resistance to (or simple ignorance of) the omnichannel model is based on misconceptions about customers and a tendency to silo different lines of business.

Many traditional short-term lenders mistakenly see their clients as a single entity with essentially the same needs. However, modern consumers navigate a digital world full of personalized offers on a daily basis, and those who seek short-term loans want to see this same concept reflected in their lender. The second problem is an inclination to operate each marketing and customer service channel individually, causing each to become further isolated and inconsistent in terms of quality and breadth of service. Through data collection and comprehensive integration, an omnichannel approach gives companies the opportunity to avoid both of these costly blunders.

3. What is the best way for short-term lenders to implement an omnichannel model?

Small steps for short-term lenders can lead to big rewards.

Short-term lenders that are ready to take advantage of an omnichannel strategy can take several simple steps to set the process in motion. First, companies might seek to define a wider range of customer “personas.” To do so, they must invest in technology to collect customer data, which can help them analyze sets of behaviors that reveal where different factions of a client base encounter difficulty while trying to procure lending services. Once these customer personas are identified, the company can begin mapping out appropriate journeys that will allow these groups of consumers to navigate the short-term lender’s products easily according to their needs and behaviors.

After mapping this out, the company can evaluate where it can make the most impactful changes. Many companies taking the omnichannel approach find that these early opportunities for change are rooted in digitization and fintech innovations.

These first few steps should be followed by a commitment to development and maintenance. Once the decision to adopt an omnichannel approach has been made, there needs to be continuous improvement and maintenance of the strategy. For companies that make this commitment, the rewards have immense potential in terms of both success for the company and its customers.

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