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Here’s a harsh truth - in lending, disbursal is only the beginning - the beginning of a relationship with your customer that you must continue to hone.
This is what’s termed loan management or servicing. It’s a process that extends through the lending lifecycle, and can make or break your equation with a borrower.
Let’s understand this with a simple, day-to-day example.
Say you saved up for six months to buy a high-end laptop. You went to the store, the customer service was great, you got the right guidance, and bought one that suits your needs.
So far so good, right?
Two months down the line, you face a glitch. You call the service centre several times and get no answer. Finally, you get frustrated and decide to lug your laptop back to the store. Whether the laptop is finally repaired or not is now immaterial - the great first impression is already ruined. It’s unfortunate, but that’s how fragile first impressions are - be it in laptop sales or lending.
Fret not though. In this blog, the last of the series, we take you through the A-Z of effective loan management.
For starters, disburse efficiently
This one’s pretty simple. You’ve assessed the borrower and they’re a good fit. There’s no reason then, to make them jump through any further hoops. If you advertised “disbursal in five simple steps” then make sure you deliver on it. Disburse the full amount in one go, unless you’d earlier specified otherwise. Ensure you provide an EMI calendar and an amortisation table for full transparency and to provide clarity to the borrower.
Stay in the loop
A state-of-the-art loan management system should stay on the borrower’s pulse and cater to their changing circumstances. Data analytics will help you understand a customer’s repayment behaviour, so you can make recommendations accordingly - have they paid on time every month for a year? Recommend a larger loan amount or extend their credit line limit. Have they been inconsistent with their EMIs? Communicate with the borrower to understand the roadblock and take remedial measures (a smaller credit limit or higher interest rate, for instance).
There are two aspects to this - the first, keeping communication channels open with borrowers. Do you send them timely reminders and new offers? Can they reach out to you easily in case they need assistance? If the answer to any of these is a no, it may be time to take a fresh look at your communication strategy. Second, is knowing when to say what. Has a borrower been paying EMIs on time and doing everything right? Don’t harass them with incessant reminders. They don’t need it. Conversely, don’t wait till someone has defaulted to take remedial action. Leverage a collections and prioritisation engine to gauge the possibility of default and communicate accordingly (We’ve written about this extensively in blog 6). Communicating with borrowers is all about a fine balance - and putting yourself in their shoes is a good starting point.
Humanise customer service
A survey from a few years ago showed that over 50% of respondents felt interaction with chatbots and FAQs was disappointing. So when a borrower faces a roadblock, they don’t want to speak to an interactive voice recording or listen to automated, templated responses. Sure, chatbots and IVRs do the job in some cases, but in more complex customer complaints, nothing does the job like a real, living agent on the other side. The key is to know when to deploy technology, and when to bring in a human touch.
Make it easy for borrowers to leave
This may sound counterintuitive, but bear with us. There are times when customers will want to opt out of a credit line or a buy now, pay later (BNPL) solution - perhaps simply to resist temptation. And as long as they’ve paid their dues, they should be able to do this with no hassle. However, lenders often make the process of discontinuing unnecessarily complex, in the hope of simply wearing the borrower out. While you may succeed in this objective, it doesn’t make long-term business sense. Technically, you’re keeping the customer, but let’s face it - you’ve already lost them thanks to the inconvenience you put them through. Knowing when to let go is an art, and making it easy for the customer is better for everyone involved.
With that, we wrap up our #HumanizingFinTech series. The takeaway? It’s less of a customer engagement hack and more of a life lesson - treat people the way you’d like to be treated, no matter your business.