How leading non-bank lenders are helping customers achieve their dreams

A deep dive into competitive compliance. 

It’s no secret that customer onboarding can be a painful experience for all involved; for non-bank lenders it’s time consuming and costly. While for customers it’s intrusive and repetitive. You just want to close the deal, and they just want their money. But the law is the law and we all have to comply. 

So how is it that some non-bank lenders seem to be thriving in a highly regulated environment while others are struggling? We took a deep dive into a number of leading lenders, compared them to industry trends and peeked at some of the most compelling research to come up with an answer.  

It’s an experience-economy now.  

What’s going on? PricewaterhouseCoopers (PwC), a multinational professional services firm, found that 35% of respondents would switch service providers after just one bad experience. After two, that number jumped to 50%.  

35% of respondents said after one bad experience, they would switch service providers

McKinsey, a business consultancy firm, notes that the traditional banking sector is on notice, ‘Customer loyalty is at risk. Banks face an expanding array of new competitors…skilled at customer ease and experience [which] may, in the longer term, disintermediate traditional banks from customer relationships and reduce banks’ distribution margins. Another consequence is that players outside the traditional financial-services industry are starting to set the benchmarks for customer experience’.

This insight is what’s driving Australia’s leading non-bank lenders to success. Plenti notes in their annual report that their ‘mission to be Australia’s best lender rightly centres around delivering unrivalled customer experiences’. Harmoney says that ‘Our people focus on the things that they are good at: researching, designing and building better customer experiences’. While Wisr notes in their annual report that looking forward they ‘will continue to deliver exceptional customer experiences’. 

Players outside the traditional financial services industry are starting to set the benchmarks for customer experience.

And thanks in part to COVID-19’s accelerating influence, ‘digital inconvenience’ is something to be avoided at all costs. From another PwC research report, ‘Speed and convenience matter most, both hitting over 70% in importance to consumers. Those who get it right prioritise technologies that foster or provide these benefits over adopting technology for the sake of being cutting edge’.

This insight hasn’t been lost on Plenti who noted that, “Consumers expect simpler experiences, faster turnaround times, and better value. Consumers are, quite rightly, holding their service providers to a higher standard. They are also voting with their feet.”

Speed and convenience matter most, both hitting over 70% in importance to consumers.

A perfect storm

So what’s going on is that a perfect storm has hit. On the demand side, changing consumer service expectations, set by the likes of Amazon and Apple, have converged with a pandemic-accelerated desire for convenience. While on the supply side, industry disruptors are moving in, combining superior customer experience and technology to create a competitive differentiation while still being compliant. 

Introducing, competitive compliance. 

The result of a laser focus on customer experience is lower acquisition costs, lower cost to service, more readily defendable competitive positions and longer and stronger customer loyalty. In the context of AML processes, it means lower drop-off rates during customer onboarding.

According to a study conducted by Infoquest CRM, a satisfied customer will contribute 2.6 times as much revenue as a somewhat satisfied customer, and 14 times as much as a dissatisfied customer. It also means that the customer is more likely to advocate for your service, once onboarded. Studies show that 84% of millennials don’t trust traditional advertising anymore, and word-of-mouth (or customer advocacy) is becoming increasingly important. 

This is competitive compliance. 

Those who get it right prioritise technologies that foster or provide these benefits [speed and convenience] over adopting technology for the sake of being cutting-edge.

What’s the secret? 

So how do the best non-bank lenders provide exceptional onboarding experiences that are quick, easy and compliant? There are three key areas that individually aren’t remarkable, but collectively, are exceptional: collaboration, technology and process.  

1. Come together

A shared vision is important for any high performing team, but for non-bank lenders, it’s essential. Here’s a typical scenario: The front line team is focussed on helping the customer get their loan so they can start their new business, buy their new car, have the perfect wedding or whatever big dream they have. To do this (and ensure the customer doesn’t go elsewhere) they need to onboard them quickly and easily. Remember the PwC research? Speed and convenience matter most and one poor experience will make 35% of customers go to the competition. 

But by contrast, the compliance team is focussed on ensuring all legislative procedures are adhered to. I’s are dotted and T’s are crossed. Speed and convenience is not their concern – accuracy is. 

With both teams pulling at each other it causes friction, resulting in a poor customer experience, high drop-off rates, increased risk of breaches due to double handling, lost sales and bad word-of-mouth. 

The leading non-bank lenders understand this problem and address it in the most fundamental way possible – their company vision and guiding values. From the foundation up they specify and structure their businesses so all pieces work together for the ultimate customer experience. Pepper Money addresses it through their ‘can do’ core value, “We leverage the power of teamwork to deliver.” 

While Great Southern Bank codifies it in their ‘contribute’ core value, “We are all part of the success of Great Southern Bank and we work collaboratively…”. 

2. Transform to transfix 

Building from a value-based shared-vision, leading non-bank lenders embed, improve and defend their exceptional customer experience through technology.

As PwC explains, “[Leaders] use technology to minimise friction, maximise speed and efficiency, all the while maintaining a human element. It leaves consumers feeling heard, seen and appreciated. It has a tangible impact that can be measured in dollars and cents.”

It also ensures compliance is met.

Locally we see that Firstmac positions themselves as a challenger company ‘that stays ahead of the big banks by using smart technology’ to deliver their exceptional service. 

Plenti notes that their ‘business model is defined by digitisation and at its core sits Plenti’s proprietary technology platform. It is a business that is customer focussed, not only in words, but in actions too’.

Great Southern Bank explains that, “We commenced a major [digital] transformation program… benefitting our customers through faster and simpler services, while accelerating our speed-to-market.”

The leading non-bank lenders have seen the writing on the wall and are fully embracing digital transformation to fuel their customer experience. Every step of the way, from initial interaction to onboarding to loan origination, the customer journey is being digitised and personalised. 

The results? Forbes says it best, “According to McKinsey, customer experience focus and digital transformation practices drive customer satisfaction up to 30% and revenue up to 50%, making the connection between digital transformation and customer experience inseparable.”

Customer experience focus and digital transformation practices drive customer satisfaction up to 30% and revenue up to 50%

3. Better processes 

The last piece of the puzzle is process. Vision and values provide the intent, technology enables the execution and processes deliver the experience.  

Again, when we look at local non-bank lenders we see that processes have been simplified, digitised and automated where possible. But the key differentiator is that leading non-bank lenders have humans to intervene when needed.  

Great Southern Bank uses a stepped, online tool but has a live chat available should the customer needs assistance. Plenti uses a three-step, multi-question online process with phone, email and help centre documents available up front. Harmoney makes the customer log in but also offers a phone option if they need a human touch.

These processes provide quick and simple access for customers. Whereas for the companies, they get scalability, consistency and the ability to manage by exception. With frontline staff focused on human interactions and technology taking care of the ‘paperwork’, everyone wins thanks to exceptional customer experiences.

The upshot 

So there you have it. Leading non-bank lenders are helping customers achieve their dreams (while slaying their competition) by digitally transforming their customer experiences at every stage of the journey. They’re using vision and values, technology and processes to meet changing market needs resulting in higher loyalty, less drop-offs, better margins and more revenue.