Kohl Analytics Group has been collecting delivery channel information for consumer loans for several years. One of the things we have learned is that the conventional wisdom that the internet or web channel is the least costly is not always correct. Another thing we have understood for some time is that effectiveness trumps efficiency every time.
These are general observations that resulted from talking with hundreds of loan originators across the country
-
- Face to Face – The traditional branch channel is often the most effective. This is because in-person human interactions build a stronger relationship with the customer or member, giving more opportunities for cross-sales of add-on insurance and other products. Many financial institutions learned this in 2020 and 2021 as volume shifted to other channels.
-
- Web/mobile – Internet-initiated consumer loan applications have the efficiency advantage of the applicant entering much of the required data on their own instead of dictating it to a team member. However, this efficiency can be overcome by the ineffectiveness of this channel in dealing with incomplete applications. We have seen many different approaches from our clients in dealing with this.
Specifically, if team members are instructed to follow up by phone, email, and/or text on incomplete applications, considerable time can be spent that doesn’t result in any progress. Some of the best practices we see are to limit the effort team members spend on these activities. If the applicant doesn’t respond to one or two outreach messages, they are not really that interested, and no additional time should be wasted. We have also seen a more extreme approach where some clients don’t follow up at all if they don’t have enough information to pull credit. - Phone – This channel has been around for a while and is often the most effective as it combines aspects of the web and face-to-face channels. This is because, due to human nature, there is less conversation on the phone than in person and certainly compared to a chat or email exchange.
This is not to say that small talk doesn’t happen. It does, but effective scripts and training can enable the phone team to direct this conversation into offering solutions and cross-sales to customers or members that would be missed in the web or mobile channels.
Phone team members often tell us that those who choose this channel are often better prepared and If they don’t have all the information required, they can usually access it during the call.
- Web/mobile – Internet-initiated consumer loan applications have the efficiency advantage of the applicant entering much of the required data on their own instead of dictating it to a team member. However, this efficiency can be overcome by the ineffectiveness of this channel in dealing with incomplete applications. We have seen many different approaches from our clients in dealing with this.
Our experience shows that the only way to know the relative effectiveness and cost of different consumer loan delivery channels is to talk to the people doing this work daily and establish how much time they spend doing specific activities.
Kohl collects this data from many clients and can provide comparative benchmarks to help expose where your organization is doing well or poorly at a very detailed level. This enables management to pinpoint exactly where they need to fix things and the value of doing so.