Survey predicts rapid growth in smart loan applications
2010-07-07
A survey of more than 300 financial institutions found that over the next few years, banks will rapidly work to adopt "smart" loan applications, which take advantage of a bank's knowledge of each customer's banking history to partially automate and simplify the process.

The survey, conducted by the Lieberman Research Group, found that while just 18 percent of financial institutions already offered the applications, 71 percent said that they planned to offer them in the near future. In addition, 46 percent of lenders said they were already planning the project, and nearly two-thirds of those respondents expect the solution to be in place before 2012.

The smart applications help guide consumers through the application process and tailor the forms based on in-depth analysis of customers' current personal and financial situations.

These technologies will become even more important, as banks are predicting a sharp increase in online loan application volume. The survey found that banks expected their volume to increase by 225 percent through 2013, while credit unions expected to see a 55-percent jump.

Despite the efficiency improvements from the technology, banks viewed the advanced applications as a way to improve customer service and increase customer loyalty in banking rather than a way to make operations more efficient.

Sixty-one percent of large banks and 52 percent of smaller ones said that they would adopt the technology to better serve borrowers. Approximately 20 percent said that efficiency was their main reason, while fewer financial institutions said they wanted to increase loan application volume or that the technology was the "wave of the future."

The results reinforce an ongoing trend of FIs working to use websites and online banking as a way to give customers additional benefits and prevent customer attrition. A recent Fiserv report found that banks that offered efficient online banking options found a corresponding increase in customer loyalty - 49 percent of customers said that banking online made them less likely to switch banks.

The study also found that the increased customer loyalty also translated into better cross-selling opportunities. Researchers found that online banking customers were 13 percent more likely to maintain a savings account with the same bank and 10 percent more likely to have a mortgage there as well.

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