I don’t know what prompted me to run this little experiment…normally I put direct mail offers for loans or credit cards straight through the shredder. But for some reason, on that particular day, I opened the envelope, read the letter, and decided to see how far I could take an online loan application from Marcus by Goldman Sachs before I had to commit.

To set the stage, this was a pre-approval letter that directed me to a specific URL and had me enter a unique code. And I know it was unique because the code was something like 16 numbers and letters long. After I entered the code in the field, here’s what happened in the Marcus online loan platform:

  1. I’m directed to a pre-approval splash screen personalized with my name, and pre-approval rate.
  2. On that same page, there are two sliders. One that asks me to select a loan amount and another that asks about how much I’d like my monthly loan payment to be. Below that are some general fields asking me to fill in my yearly income and how I earn that money.
  3. On the next page, Marcus gives me several loan offers. The top selection is the loan offer that is the closest to the loan amount and payment amount I selected on the previous screen. The two variables that they figure out are the term and rate. Below the top option are several other loan offers with various rates and terms. I select one and move to the next screen.
  4. This screen is the personal information screen, asking for all of the standard information on a loan application. Social Security Number, address, phone number, etc. It also asks me to select what I will be using the loan funds for. For sake of ease, I click the first option, Debt Consolidation.
  5. On the next screen, I’m asked how I would like to receive the loan funds. I have the option of entering credit card and/or loan account information to pay off debt directly or having the funds deposited directly into a savings or checking account. Or a mix of both.
  6. After that screen, you agree to the terms and conditions and sign the loan documents electronically through DocuSign.

This whole process took inside of 10 minutes. AND I was on the phone multi-tasking at the same time.

Had I gone through with the loan, I would have been able to get up to $40,000 of unsecured money deposited into a checking account in 2-3 business days with a process that took 10 minutes.

10 minutes!

The point of this post isn’t to sound the alarm that online lenders are going to take over the world. The point is to look at the lending process at your financial and examine barriers to entry for your customers.

Unsecured loans are a great place to start because they usually take the least amount of work to get out the door. In general, here’s a shortlist of things you can consider to streamline your lending process for consumers:

  • Transition Points: is there a point in the process where your customer would need to transition from an all-digital experience to a phone or in-person experience?
  • Catch Points: are there barriers to entry with your loan process? For instance, do customers need to log in to online banking to complete a loan application? Or perhaps non-customers (or members) cannot apply for a loan without first becoming a customer.
  • Data Points: where does the customer provide out the information needed to complete the loan application? Is it all collected in the application, or is there more information needed through a phone call or branch visit? Additionally, is the amount of information and proof of income, etc. that is required, varied by loan type?

The one thing I keep coming back to after going through the Marcus process and comparing it to other loan applications I’ve completed is: would the average consumer think twice about applying for their loan with their community financial over taking advantage of one of the many pre-approved mailers that are landing in mailboxes? The ease of online lenders’ process makes the idea of quick cash all too enticing to many people.

And that is why, in a nutshell, if we aren’t marketing our banks or credit unions as an easy loan solution, the online lenders will eat us alive.