Nudges, cross-promotions & rewards: A triad for better conversions in digital lending

Chitwan Kaur   /    Content Specialist    /    2022-02-03


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The number of digital loans disbursed in India grew 12x between 2017 and 2020. Why did a majorly credit-averse and slowly digitizing populace turn to digital credit in such numbers? 

Big data, increased digitization, cutting edge data analysis, AI and the inefficiencies of legacy banks come to mind. But these were just enablers about which borrowers are either unaware, or simply don’t care.

From the consumer perspective, there’s only one reason to get a loan digitally – convenience. And now, customer experience can achieve such levels of sophistication that it may be possible to almost read their minds.

That seems like a job for behavioral economics – a field created to account for the human factor that traditional economic models consider anomalies. It holds the answers to why customers hesitate to buy loans, (therefore, why lenders face conversion challenges) even if it is in their best interest. 

The truth is, loans are seen as unattractive products and obtaining them requires significant cognitive effort. Customers put off taking a loan because they may feel a sense of indebtedness or aversion to loss. When presented with complex loan applications, clunky interfaces magnify these insecurities, prompting borrowers to delay decisions or altogether abandon the application.

Digital lenders can prevent customers from dropping off using the principles of behavioral economics. By marrying these with their data capabilities, digital lenders have been able to boost their conversions by as much as 36%. In this blog, we discuss how.


Nudges work off of the most basic principles of behavioral economics. Nobel laureate Richard Thaler popularized the idea in his 2008 book Nudge: Improving Decisions about Health, Wealth and Happiness. The concept assumes that people don’t always behave rationally when it comes to making decisions that will financially benefit them. They can be encouraged to make favourable decisions by building a choice architecture without depriving them of the alternative options.

From that standpoint, it stands to reason that any digital lending app or flow which not only guides the user along the journey but also provides them choices of different products and options will help the user feel secure. 

Digital lenders working in the interest of financial empowerment can deploy nudges in their user interface to remove hesitation and coax borrowers to complete their loan applications and encourage timely repayment.


From spreading awareness about the product to securing a completely filled out loan application, the onboarding process is complex. The reasons for not completing onboarding are plenty, but nudges can keep customers on track. 

Here’s how nudges facilitate onboarding —

  • Anchor a customer’s attention by showing them their pre-approved loan amount (if applicable). 

  • Once on the app, encourage them to explore features like a loan eligibility or interest calculator to dispel fears of large impending EMIs.

  • Save-and-resume application if the customer leaves it incomplete.

  • In case a customer abandons the onboarding process, they can be redirected back to it with well-timed notifications.

The FinBox conversion kit uses nudge-driven optimization to improve conversion rates by 50%. It allows platforms to trigger nudges throughout the stages of the application process at customizable intervals.

Read: Catch drop offs before they happen. Here’s what to look out for


An RBI report released in November 2021 found that 1,100 digital lending apps in India were operating illegally. It also shed light on the growing practice of coercive debt collection that led to harassment, and in extreme cases, suicide. Platforms offering digital loans can boost their collections and keep predatory practices at an arm’s length with well-crafted nudges. Here’s how —

  • Separate borrowers through behavioural segmentation or “segments of one” on the basis of their cash flow restraints, liquidity crunches, repayment ability and spending habits.

  • Tailor the messaging of your nudges in terms of frequency, intensity and language for each group to elicit a desired response.

Read: Lending’s already a dime a dozen. It’s time to reinvent collections.


Growing competition in the digital lending space, especially the surge of apps disbursing hyper-specific loans, has led to a fragmented borrowing experience. It’s easy for competitors to win over your customers with a credit product designed specifically for their new needs.

Consider this – a young man managing his father’s shop takes a business loan from a lending app. A year after the disbursal, he decides to pursue higher education. This digital-savvy individual comes across targeted ads from a student-focused lender. The interest rates, repayment tenure and the general user interface of the app are geared towards education loan seekers. 

Despite good user experience or attractive interest rates on the business loan, the possibility of borrowing from the original lender would not occur to the aspiring student. The business loan provider might as well have served up their customer to the competitor on a platter.

This disaster could have been averted by cross-promotions. In fact, cross-selling reduces high costs of customer acquisition and unlocks new revenue streams for lenders.

The kind of user data at a lender’s disposal today can help predict a borrower’s future needs and strategize to draw their attention towards allied products and design attractive offers. Here’s how –

  • Identification: Data insights from cash flow and prior credit utilization can help lenders identify the need for a future loan. 

  • Customization: Now, lenders can create pre-approved loans of varying values based on the customers’ profiles, saving patterns or spending habits. The interest rates and repayment structures can also be designed to meet their expectations.

  • Communication: The next step is to reach out to customers with the offer. The type of loan product (personal loan, BNPL, no-interest EMI, etc), channel through which it is communicated (SMS, social media, notifications or email) and the time at which the offer is made (time of the day, week or month) must be decided after analyzing data for the best possible response. 


In lending, rewards programs no longer give you an edge. Customers have come to expect them in exchange for their loyalty. Rewards can be given out at the point of onboarding customers or as incentives to buy more or spread the word about the lender.

  • Onboarding: Rewards can run parallel to nudges offered during onboarding. For leads sitting on incomplete applications, waiving off processing fees in part or in full, for example, can be an incentive to complete onboarding. By adding a time limit to the offer, lenders can further create a sense of urgency to elicit quicker applications.

FinBox improves your lead-to-disbursal ratio by offering such rewards automatically during the application process. It plugs rewards into various onboarding steps and sounds out the customer, increasing the chances of securing the application.


Data may be at the heart of the evolved FinTech landscape today. But it is the customer experience that ultimately drives conversions. Analyzing user behavior gives digital lenders the power to prompt more loan applications, craft tailored credit products and create incentives — all leading up increased conversion rates. Nudges, rewards and cross-selling, when incorporated into a coherent strategy, can help disburse more loans.

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