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Best Practice Report - Managing Personal Loan Distribution Channels
Retail Finance Intelligence (RFI), June 2009, Pages: 23
There are five widely used channels for personal loan applications. These are the direct channels -branch, internet and phone and the indirect channels - brokers and car dealers. To build a customer base and provide services in the most effective way, it is essential for banks to distinguish channel preferences of customers with various characteristics and needs. This report looks at how different customer segments prefer different channels and offers insights into how valuable each channel is to them. It also gives two case studies in the industry - GE Money and ANZ.
Scope and methodology
The report uses data from a survey conducted online by RFI in March 2008.
This RFI survey:
- Is nationally representative
- Contains 2,000 respondents
- Includes current, future and past borrowers
- Specifically addresses the loan application process
Highlights
- Findings indicate that the branch is clearly the most preferred application channel. Not only did the branch have the largest share of applications within the survey, but respondents were much more likely to think the branch offered the best value when split by type of borrower, age and gender. The main reason for this preference is that the branch channel enables personal service.
- The internet and phone channels are two other widely used direct channels, which provide different benefits for the customer. The internet channel is quick and easy, while the phone channel allows negotiation and human interaction. Results show that the internet channel is expected to grow, and banks may benefit by offering the phone channel as a supplement. Results also indicate that to enlarge a customer base, and especially to attract large value borrowers, it is helpful for banks to establish and maintain strong networks with third parties.
Reasons to read this report
- Learn about the channel preferences of personal loan customers
- Receive insight into the reasons for which customers value different application channels
- View specific best practice examples of direct and indirect channel implementation via case studies of GE Money and ANZ
Country covered: Australia
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