Chatbots and open banking: the next step for lenders

Don’t get left behind. Find out why lenders and loan brokers should know about chatbots and open banking.

Financial technology (fintech) is developing at a rapid pace. Customers want quicker, more convenient interactions with lenders. Lenders and loan brokers want technology that will meet those demands and drive business efficiencies.

Businesses that don’t keep up with the latest trends in fintech risk appearing outdated. Most people don’t want to meet their lender in-person anymore. These days, 7 out to 10 people use computers and mobile devices for banking. People want to apply for loans anywhere and at any time. Smart lenders are using this trend to their advantage. Their customers can access their products whenever it’s convenient for them to do so, thanks to fintech.

Advances in messaging software, in particular, have revolutionised customers’ expectations. According to a recent worldwide survey by Statista20% of people want to use chatbots for banking or financial advice. If their bank can’t offer chat automation, there are plenty of others that will. 30% of large financial institutions are investing in artificial intelligence.

Innovators within the financial sector aren’t settling for a simple chatbot. They are looking at how AI can combine with the latest major disruption, open banking, to enhance the customer experience. Find out why chatbots and opening banking is the next step for the lending industry.

Never miss a lead

24/7 access to banking services was the second most important factor for customer retention in a recent study. Lenders that want to remain competitive use chatbots to provide customers with round the clock customer service. Using an AI powered chatbox on their websites also ensures that they never miss a new business lead.

Advances in AI and computer linguistics have helped to boost the adoption of chat automation. Chatbots can mimic human interactions and improve over time through machine learning. This makes them well-suited to carrying out customer service tasks. Large enterprises looking to reduce operating costs are driving industry growth. By 2025, the global chatbot market is set to reach $1.25 billion.

In the lending industry, chatbots are being used to collect new business leads outside of normal working hours. Automated chat templates can collect loan applicants’ names and addresses at any time of the day or night. It doesn’t have to stop there; you can collect as much or as little information as you need. Chat templates can be tailored to your business. Smaller lenders or brokerages can use chatbots to upscale their new business strategy without needing to hire extra staff.

Ibby’s workflow automation tools will save customer contact details to your CMS and set-up tasks and reminders to help your team nurture leads. It will also send out automated emails once a visitor submits a loan application. Why is this important? Timely customer communications can help build trust, satisfaction, and loyalty.

Qualify leads with chatbots and open banking

Traditional lenders cannot afford to be complacent. Competition from digital-first fintech companies is eating into their market share. Fintech companies make up 38% of the personal loan market in the US. Five years ago, digital start-ups only had 5% of the loan market.

Traditional banks and credit unions can learn from fintech companies if they want to thrive in today’s digital era. US banks’ share of the loan market dropped by 20% from 40% in 5 years and credit unions’ share dropped 21% from 31% in the same period. Most fintech companies are at the forefront of emerging technology in the financial sector. They use or develop digital tools that are pushing the boundaries of customer experience. They are finding ways to make applying for a loan faster and more convenient. Customers can access their services whether they are at home or on the go, as long as they have an internet connection.

Traditional lenders that are not willing to change their business model may struggle to compete. Consumers’ appetite for digital-first loan providers may impact even the largest market incumbents.

Many fintech companies recognise what open banking can do for their business model. Individuals can give software permission to access their financial data automatically. The impact this has on streamlining the loan application process and making it more convenient cannot be underestimated.

Individuals don’t have to submit proof of their financial history manually anymore. Now, fintech can fully automate the process. In just a few taps, lenders can run financial checks on behalf of applicants. Loan brokers can immediately see what products a person is likely to be accepted for. Automating this part of the loan process makes it less daunting and time-consuming for individuals. The result? People are less likely to abandon the application process and lenders may see an increase in successful applicants.

Ibby can help businesses to drive efficiency by combining the benefits of open banking with its chat automation tools. Before applicants even reach an advisor, Ibby’s chatbot technology will use open banking to conduct credit checks and assess applicants’ eligibility. Sending your advisors pre-qualified leads only will free up time so they can focus on converting leads into customers.

Get personal with customers

In a recent study, 64% of lenders claimed they are worried about losing customers to emerging technology companies. Competition for customers is fiercer than ever before. Emerging challenger banks are taking market share from traditional lenders, and customers can easily switch providers if they are offered a better deal elsewhere. Financial institutions are turning to fintech to help them hold on to their customers. In the same research, customer experience and technological innovation emerged as being very important for customer retention.

Fintech can make it possible for lenders to offer a personalised service which is essential if they want to improve the customer experience. New technologies make it possible to gather an unprecedented amount of customer data now. Companies that can turn this information into insights will be able to stand out from the competition. 74% of professionals plan to invest in data analytics tools so they can keep track of customer trends.

Loan brokers, in particular, need customer data to provide tailored advice. It isn’t enough to only know top-level facts about your customers anymore. People using a brokerage service want their advisor to understand their circumstances and future needs. If they can’t deliver this, customers may decide to go direct to lenders or try a Robo-advisor.

Before they can analyse customer data, lenders and brokers need to collect it. That’s where chatbots and open banking comes in. When used together, it can create an in-depth picture of individuals’ financial circumstances. This data can be mined to identify trends in customers’ lifestyles and financial needs. It will give lenders and brokers the context they need to understand what customers want and why they want it. With this knowledge, they can provide better product recommendations and create bespoke offers.

Ibby will make it easy to store customer data and act on insights. Its CMS software saves customer interactions with chatbots, making it easy for advisors to access the information when they need it. These insights will be combined with data from all other customer touchpoints to build a full picture of every individual using your service. This can be used to drive your marketing efforts, develop your business offering, or automate personalised messages sent at key times in the customer lifecycle.

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