As consumer demand for alternative payment options and personalized experiences increases, growing dissatisfaction with traditional loan repayment processes reaches a tipping point
PayNearMe, the fintech company bringing progress to payments, released a study titled, Consumer Trends Driving the Future of Loan Payments, which reveals that challenges in the loan repayment process and poor payment experiences jeopardize customer loyalty and potential future revenue. The study, based on a March 2024 online survey of 1,574 U.S. consumers aged 18 and older, reveals a growing preference toward alternative payment methods, as well as increased demand for hyper-personalized interactions. As consumers navigate loan repayment, their expectations for convenience are leading to more dissatisfaction with traditional loan repayment processes.
Key Findings:
-42% of respondents say they feel disorganized when repaying loans; up 75% from a previous report published three years ago, indicating a critical area for improvement in the loan repayment process. (24% in 2021)
-76% more respondents report experiencing stress and anxiety when managing and making loan repayments compared to three years ago. (51% in 2024; 29% in 2021)
-61% of those surveyed say they wish managing and repaying loans was easier, reflecting a strong desire for user-friendly payment experiences (a 39% increase).
-Preference for digital wallets as available loan repayment options is growing for survey respondents. For instance, 54% prefer PayPal as an option compared to 43% in 2021 (a 26% increase), and Cash App has jumped 95% in preference, from 22% to 43%.
Browse more about Fintech Insights: Brand Safety and Mutual Trust: The Key to Building Financial Services Partnerships
-69% of respondents appreciate a personalized payment experience and 80% would like their payment screen dynamically populated with their loan details.
-82% of those surveyed say a poor loan repayment experience, such as limited payment options, would influence their decision to work with a different lender for future loans.
“The gap between consumer payment preferences and the payment experience that lenders currently provide continues to widen,” said Anne Hay, EVP, CMO at PayNearMe. “It’s clear that the personalization of payment experiences could alleviate the current stress and dissatisfaction associated with traditional loan repayment processes, and choice of payment options is key to personalization.”
The study shows payment preferences continue to increase for alternative payment methods, specifically digital wallets, as evidenced by survey respondents reporting the following options as being important or very important:
-54% say PayPal (up from 43% in 2021 – a 26% increase)
-44% say Venmo (up from 27% in 2021 – a 63% increase)
-43% say Cash App Pay (up from 22% in 2021 – a 95% increase)
Additionally, 38% of survey respondents noted that having the ability to use a stored balance on a digital wallet such as PayPal, Venmo or Cash App Pay would make paying loans easier. According to the study, 1 in 4 survey respondents (25%) say not having their preferred payment types available makes loan repayment difficult.
“Expanding payment types and channels is no longer optional for lenders. The data underscores a clear trend toward the increasing importance of digital wallets for loan repayment,” said Hay. “If lenders want to create the customer experience consumers desire, payment choice and convenience are critical factors,” she continued.
Personalized Self-Service Lowers Costs, Enhances Consumer Experience
The study sheds light on consumer preferences and frustrations with the loan repayment process and sets the stage for lenders to innovate and adapt in ways that can lower the overall cost of accepting payments.
Nearly one in five survey respondents (19%) regularly call customer service to pay their loan, which can lead to overburdened agents and higher costs for lenders. “When lenders drive their customers to personalized, self-service channels, they ultimately lower their operational costs while freeing up their staffs’ time to focus on other tasks,” said Hay.
“Consumers expect loan repayment to be as effortless as placing an order on Amazon,” said Hay. “With reminders that include a personalized payment link, PayNearMe is enabling lenders to deliver what consumers ultimately want—an easy, click-and-pay self-service experience.”
“The industry has reached a tipping point, as evidenced by the overwhelming responses that indicate the critical importance of payment experiences in shaping customer satisfaction,” she continued. “With nearly 8 in 10 respondents (79%) expressing a likelihood to stick with the same lender in the future following an exceptional payment experience, it’s clear that a quality experience has become an important factor in consumer decision-making. For the borrower, the payment experience is the customer experience.”
Latest Fintech Insights : Parametric Insurance: Revolutionizing Traditional Insurance Models
[To share your insights with us, please write to psen@martechseries.com ]
