articles by xbridgers
Business Money, January 2005
Xbridge is often asked why some lenders close lots of business via the online channel and others close almost none. Why is there such a dichotomy?
Generating business online is not a simple process. It requires significant effort and resources to achieve. Once achieved, it is difficult to sustain. But the first mistake most lenders make is that they don't use the web as a means for interacting with potential customers. Instead they build flat websites that consist of little more than republishing of their paper brochures. They expect such "brochureware" to make a strong impact on potential customers. They don't.
The internet is the first mass means of communication in the last 100 years that enables two-way communication. Only the telephone enables comparable levels of interactivity. Few lenders take advantage of this most valuable feature of the internet in order to engage potential customers in a dialogue about their financial needs. Instead they use the channel for the one-way broadcasting of messages they hope the customer will want to hear.
Imagine sending out a mass direct mailing to potential customers where the call to action is for them to phone a dedicated number. When these hot sales leads call, they are connected to a recorded message describing what the lender thinks they will want to hear.
No lender would run a direct mail campaign that way; nor should they run a web-based campaign that way. Nonetheless, this is the approach adopted by most lenders in the online channel. They rely upon one-way communication - hoping the customer will want to read these online brochures and will respond to what is written.
Such lack of interactivity is the first reason most lenders close little or no internet-originated business. Online customers want to do more than read "brochureware". They expect and demand that you engage them (electronically) in a discussion of their needs.
Creating a truly interactive online experience is not easy. It requires high levels of skill, expertise and the commitment of serious resources. The software algorithms for delivering satisfying levels of customer interactivity are complex and require constant enhancement. Online design and usability are maturing concepts that require constant attention. For these reasons, few lenders currently deliver a satisfying, interactive web experience. That failure makes the online channel more lucrative for those who get it right.
There are a handful of UK lenders that originate more than 10 percent of their customers via the online channel. In the future, this proportion will rise as customers gradually, but steadily shift their custom from the branches to the online channel. Lenders that are complacent will lose market share longer term, particularly as early adopters improve business processes and entrench their channel superiority.
Interacting with customers online is tough - especially for commercial finance. That is why few lenders do it well. Developing an interactive web interface is the first step in developing an effective online sales process. Customers have very high expectations from lenders online. Few currently meet them.