Lending has since gone digital, and customers love it, leading to a surge in digital lenders offering various loan products via mobile apps.

And when it comes to anything digital, speed and efficiency are usually the top priorities. So, it’s little wonder why many lenders assume that quick cash transfers and rapid loan processing are the sole concerns of borrowers. 

However, customers’ expectations of digital lending are more than that.

To gain a profound understanding of what influences borrowers’ choices among various lenders so you can make informed decisions when designing your lending product, we’ll shed light on the key factors that guide borrowers in selecting a lender in this article.

Our data point covers borrowers’ pain points, needs, and the features they desire from a lending app, experience moments that give them the most satisfaction, and more.

Digital-led onboarding experience

In almost all markets, borrowers overwhelmingly favour a digital-led onboarding experience over agent-led methods. That is, the average user of your lending product wants a digital, self-onboarding process rather than going through a staff or agent.

In this approach, the lending app itself needs to guide borrowers through a low-touch process to onboarding themselves, minimising the need for human interaction. 

With increasing regulations around the financial market, it can take time to digitise every step of the onboarding process, leading lending brands to rely on agent-led onboarding. 

The pain of agent-based onboarding, however, is that it often involves phone calls or live chat, making it a high-touch, personal interaction experience.

Borrowers, frequently seeking quick cash solutions, prefer the convenience of completing their signup process without relying on human interactions.

Therefore, implementing a seamless, low-touch in-app onboarding process can significantly benefit your lending business and align with borrowers’ preferences for efficient digital interactions.

Reasonable interest rates

Next, reasonable interest rate. For most parts of the digital lending market, lenders typically charge interest rates ranging from 48% to 120% per year on loans. For short, monthly loans, consider targeting a 4% to 10% rate.

These rates significantly impact borrowers’ financial stability, making it challenging to repay their loans. Moreover, borrowers expect credit to be both affordable and sustainable. 

They seek fair and reasonable loan terms that won’t leave them in a worse financial situation than before they borrowed. 

The easier they can pay back borrowed money and ensure the rates don’t fluctuate, the more comfortable borrowers get taking loans. So, charging a super-high as a way of covering lending expenses may not produce the desired result.

However, charging too little interest rate as a competitive edge might harm your business. The solution is finding a pace that balances both sides of the coin (lending expenses and competition) and still leaves you a profit.

Fincode offers technology-driven lending solutions that enable lenders to operate profitably at scale while reducing their lending costs.

Data privacy/security

Regarding data security, borrowers want the same thing: to trust you with their sensitive financial data and other confidential data during the loan process. Lenders who invest in the highest security features tend to win customers’ trust and, subsequently, customer loyalty.

It’s expected that your business doesn’t misuse this data outside of the provisions of regulations to the detriment of customers.

The breach of customers’ data privacy is often associated with unethical and wrong attempts at recovering loans. Agreed, recovering loans isn’t the most straightforward task; however, borrowers’ rights to data privacy are non-negotiable. 

Customer experience

Strive to give customers a better customer experience than competitors. It’s a universal business language. 

You need borrowers to run your lending business successfully; the more, the better. These are your customers, and their satisfaction is paramount. 

It’s vital to ensure they have the smoothest and most efficient experience when dealing with your business, all while staying within reasonable limits.

Borrowers seek out lenders who offer a swift and hassle-free loan process. They favour lenders who can meet their credit requirements promptly. However, it doesn’t stop there. The ultimate borrower experience should be comprehensive.

One essential aspect is the development of an effective customer support system. This is how you can set your lending business apart through an exceptional customer experience.

Value-added services related to loans

Think about other services you can introduce into your app to give customers wholesome experiences. For lending products, financial coaching is often valuable and can become a deciding factor for many borrowers picking your service. 

With the increasing ease of accessing credit daily, borrowers have more options and can be confused about what rate or terms to consider. Offering financial coaching in this regard will be super valuable. 

Borrowers seek out financial experts for credit and money advice. However, they often prefer lenders who demystify financial jargon in loan offers, making them feel at ease to take up loan offers. This is crucial in alleviating fears of falling prey to loan sharks.

Also, consider investing in educational materials for borrowers, such as blogs, social media posts, or email updates. 

Mobile presence

As a lender looking to grow your business successfully, it’s important to know where to play to win. 76% of borrowers prefer to take loans via mobile apps simply because it’s easier to access and handy. 

The overwhelming preference for digital channels positions them as a priority for lenders in engaging their customers. It’s widely known that building a mobile application for your lending business is expensive. 

However, you can get your lending mobile application with Lendsqr at a fraction of the cost of your proprietary building efforts.

Furthermore, you can dominate the digital space and cater to borrowers where they’re most comfortable. Sign up to get a web application and mobile application on Finslack, with which you can immediately start lending.

Building a Lending Product?

In case you’re considering building a lending product, we write this article to guide you on that path. However, if you want a professional technology partner to work with you to bring your bespoke lending product quicker to market, Finslack is your best bet.

Contact us here to see a demo of how we would help you do this.