Solving the Mystery of Online Application Abandonment
Addressing abandonment rates should be considered an immediate, purpose-driven imperative rather than something you may investigate in the future.
As more of a credit union’s engagement with members and prospective members happens inside digital channels, data patterns are beginning to reveal insights into a series of puzzling mysteries. One such conundrum is the persistence of high application abandonment rates among mobile and online users.
Forrester analysts reported abandonment rates for online banking applications are at an all-time high. As our team built a digital lending solution for credit unions, we had extensive conversations with both consumers and lenders to better understand why potential borrowers weren’t seeing online applications all the way through to submission. What we heard came down to three main realities.
First, the online channel is, by nature, geared for self-help. Self-service in the digital era presents a double-edged sword for lenders. On the one hand, the prospects of anonymity and 24/7 availability bring plenty of warm leads through the virtual door. On the other, the lack of social pressure to continue with a transaction makes it easy to stop whenever someone is inclined to do so.
A member in the early stages of shopping for a car, for instance, may pop out to a credit union’s digital lending solution just to use the payment calculator. If they leave to go check out a local dealer’s online inventory, the system may classify that as an application abandonment.
Second, consumer expectation for elegant, simple and intuitive user experience design is at an all-time high. This is especially true when you’re dealing with an established relationship. Members absolutely expect their credit union’s digital banking to pre-populate data when they are logged in. They want the 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 spans become even shorter. They’ll simply bounce to a different provider, which is often as easy as opening a different app. CUNA Mutual Group’s research indicated most credit unions would be happy with an online application that takes consumers five to 10 minutes to complete, provided the number of follow-ups with the borrower were minimal.
Third, and perhaps the most philosophical in nature, is the lender mindset. As our team talked with credit union auto, home and personal loan staff across the country, we began to see that online abandonment rates were considered a cost of doing (digital) business. In other words, there was a tacit acceptance of high levels of failed transactions in the digital channel. Still others were unaware of their abandonment rates altogether. It’s hard to solve a problem when that problem isn’t known or acknowledged.
Many credit unions at the forefront of digital transformation deployed online and mobile strategies with a baseline recognition that there would be a series of micro-failures along the way. This is a good thing, as it has no doubt empowered staff to make innovation discoveries that are member- and experience-centric. Online abandonment rates should not be allowed to linger in the category of accepted failures for too long. That’s because they can be improved, in both small and large ways.
Here are a few discussion points your lending team can consider to set a plan for stemming the tide of online abandonment rates:
• Investigate the metrics. Is your digital lending solution reporting abandonment rates? Is it the same across user types? Does it account for pains, gains, needs and jobs to be done of your different members at various points of the borrower journey? Are there adjustments that can be made to give you a truer picture of who is leaving and why?
• Deploy human-centered design. Even for credit unions with digital lending solutions that offer great data and reporting, it is still a worthwhile exercise to talk one-on-one with members who have used the solution. The idea is to develop empathy with a variety of users so you can better understand the abandonment triggers – whether they are on-screen or based on life circumstances. Maybe your online calculator is set to default to a 24-month loan, making car payments look astronomically high. Perhaps users are getting tripped up by disclosures or questions about GAP insurance. Is there a way to automate follow-up with warm leads, either via personal outreach or an email sent 48 hours after the user leaves?
• Rethink “acceptable.” Determine the level of abandonment rates you are currently experiencing. Is that level acceptable? If not, set a new standard. When viewed through the three realities above, are there improvements that can be made, and how much of a dent do you expect those improvements to make?
Lending is one of the last businesses that is comfortable asking so much of its customer. Now that mortgage, auto, personal and many other loan types are migrating to the digital realm, lending institutions of all types are forced to evolve for survival in a less tolerant environment. Post-pandemic consumers have lost patience for clunky, difficult-to-navigate websites and apps. Fintech disruptors know this and have honed skillsets and experiences for the on-demand economy, virtually eliminating consumer pains associated with borrowing money.
Sadly, the consumer desire for fast, convenient and personalized lending experiences is opening credit union members and others up for less-than-healthy financial relationships. With so many lenders vying for their attention, it’s easier than ever to abandon even a consumer-centric lender for another provider. When viewed through this lens, addressing abandonment rates shifts from something you may investigate in the future into an immediate, purpose-driven imperative.
Kevin Polinsky Senior Director of Sales AdvantEdge Digital, a CUNA Mutual Company Madison, Wis.