Abandoned: Credit Union Lessons Learned from Retail Failure

As financial institutions, numbers are at the very core of a credit union’s operations.  However, one area sometimes overlooked for various reasons, most often for lack of accountability and/or no new
options, is abandonment.

Consumers (i.e. your members and potential members) are continually drawn towards convenience, making branches less effective in starting the relationship process while making online and phone communications imperative for future success.  As members use your online channels, think of the opportunity costs by not seizing every opportunity to start or further your credit union’s relationships with those individuals.  Credit Unions are retail banking institutions and can learn from the failures of other retail stores.

Think of a traditional retail store such as Target.  You wouldn’t expect a Target customer to ditch their shopping cart in the middle of the store, but they have no problem abandoning their shopping cart online.  It would be awkward or seem rude to do so inside a physical store, however, online there is anonymity.  Closing a browser and visiting a competing merchant or credit union has no social consequences or uncomfortable feeling.

Statistics can vary, however one recent report shows that the average online shopping cart abandonment rate is as high as 77%.  As for credit unions, Callahan & Associates reported that 40% of online member reported either completing or attempting to complete an online loan application.  They went on to say that more than one-fifth of those who tried using an online loan application did not complete it.  Although some of these applications were likely to have been made eventually via other channels, it does represent a significate lost opportunity for credit unions looking to retain their online members and attract new ones.

One counter comment would be that “online loan consumers may merely be shopping and only start an application to see what is available or to research rates without actually completing the application.”

To this point, if you could gather enough information on these individuals such and retain them as a warm lead, wouldn’t this represent an opportunity for your credit union?

Community Choice Credit Union in Des Moines, Iowa uses full online loan applications from MeridianLink and Mortgagebot.  Community Choice also deploys CU Ratecheck’s quick apps as an option for those wanting to start the loan process quickly.

So, putting this above theory to the test, in June 2014 here were the comparative numbers:

MeridianLink
124 full apps received
18 funded
$218,100 booked
14.51% book to lead
CU Ratecheck
226 quick apps received
64 funded
$935,298 booked
28.32% book to lead

The above example shows that when given the option, credit worthy individuals also choose the perceived option to save time.  Additionally, this example indicates that members need options even when it comes to starting the lending process online.

Let’s look again at retail stores.  At the point of checkout 58.4% of users abandon due to concerns about payment.  This is due to consumers being very cautious about sharing financial information online.  If you are asking for a Social Security Number and this is the only method for starting the online loan process, you will certainly increase your abandonment rate.  The question then becomes how many members or potential members are you not serving because they ended up elsewhere or decided not to pursue?

Think of this, when it comes to refinancing promotions, a member doesn’t have to refinance as they already have a loan serving the purposes they need it for.  So, knowing this, you want to make the process simple so they will go through with it, or more importantly make the process seem simple.  To this point, another major reason for retail abandonment is time sensitive users.  We are all busy and so are your members.  How difficult would it be to fill out a full online application during work hours in a cubicle with your boss hovering?  It is important to find the right balance between obtaining enough information to start the process and being non-obtrusive.

Last point to be made in regards to abandonment rates.  Do not neglect the multi-channel environment.  In 2014, mobile web traffic surpassed desktop.  This means that if your loan lead generation method/application is too cumbersome and difficult to navigate via a mobile device, you are losing leads.

Abandonment rates do present a real opportunity loss for your credit union.  A simple “quick app” version is one solution that can improve these rates.  However, it is equally important that you have a backend management system that can support these leads.  It is imperative to maintain operation efficiency, create accountability across multiple levels, and provide easy access to information so that you can provide swift and quality service to your members and the communities you serve.

Back end functionality screenshot of Supervisor view.

Back end functionality screenshot of Supervisor view.

To learn more about how CU Ratecheck can affordably increase loan opportunities for your credit union by lowering abandonment rates and encouraging loan prospects, call 515-270-7339 or email service@curatecheck.com.