Fifth Third Bancorp's new online loan application process educates consumers as they apply, giving the Cincinnati company a more informed customer and more approved applications.
This summer, Fifth Third replaced a three-year-old "placeholder" system that was not well integrated and offered few advantages over filling out a paper form. Today, its system is almost completely electronic and has several new points of interaction that let Fifth Third reduce abandonment.
"We needed something that was going to be able to give us a really rich end-to-end experience for the customer. We needed it to be easy to use, easy to navigate [and] provide everything the user could want," Marilyn Mocilnikar, a senior vice president at Fifth Third and its director of retail lending products and services, said in an interview Friday.
Fifth Third, using a system from Tavant Technologies Inc. in Santa Clara, Calif., introduced its new online loan application for home equity and auto loans on June 29 after having used Tavant's system for mortgage applications since early 2008.
The old online application system, which was built in-house, "was very cumbersome," Mocilnikar said. "It was very manual, especially on the back end. It didn't integrate with any of our systems, and there were really no tools or calculators or ability to display current rates."
Though it received minor upgrades over time, Mocilnikar said, the old system was considered, internally, "a flat application" and "just sort of a placeholder until we were able to bring this system online." The new system was introduced after nine months of preparation.
The rate calculators and other tools now available serve a valuable customer education role that actually helps get more loans approved, she said.
"The customer is better able to see if these products are a fit for them and if they would qualify for these products," she said. "When they choose an application now, they have a better chance to be approved. … We have more informed customers when we're talking to them about completing their loan."
Customers can save a partial application to complete later, she said. Another option is Fifth Third's "click-to-call" feature, which lets customers request a phone call from the bank by clicking a button on the application page.
Fifth Third also can initiate calls on its own to customers who have abandoned an application, Mocilnikar said. Though she said it was too soon to have data on how many abandonments this has saved, "anecdotally, I've been told that yes, we have had success with that."
Loan closing is still done in person, she said. Fifth Third representatives contact the customer to schedule a face-to-face meeting after the application has been approved, but every act up to that point can now be handled online, she said. The process is the same for new and existing customers.
Mocilnikar described these improvements as early steps in a bigger push to bring in more business online. "This is just the very beginning of what will be a long process … we're taking it very slowly," she said.
Fifth Third chose to work with Tavant because "they have a lot of experience integrating and interfacing with our host applications" and have proven themselves on earlier systems, such as the mortgage application upgrading, she said.
Nicole Sturgill, the research director for delivery channels at TowerGroup Inc., a Needham, Mass., independent research firm owned by MasterCard Inc., said that Fifth Third is taking a step few other banks have by focusing on home equity and auto loans.
"We have not seen a big movement on the loan side for online account opening," she said. "A lot of the work has been on deposit accounts."
In most cases, "someone on the back end is printing out a form and turning it around and putting it into the new accounts platform," she said. Even for banks that have automated the application process for deposit accounts, the consumer loan application process is probably running on older technology, she said.
Sturgill, who worked in Fifth Third's debit processing business from 1995 through 2004, said that it might be possible to improve the process even further by removing the need — especially for existing customers — to meet with a banker in person at the end of the process.
"It's interesting to see that they still want to see whites of the eyes at the end of the process," she said. "That's safety and security."
Other organizations taking a similar approach to online lending may instead require a mailed form so they can get a signature on file to complete the process, she said.
Though Fifth Third requires face-to-face contact at the end of the process, Sturgill said, she doubted that this would be problematic for most applicants.
"Most customers are probably just so happy to be able to do as much as they can online that" Fifth Third is "not getting a lot of pushback," she said.
