Internet Bank Marketing with eDominate

Would your institution like to ...

Turn your Web site into a profit center for fee-based income?
Increase you loan volumes by up to 30%?
Turn superior online customer service into measurably improved revenues?
Cross-sell automatically with higher success rates?
Automatically link to partners and attract new business?

If so, eDominate has a complete online marketing solution that:

Generates fee-based income by providing advocacy for local businesses.
Drives more loan applications and can automate pre-approvals.
Delivers superior customer service by focusing on borrower needs and convenience during lending.
Cross-sells intelligently online based on individual borrower's needs and qualifications.
Opens new lending markets with unique partner communications and promotions.

Whether your focus is commercial, consumer, indirect, mortgage, or all of these lines of lending, eDominate can make your online lending a success. Ask us how, or consider this online marketing scenario:

What would you do for 20% more mortgage applications?

What would you do to prevent losing 20% of your mortgage portfolio?

Industry surveys suggest between 7% and 12% of mortgage applications are now originated online. And many financial industry insiders believe that over the next few years the percentage will double to at least 20% of applications starting on the Internet. National City Corp, who have been especially aggressive with their online home equity lending, already estimates that 30% of their mortgage applications to be originated online in the next five years.

With ever-growing consumer acceptance, ever-expanding technical capability, and never-ending competition, the online lending aspect of online banking has opened a new window to a financial institution's value proposition. Customers are willing, and sometimes even prefer, to engage their lenders online. And with the current market of mortgage lending, fearful homebuyers are applying at multiple lenders, hoping to quickly discover who might accept them ... making online lending attractive from both a bank efficiency perspective and from a customer service perspective.

So where does your financial institution stand? If 20% or more of mortgages will be originated online in the next few years, will you be providing those loans?

Can you afford not to?

LOST IN TRANSLATION
For most financial institution customers, the Internet is a worthy extension of the branch office and far more convenient: Open 24 hours a day, seven days a week, online banking is just a walk-to-your-computer away compared to a drive-to-the-nearest-branch. Back in 2000, there were approximately 14 million households using some form of online banking. By 2006, that number had more than tripled to 45.4 million.

Besides convenience, one of the reasons online banking has been so successful is the breadth of services customers can access online. The Internet environment may lack the face-to-face charm of branch operations, but it has certainly delivered a level of efficiency unmatched by even the best-run branches.

Embracing this shift to banking on the Internet, however, comes with a note of concern. By delivering a quality online banking experience for deposit accounts, and helping customers move towards less and less frequent branch visits, financial institutions may actually be losing business.

How?

By presenting an online banking experience that richly supports deposit accounts but failing to offer any true online lending, financial institutions have effectively shipped their customers to the Internet and marooned them there with inadequate services. The customer experience in finance demands ever-improving service – especially in an online environment – yet by delivering just a portion of that experience (robust deposit account services), many financial institutions are unconsciously pushing Internet savvy customers away.

MORE THAN JUST AN ONLINE APP
Despite the success of the first-generation online banking (i.e., deposit-account transactions), most financial institutions cannot yet deliver dynamic online lending transactions. There are many reasons why Internet lending has lagged, and for most institutions those reasons include:

Lending is a process, not a discrete transaction like an account transfer or payment, thus requiring a more workflow-focused Internet technology than deposit account management.
Lending is a group effort, with ongoing communications between the borrower and the loan officer, the loan officer and the loan processor, the loan processor and the underwriter, the underwriter and management, and back through the loan officer to the borrower, requiring both process-management and secure communications incorporated into the online lending solution.
Security concerns create barriers, specifically with financial institutions worried about the identity and validity of their online borrowers, and with technologies unable to meet the federal regulations and industry standards for identity verification in an online environment.
Cross-selling too complex for an automated, online system, plus the relationship building – so key to the lending process – typically requires human intervention to effectively match appropriate products at the appropriate time of need, and few if any Internet lending solutions yet provide this degree of intelligence.

While these issues are surely valid, the business case for resolving them is even more compelling.

The realistic future of 20% or more of mortgage loan originating online brings with it a whole new set of challenges and opportunities, including the assumption that consumer lending and commercial lending will follow pace. For those financial institutions choosing to pursue online lending, the obstacles to providing an effective, customer-friendly lending process are worth overcoming – especially to achieve first-to-market status, top mindshare among local customers, and the lion's share of those future loans originating online.

For those financial institutions choosing to wait, however, the rewards of early adoption are lost and the risks of falling behind increase: Not only will they lose borrowers to competitors who have sophisticated online lending, they will also lose all the secondary sales opportunities that come with winning a new loan customer – opportunities to open deposit accounts, cross-sell insurance, refinancing credit cards, etc.

So when waiting becomes too risky, how can we win with online lending today?

THE NEXT WAVE
Just as the first wave of online banking brought a new game to banking, so does online lending. First generation online banking succeeded by mapping teller functions to an Internet delivery, and so the next wave of online lending must map loan officer functions to an Internet delivery.

For example: At the beginning of any loan, borrowers need help researching and evaluating loan programs, gaining the knowledge and confidence necessary to apply. In the branch, a loan officer would provide that introduction, education, and alignment. On the Internet, an online lending system must be dynamic enough to not only display all the loan products, but to capture borrowers' goals and limitations, map potential loan products to those particular circumstances, and guide borrowers in choosing a product.

Once a suitable loan has been identified, an online lending system must intuitively walk the borrower through an application – just as a loan officer might walk a mortgage prospect through a 1003 form across the desk. Identity validation and "know your customer" rules must also be engaged with an online application, requiring compliant electronic identity fraud prevention to be part of any online lending solution.

In a branch environment, a loan officer would typically desire to pre-qualify a borrower based on information collected during the application. Similarly, an online system must collect enough initial data to pull a prospect's credit report, apply his or her personal financial information to a desktop underwriting system or approval matrix, and generate a pre-approval or rejection automatically.

Often a branch session would end there, with the applicant leaving to collect their financial records or begin searching for properties, vehicles, etc. In an online environment, however, the addition of a secure messaging system could allow the process to continue immediately, with applicants able to upload their financial records (tax returns, pay stubs, financial statements, etc.) in electronic format or fax them hard-copy to the lending institution.

More importantly, a secure messaging system also allows the applicant to ask questions, allows the financial institution to track and answer those questions, allows the loan processor to request further information from the applicant, and even facilitates the institution's team of loan officers, processors, and underwriters (internal or third-party) to communicate with each other in one centralized system for easy tracking and audit.

Finally, Forrester Research has repeatedly called product cross-selling the "Holy Grail" among financial institutions. With the passing of the 1999 Gramm-Leach-Bliley Financial Services and Modernization Act and the repeal of the 60-year-old Glass-Steagall Act, financial institutions are now able to market themselves across banking products, insurance products, securities products, etc. The nuanced details of such broad cross-selling are daunting for well-trained branch representatives, and even more daunting to present in an Internet environment. However, an intelligent analytic system that could align the borrower's personal financial goals, their creditworthiness, and available (approved) financial products in an automated matrix, would be able to cross-sell with tremendous success ... perhaps enticing customers to additional products even more effectively than face-to-face representatives.

THE EARLY BIRDS
In summary, the success of online banking and the growing demand for robust online lending put financial institutions at a strategic crossroads:

Early adopters, those willing to implement customer-focused online lending solutions, will reap the benefits of greater loan volumes, industry-leadership, and the additional deposits and ancillary product sales that accompanying consumer lending.
Slower adopters will be forced to play catch-up: engaging the market when online lending has become commoditized and expected instead of a service differentiator, and struggling to maintain customers as opposed to winning new ones.
While late adopters may actually lose lending and deposit business as savvy consumers make financial choices based upon service (and cross-selling) rather than loyalty or branch capabilities.

Financial institutions hoping to take advantage of the online lending space need to engage technology solutions that support customer-focused lending and buying cycles, overcoming as many of the obstacles to the Internet lending process as possible – specifically, issues of managing dynamic communications during loan processing, Internet security, process automation, and customer-focused online cross-selling.

Anticipating and meeting consumer needs for online lending can readily translate into increased loan volumes, greater revenues and deposits, as well as improved customer service and loyalty ... so if your customers are ready for online lending, are you?

Ask us how eDominate can help!