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When the COVID-19 pandemic hit in March 2020, millions of Americans had to adjust to statewide shutdowns that lasted for months. During that time, we adapted to living entirely different lives, and digital technology provided many of the solutions that made that possible.
When restaurants shut down, we started ordering food to go on mobile apps. When many of us left the office to work from home, we installed Zoom or Teams and were able to continue working in a digital environment. When we couldn’t visit loved ones, we taught our kids’ grandparents to use FaceTime. When we couldn’t go into our physical financial institutions, we relied on digital banking technology.
With vaccination efforts in full effect and businesses reopening across the country, the pandemic finally seems to be winding down. So, why aren’t we hearing about returning to “normal”? The truth is, many of us are still shell-shocked from what was a very traumatic time.
We emerged from a global pandemic into an uncertain economy, and many of us are simply stressed out. In fact, 84% of adults said in a recent survey that they experienced at least one emotion tied to prolonged stress recently, with the most common being anxiety at 47%, sadness at 44%, and anger at 39%.
In short, your borrowers are stressed out, and they’ve come to rely on digital technology to help ease the hassle of tending to everyday tasks. This means, delivering seamless and secure digital payments is more important than ever for your financial institution. In this blog post, we’ll discuss the benefits of providing a stress-free payments experience that delights your borrowers.
The digital payments revolution has already begun—don’t get caught behind the curve.
We talk often about the importance of providing borrowers with convenient and secure payment options because we realize that falling behind the technology curve when it comes to banking options can cause borrowers to take their business elsewhere.
Did you know that the pandemic has accelerated the adoption of digital products and/or services by at least six years? This means, if your institution was planning on extending digital payment options to your borrowers in the next one to six years, you are now even further behind the curve.
Offering convenient payment options can help reduce borrower default.
Your borrowers have busy schedules. Requiring them to take time out of their schedule to call or write and mail a check just to make their loan payment will lead to a longer to-do list for them. Most borrowers prefer the convenience that comes with being able to make payments online through their institution’s payment portal or from their mobile phone.
Delivering an easily accessible and navigable payment platform that is available 24/7 with multiple payment options (credit or debit card, checking or savings account, ACH payments) can help your institution reduce delinquency issues related to lack of convenience.
When your collections team does not have to spend time and resources contacting borrowers that are late on their payments (simply because they haven't had time to make a payment), it allows them to focus on borrowers that are truly delinquent and in need of a mutually beneficial solution.
Your borrowers expect digital payments options.
Digital payments have exploded in popularity, and research suggests that they’re here to stay. In fact, digital payments are estimated to increase 20% year-over-year in 2021 to reach $6.7 trillion. Further data suggests that nearly 70% of consumers intend to keep buying online for store pickup post-pandemic, and only 16% say they would revert to their old methods of payments post-pandemic.
In other words, your borrowers have come to expect digital payments tools. Offering these options is no longer a luxury—it’s a necessity if you want to meet consumer expectations.
Offering self-serve payments options frees up internal resources for your financial institution.
Did you know that more than 60% of U.S. consumers say their go-to channel for simple inquiries is a digital self-serve tool such as a website (24%), mobile app (14%), voice response system (13%), or online chat (12%)?
Giving borrowers the capability to self-serve can result in major cost savings for your institution. Rather than adding multiple employees to your staff to take phone payments, paying their wages and employee-related expenses, and training them, just making the initial investment in an online and mobile payment solution can be much more cost-effective in the long run.
Digital payments offer built-in layers of security for your borrowers.
According to Wired, “Online transactions from any reputable vendor are protected by SSL certificates (to protect data in transit), firewalls, and regular systems scans. Furthermore, consumers are empowered to add extra security layers to online transactions. They can create strong passwords, sign up for identity theft protection services, and keep their anti-virus software up-to-date.”
These additional layers of security can help minimize fraudulent activity, giving your borrowers—and your institution—an added layer of security.
Ensuring access to convenient and secure payment options will provide a seamless user experience for your borrowers. Since indirect borrowers make up a large part of many institutions’ auto lending portfolios and many of these borrowers will never visit your branch, creating an enjoyable digital environment is critical. To learn more about designing a digital payments experience that all of your borrowers will enjoy, check out our free whitepaper—no download required!
Mausami Wagh runs the Risk product portfolio for SWBC, with a particular focus on fraud and compliance in the Payments space. Mausami has over 8 years of product management experience and has been with the SWBC family for 4 years. Mausami holds a Master's degree in Information Systems from Northeastern University, Boston.