Modern customer preferences have changed drastically with the rise of the smartphone, inspiring a wave of consumerization in industries that were traditionally a step removed from the end customer. One such industry is finance, where a wave of consumerization has simplified transactions and made financial services more directly accessible to the end customer. This movement aims to eliminate traditional complexities that have historically categorized the finance industry.

Evidenced by the rise of finance apps, direct banks, digital mortgages, AI-powered personal finance offerings, and point-of-sale lending, the consumerization of finance continues to be accelerated by customer demands for transparency, visibility, and, most importantly, convenience. In one survey, consumers cited convenience as the top reason they are switching to digital-only banks for their finances.

And convenience isn’t the only customer preference reshaping financial service offerings. Today’s customers also have high expectations for personalization and corporate social responsibility. These are more than just preferences—they are requirements. Customer expectations are significant, but so is the opportunity to meet these demands. Both lenders and merchants stand to benefit from technology solutions that make financing convenient and personalized to customer needs and beliefs.

Platform solutions, such as embedded finance, create an experience that appeals to the modern customer while delivering powerful business benefits for lenders and merchants alike. For lenders, these benefits include customer diversification, loyalty, retention, and growth in deposits over time. For merchants, they include enhanced satisfaction, larger average job size, and growth in sales.

In this blog, we’ll unpack three modern customer expectations and how your institution can embrace them to meet and exceed the modern borrowers’ expectations in 2024 and beyond.

What are borrowers looking for in 2024?  

Experience reigns supreme

Digital borrowing continues to grow, with more consumers preferring online platforms and mobile apps for loan applications and management. One recent survey found that 61% of Gen Z and 54% of millennial respondents expressed willingness to change banking providers in favor of superior digital banking experiences. Lenders must ensure digital financing offerings are user-friendly, secure, and able to provide quick approvals and disbursements.

These characteristics are an extension of the overarching demand for convenience, which has swept nearly every category of customer experience. In addition to convenience, borrowers increasingly expect personalized lending experiences tailored to their specific needs and financial situations. In fact, research indicates that most modern customers are willing to provide data in exchange for personalization.

How can lenders prioritize experience?

  • Deliver a frictionless embedded lending experience for customers and merchants.
  • Securely harness customer data to deliver personalized products and support to your merchants.
  • Tailor lending experiences to your merchant’s unique products, services, and customer preferences.

Sustainability drives buying decisions

The growing awareness of environmental issues continues to feed the rising demand for “green loans” utilized to finance eco-friendly projects and initiatives. Displaying this growth, the market value of green finance reached $540.6 billion in 2021—a substantial rise from the $5.2 billion recorded in 2012.

In addition to seeking financing options for their own green purchases, borrowers are also looking for evidence that the financial institutions and merchants with whom they interact prioritize sustainability. Furthermore, one recent survey found that consumers are more likely to respond to marketing efforts for green products or installations when they are linked to a financial institution, demonstrating the consumer interest in trusted financing solutions for green projects.

How can lenders prioritize sustainability?

  • Partner with merchants who deliver green products and services, such as sustainable HVAC products.
  • Explore green banking incentives from federal and local governments, such as the Inflation Reduction Act of 2022.
  • Articulate your commitment to sustainability to your broader community, including merchants and end customers.

The greater good matters

Modern customers want to be viewed as people above purchasers. One recent survey found that 77% of respondents would be more likely to choose a company over another based on whether the corporation is committed to making the world a better place. This consumer desire is manifested in an increased focus on corporate social responsibility (CSR). This focus is inclusive of sustainability, but it doesn’t stop there.

One way a financial institution can demonstrate corporate social responsibility is by supporting unbanked or underserved individuals. The majority of unbanked Americans earn less than $25,000 annually and rely on non-bank finance options, such as money orders or bill payment services, leaving many victim to predatory fees and without the ability to grow positive credit history. This is a reality in many communities nationwide, indicating a strong demand for financial institutions to support their communities, while also benefiting from an improved social responsibility standing. Federal programs, such as the CDFI fund, are supporting financial institutions in serving unbanked and underserved individuals.

How can lenders prioritize community?

  • Support small business growth by partnering with merchants in your local community.
  • Focus on merchants that are stationed in underbanked geographies.
  • Develop targeted lending programs for customer segments that would benefit from improved access to fair and convenient financing options. 

Win the heart and mind of the modern customer with MerchantLinQ from LoanStar

Convenience, sustainability, and inclusion are all top-of-mind for the modern customer. But many financial institutions are uncertain of how to prioritize these needs in a way that simultaneously advances their business objectives. The right technology, particularly when it comes to a financial institution’s lending program, is a critical success factor in its ability to demonstrate creativity and responsiveness to evolving customer priorities and needs.

Embedded lending is a powerful tool to employ to not only address the digital-convenience mindset of many consumers but also meet diverse and highly targeted borrowing needs like those found in green product segments and underbanked communities. Configurable and adaptive to each institution’s goals, LoanStar’s MerchantLinQ platform empowers financial institutions to offer loan and credit card products to local merchants that match the needs of their dynamic borrower communities and grow their appeal among a population of engaged and educated customers. Contact a LoanStar representative to learn more today.