- Prospective home borrowers are increasingly judging lenders on the quality of the application-to-funding experience and measuring it against what they’re getting from nonbanks, fintechs and broader consumer-focused providers.
- To close the gap, traditional lenders need to start with diagnostics that examine current operating models with particular attention to siloed business lines, conflicting channel strategies and inconsistent borrower experiences.
- They may also want to take a page from the non-bank playbook: lead with lending to gain and solidify the relationship rather than treating it as merely cross-sell.
Expectations of consumer borrowers have changed radically in recent years. Competitive rates, once a differentiator, are now table stakes, and prospective borrowers increasingly judge lenders on the speed, certainty and quality of their overall application-to-funding experience. Today’s consumers aren’t looking for perfection, but they are demanding clarity and a loan experience that’s easy to navigate through every step of the process.
This sought-after experience is overwhelmingly digital and characterized by fewer clicks, faster processing times, less cumbersome documentation requests and a greater sense of certainty earlier in the process. And it’s important to note that these consumers are no longer comparing just banks. Instead, they’re measuring every interaction against the seamless, frictionless experiences delivered by nonbanks, fintechs and broader consumer platforms. As a result, the competitive landscape has never been more intense.
Furthermore, nonbanks are increasingly identifying qualified borrowers at their moment of credit need and winning the relationship before a traditional lender enters the consideration set. More than ever, the battle for lending relationships is being fought, and lost, upstream.
Seismic Shift
For lenders, the shift is more than an operational challenge; it’s a strategic inflection point. Meeting these evolving expectations is essential to deepening customer relationships and remaining relevant in a rapidly moving market.
A critical starting point is solving a fundamental problem: offering the right product, to the right customer, at the right time, through the right channel. Decision intelligence is what makes this possible at scale—connecting behavioral signals, relationship data and market context into real-time recommendations that no static-segments model can replicate. While this may seem daunting to traditional lenders, the transition is already well underway. Fintechs and nondepository institutions have successfully carved out meaningful market share by embracing this approach. They’re forcing traditional depository institutions to adapt or risk further erosion of market share.
And their results are meaningful. Home equity line of credit (HELOC) borrowers who are funded in 20 days or less take a draw at closing that’s almost half the entire line. That compares with only 18% of the available line for borrowers with comparable credit profiles who are funded in more than 20 days (Figure 1).
Figure 1: Characteristics of HELOC Applicants Who Get (but not need) Money Fast
Source: Curinos LendersBenchmark HE Originations
Given this reality, the natural question becomes: what strategic moves should lenders consider next? A foundational diagnostic is essential, one that examines current operating models with particular attention to siloed business lines, conflicting channel strategies and inconsistent borrower experiences. Many institutions, for example, still rely on manual handoffs, exceptions-based processing and product-centric—not customer-centric—workflows. These inconsistencies create internal complexity and external confusion, making it difficult to meet the expectations of today’s consumer, who demands a lending experience that’s easy and fast.
Lead with Lending?
Depository lenders have traditionally treated lending as a cross-sell opportunity within an existing relationship. But that’s no longer effective at a time when fintechs and nonbanks are using lending as an acquisition tool for primary customers. They’re winning the relationship at the point of credit need—before banks are even entering the consideration set—and then expanding it into broader financial offerings. If depository institutions want to compete effectively, they’ll need to pivot from viewing lending as a supporting product to embracing it as a strategy for front-door growth. But in doing so, lenders must avoid relying too heavily on rate as the primary lever because it tends to attract consumers who are less loyal and more likely to churn. It can also lead consumers to select the wrong product for their long-term financial needs. So while meeting price expectations is necessary, product suitability and overall experience are equally important and often more influential in driving repeat business.
The Value’s in the Relationship
Whatever the approach, all roads have to lead back to customer value. Lenders need deliberate strategies to help customers clearly understand the benefits of deeper relationships. Components include relationship pricing, bundled services, loyalty incentives and tailored product strategies. When offered thoughtfully, these incentives can create powerful differentiation. But too often they’re either invisible, difficult to access or misunderstood and therefore undervalued.
Maximizing customer value also requires a deeper understanding of the customer, and that in turn requires a more sophisticated understanding of risk. Holistic borrower data, for example, enables smarter, more precise credit decisions that protect margins while at the same time expanding access for qualified borrowers. Leveraging this data allows lenders to more effectively tailor products, anticipate needs and identify opportunities to deepen relationships. It yields the dual advantage of enhancing customer satisfaction while improving risk management.
Lenders need deliberate strategies to help customers clearly understand the benefits of a deeper relationship.
Anticipate Their Needs
Borrowers signal financial needs continuously—through spending patterns, life events, digital behavior and relationship milestones. Decision intelligence connects these signals to predictive models that surface the right product recommendations at the right moment. By proactively educating and guiding borrowers through their options, lenders can ensure these customers make informed decisions that align with their financial goals and circumstances. As a result, borrowers will generally feel as if they’re being heard and understood, which is often the first step to becoming a loyal, “stickier” customer that puts greater confidence and trust in their financial partner. Providers waiting for borrowers to self-identify and initiate will increasingly find themselves outmaneuvered at the point where the relationship is actually formed.
What it Will Take to Win
To remain competitive, lenders must prepare now for the expectations of the modern consumer. That means developing a clear strategy focused on customer value, data-driven personalization and relationship depth. While there’s no one-size-fits-all approach to consumer lending, there are common threads among the lenders that will emerge as winners. These institutions will build integrated, account-level customer profiles, deliver a consistent and optimized borrower experience across all channels and anchor their strategies in transparency, personalization and digital ease. And they’ll view every lending interaction as an opportunity to strengthen the broader relationship—not just to complete a transaction.
Those who embrace transformation stand to unlock significant enterprise value by creating meaningful, lasting relationships with their customers. The alternative? Continue to cede ground to disruptors that have already proven they can attract customers with seamless experiences and tailored products. And risk becoming providers of commoditized credit while more agile competitors capture the full relationship.
Decision & Action Takeaways
Decision to be Made | How to deploy decision intelligence to identify and reach the right borrowers at the moment of credit need, and deliver an experience that removes the time and friction out of application-to-funding, which is currently being accomplished by nontraditional providers. |
How It Affects Total Customer Value | Radically improving the borrower experience can win back ground lost to fintechs and direct banks and add and deepen customer relationships. |
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Expected KPI Lift |
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