Consumer expectations drive change in every industry, and that includes finance. With more regulations than ever limiting consumer lending markets, it is important to appeal to qualified customers. Highly-qualified buyers come with equally-high expectations from their financial institutions. They expect intuitive online banking, mobile access and flexible payment processing options from every lending institution with which they do business.
Reactions to Traditional Banking
Today’s consumer looks beyond traditional lenders to find finance products that work for them. This can be easily seen, as membership in credit unions dramatically outpaces account growth for traditional financial institutions. Credit unions often fall a bit behind larger banks in service offerings, but Millennials expect more technology from their finance company. Reconciling these changes is tough, but the simple fact is that to appeal to Millennials, lenders must offer more self-service payment options.
Given that Millennials are now the largest group of employed consumers, failing to appeal to this market is a critical business failure. So the question becomes, how can lenders engage with Millennials and other markets to build market share?
Understanding the Modern Consumer
Today’s busy professional has no time to spend on traditional payment methods. Between running kids to school, continuing their own education, getting to work on time, meeting social obligations and dozens of other activities, sitting down to write and mail a check is a bygone process. Some of today’s consumers don’t even own checks. Mail service is also on the decline, so simply finding a mailbox can be a major inconvenience.
The availability of mobile technology means that borrowers want to log in on-the-go and authorize their payment. The last thing they want is to add another stop to their already packed day. That leaves lenders with the option to offer alternative payment options or lose out on a potential loan.
Tricky Regulations Limit Options
Growth in cybercrime and identity theft has also led to more stringent regulations on the finance industry. Finance is one of the most tightly regulated industries, which makes it a challenge for lenders to balance regulatory requirements with consumer expectations.
In 2015, 73 percent of finance companies were victims of attempted payment fraud. Given the advancing numbers, it is no surprise that meeting compliance targets is a constant challenge as technology changes and fraud attempts become more sophisticated. While much of the compliance burden falls on the payment processing company, consumer lenders can take a hit to their reputations if something falls through the cracks. Meeting security needs and consumer wants often requires substantial investment in secure self-service payment options.
What Self-Service Payment Solutions Are Available?
From online portals to mobile apps that include payment options, self-service is ubiquitous in most payment processing platforms. The more options offered to consumers, the less likely borrowers are to miss a payment and fall behind.
Card processing with all interchanges offered is often the most accessible, though varying fee structures can make it less attractive to lenders. Accepting Visa and MasterCard payments is one way to offer increased payment flexibility, direct payment control and reduce fraud targets. Traditional options like payment coupons still have value, but checks are one of the most targeted methods for fraudulent payments. A bounced or fake check can cost a lot more than the payment processing fee associated with digital self-payments. E-checks, direct payment transfers, ghost accounts, p-cards, debit cards, credit cards, digital wallets, ACH transactions and dozens of other methods can be used along with a self-service portal.