Luna Connect Is Now SOC 2 Type II Certified And More Secure Than Ever

At Luna Connect, data privacy and security are vital. Each individual and the team as a whole work continuously to make sure the platform is safe and secure for our customers. Our commitment to providing a secure, safe experience is one of the reasons why Luna Connect has attained SOC 2 Type II Compliance. With our SOC 2 certification, we have proven to our customers their data is safe with us.

What Is SOC 2?

SOC 2 audits are used to ensure that the data managed by service providers is managed securely to protect the interests of organisations and the privacy of their customers. When evaluating SaaS (Software as a Service) providers, security-conscious businesses will always value SOC 2 compliance. The American Institute of CPAs (AICPA) developed SOC 2 and defined standards for managing customer data based on five fundamental trust service principles, namely privacy, security, processing integrity, availability and confidentiality.

According to specified business practices, each organisation designs its controls for complying with one or more of the trust principles. This report provides you (as well as regulators, business partners, suppliers and such) with important insights into your service provider’s data management processes. 

There are two types of SOC reports:

  • Type I refers to the vendor’s systems and whether or not their design complies with relevant trust principles.
  • Type II describes the systems’ operational effectiveness.

How Is SOC 2 Certification Issued?

Outside auditors issue SOC 2 certifications by assessing whether a vendor adheres to one or more of the five trust principles based on the systems and processes in place.

Organisations that are SOC 2 compliant maintain a high level of security. Strict compliance requirements (conducted through on-site audits) ensure that sensitive data is handled responsibly. Keeping up with SOC 2 guidelines can help organisations protect themselves from cyber-attacks. SOC 2 compliance also provides a competitive advantage because customers tend to favour service providers with strong security practices, especially in IT and cloud services.

Assisted By Vanta 

To ensure a smooth audit process and continuous compliance monitoring, Luna Connect recognised that there could be no better partner than Vanta. As a leader in compliance automation, Vanta was our top choice in assisting us with the collection of our audit evidence.

Luna Connect: A Company Committed To Security

As a team, we at Luna Connect could not be more pleased for our customers to have yet more evidence of our commitment to safety and security. We are proud of our SOC 2 certification and will continue to do great work while safeguarding our customers as much as we possibly can in the future. Luna Connect will continue to set a high bar for excellence when it comes to industry technology, innovation and security.

Contact us today to find out how our secure platform can help you https://lunaconnect.io/contact/

What Is UX And Why Is It Important for Digital Lending?

User Experience (UX) is a common term in the realm of technology and design. Despite the term’s popularity, many still don’t appreciate what it means or how to use it correctly. In today’s world, anything created within the digital space (including websites and mobile apps) should be designed with user experience in mind. You could lose customers before you’re able to show them how wonderful your business, service, or product really is without a thoughtful UX design. 

UX plays an important role in ensuring the success of your product and business, and you are more likely to acquire more customers and build a loyal customer base who will spread the word about your offering.

What Does UX Mean?

User Experience refers to the way people interact with a product or service. A real-world example of user experience outside of the tech landscape would be a restaurant.  The user experience here would be made up of reservations, menu choices and appearance, dishware, lighting, tablecloths, employee uniforms, service, etc. All these factors would influence how the customers feel about their interaction with the restaurant. In the digital world, UX refers to all the design elements that affect the way the user interacts with a digital product.

What Is UX Design?

UX is rarely referred to as a standalone term. You will more frequently hear the phrase “UX Design”, with people who work in the field referred to as “UX Designers”. That said, a UX designer is not a person who designs user experiences. Since UX deals with a user’s impression of a product, their experience cannot be designed. Rather, a UX Designer designs for UX. A UX designer creates products (either digital or physical) that are easy to use and practical. 

UX can be directly tied to the human experience, specifically human behaviour and psychological trends. How the user perceives each step of the experience can make or break any design. A successful UX designer must go beyond simply understanding how to create aesthetically pleasing designs, they need to understand the psychology behind the user experience.

What Makes A Good UX Design?

A good UX design ensures that people have the best experience possible with products and services. Poor UX will cause users to feel confusion, hesitation, and frustration and will ultimately reflect badly on the product or service. A good UX design incorporates the following principles: 

  • User-Centred Design: first and foremost in any UX design is to focus on the user. Focusing on efficiently combining form and function and focusing on the user experience from the very beginning stages will yield a well-designed, user-centric end result. 
  • Prioritised Consistency: the basic functionality and design of products should be the same across the board. Many popular and successful apps and websites utilise similar techniques and placements for their user interfaces. Consumers have grown used to such designs and expect new products to work similarly. 
  • Give The User Control: before, there was widespread fear that users would break the web pages and applications they used when given too much control. We now understand that the more control a user has, the better experience they have. 
  • Accessibility Is Crucial: Making your designs easy to use for everyone, including those who interact with products differently, is an important aspect of UX Design. Prioritising accessibility allows for more of your users to have a positive experience. 

Benefits Of Good UX Design

UX design is about solving problems so users don’t have to worry about what they’re doing. They can use a product intuitively without putting an overwhelming amount of thought into it. Prioritising the user is always at the forefront of UX design, a better product is always one that focuses on the end-user. Products created with great UX design will enjoy many benefits, including:

  • Increase conversion rates: effective UX design can make the difference between your users successfully completing your call to action or not. UX can help you increase conversions, thereby generating more revenue.
  • Reduce costs: giving users more control and empowering users to complete tasks independently with less support from you.
  • Inspire customer loyalty: creating positive, meaningful user experiences, UX contributes to customers wanting to stick by your business and continue using your product.
  • Stay ahead of the competition: UX being such an important feature and a popular topic of discussion, you’ve likely fallen behind the competition if you’re not already implementing it. Providing an excellent user experience is a competitive advantage.

UX Design and Digital Lending

At Luna Connect, we have made creating the best possible user experience a priority for our digital platform, for both borrowers and lenders. The platform’s digital layer offers your clients an easy-to-use digital lending and digital onboarding experience. As we know, ease of use is a crucial element in good UX and, ultimately, customer satisfaction. Users will find the entire online experience seamless and convenient. The platform is compatible with all device types, including mobile, tablet, laptop, and desktop. It also supports multiple financial products. At Luna Connect, we are proud of our reputation for both innovation and client satisfaction. By prioritising the user experience, we make the digital experience more enjoyable for your customers, allowing you to reap the many benefits of a good UX design.

To find out how you can delight your customers with user-friendly online processes talk to us today.

5 Top Benefits of Digital Transformation For Local Banks

Has your company undergone a digital transformation?

Especially in the financial sector, digital transformation is crucial to the survival of businesses. In a nutshell, it is the up-gradation of existing processes or introduction of new ways of carrying out business activities using digital technologies that enhance a customer’s experience, leading to higher conversion rates for the company. 

In banking, this integration of digitisation leads to fundamental changes in how financial institutes operate and deliver value to their customers. 

Moreover, it refers to the process of transforming an organisation into a digital business. It is not just about digitising the existing processes. It is also about the integration of new technologies and a new way of thinking that will help financial institutions to more effectively serve their customers, generate new opportunities for innovation, and stay ahead of the competition.

The main goal of digital transformation is to stay relevant and competitive in a world that has become predominantly digitised and where anything and everything can be done online.

So, what exactly are the benefits that digital transformation can offer those in the local banking and lending sector? We uncover five of these benefits below,

  1. Customer Experience
  2. Online Trust
  3. Efficient Customer Acquisition
  4. Personalisation
  5. Innovation & Agility

1. Customer Experience 

Customer Experience (CX) is by far one of the most essential aspects to ensuring the success of a business. And with AI, customer service can be more personalised and efficient than ever before.

AI can improve the customer experience by providing more relevant content for customers, giving them more accurate answers to their queries, and predicting what customers are looking for within the business offerings. 

Artificial Intelligence can have a positive impact on the customer experience by understanding their wants, needs, and habits. Moreover, it can analyse the data collected by the business to improve the customer experience in various ways. 

For example, it can provide more relevant content for customers who are looking for information about a given topic by analysing their social media posts, monitoring their queries to provide them with accurate answers and predicting what they are looking for before they even ask. 

2. Online Trust

Nowadays, people choose their banks depending on how they perceive the establishment. And how financial institutions position themselves online will shape the way their potential customers perceive them as a business. Social media platforms, websites, and ads all bolster influence on those using the internet. Therefore, if banks can deliver the right kind of digital marketing, it will help them build trust in people’s eyes online.

There are several ways to build a relationship with a customer but one particular strategy that has produced promising results – Online Reputation Management (ORM). ORM is a multi-faceted concept to create a positive public perception of a brand, business, or person. It includes monitoring reputation, handling any client feedback that could harm the brand, and using tactics to contain and solve concerns that could damage the reputation. 

3. Efficient Customer Acquisition

Banks need clients just as much as clients need banks. Therefore, these organisations can no longer be stagnant regarding how they choose to attract their consumers to their services. The good news is, there is a more affordable and easily accessible way to attract these customers to your institution. 

The online sphere provides fantastic platforms to reach out directly to these possible consumers, right on their devices. This access makes influencing them easier, which in turn, leads to an increase in the possibility of them coming to you. This system is also called Content marketing and is basically contemporary word of mouth. Content marketing helps to encourage engagement and attains trust with both candidates and clients.

4. Personalisation

Digital transformation allows financial businesses to foresee and understand what the people want, and they can develop their services and offer according to customer prerequisites rather than playing the game of guessing. Contemporary innovative technological evolutions allow banks to boost customer engagement with personalised offerings.

5. Innovation & Agility 

Digital Transformation helps banking organisations to embrace technology and market trends and scale these efforts with incremental triumphs. Only if an establishment can upgrade itself will it be able to cater to the needs of the new-age clients. Sophisticated digital technologies have changed the traditional way that banking operated. 

The emergence of shopping outlets, social media channels, and integrated mobile apps has opened several doors for banks to reach out to their customers.

Those in the banking and lending sectors need to welcome this new digital world by moving towards a digital transformation. For example, many people today are more likely to watch a short explanatory Youtube video than read a long pamphlet. What does this tell us? It tells us that videos are becoming increasingly popular as they are straightforward and promote engagement.

The lending sector is one of the most important aspects of the banking industry, and they both heavily benefit from implementing innovations such as digital transformation. Because this sector provides essential services to customers by providing loans and other financial services,  it has become increasingly difficult for the lending sector to keep up with its pace of growth. This has led to an increased demand for automation to maintain efficiency.

Top 5 Industry Trends That Will Shape 2022 For Digital Banking

Increasing capital and improving the customer experience have been the focus of banks and credit unions’ efforts to catch up with their competitors. Advanced analytics, innovation and modern technology, as well as a new approach to the workforce, have been the focus points. 

Due to the rapid development of technology, the competitive landscape continues to expand, offering simple engagements and seamless experiences, causing existing relationships with banks and credit unions to crumble. For any organisation, there are a variety of options available for partnering with third-party providers to quickly deploy solutions to meet customer demand instead of developing them internally. Institutions can proactively modernise their existing systems and processes alongside partnering with fintech and big tech competitors.

In this digital age, it is more important than ever to ensure that financial institutions are digitally future-ready. As the supply of technology increases, the demand for innovation grows. The more technology is available to consumers, the more they expect that technology to be used to serve them. For instance, APIs, especially faster payments, and easier unbundling have enhanced APIs, services and payments. APIs have improved service delivery, especially payments, and have simplified unbundling. Originally regarded as high-tech, they are now becoming the standard for Digital Disruption in Banking and its Impact on Competition for data sharing in open banking applications. 

Each organisation must make the decisions in light of their existing and desired business models. If a traditional financial institution decides to follow a certain path, there will definitely be pressure to act quickly and decisively. As leaders in the finance and lending space with our digital lending platform, Luna Connect has put together predictions of five trends that will strongly influence 2022.

Quick Wins Are Top Priority

Solutions are Quick Wins if they are easy, fast, economical, and can be easily reversed. A quick win is a visible change and is expected to have immediate effects.

In order to ensure a positive customer experience, banks and credit unions should invest heavily in digital banking transformation. Investing in the right areas depends on each institution’s maturity level of digital transformation.

Success in digital banking transformation hasn’t changed fundamentally; however, strategies and tactics have shifted to focus on ‘quick wins’ that can set the stage for future improvements.

A reimagined back office, combined with process automation, is part of the toolkit to improve customer acquisition and retention. Making account opening and loan applications more user-friendly is part of the effort, with the goal to reduce the time from 10-12 minutes to under three minutes, Professional Bank launches new digital account opening.

Additionally, a focus will be on introducing innovative products, improving financial management tools, expanding access to relevant and compelling content, and increasing proactive recommendations using data and artificial intelligence to improve customer engagement overall.

Developing a digital banking strategy is an ambitious long-term endeavour that can present some challenges on the way. Much of the time, it takes at least twice as long and costs twice as much to transform an organisation as originally anticipated, in part because of challenges in cultural readiness, as mentioned Gartners IT Roadmap for Digital Business Transformation. In many organisations, digital transformation is not yet tested, so their ability to transform is uncertain.

Winners And Losers Will Be Determined By Data And Artificial Intelligence

Data and analytics are the backbones of digital banking transformation. By 2022, artificial intelligence and data will be the main differentiators in the banking industry according to McKinsey, Next-gen Technology transformation in Financial Services. Microsoft outline The top five things a customer needs from their bank, including customers expect their financial institutions to understand them, reward them, and know their daily lives and financial profiles in real-time. Many consumers have become accustomed to intelligent experiences during the pandemic, such as those offered by Netflix, Google, and Amazon. Financial institutions can replicate this by leveraging their internal resources and partnering with third-party providers.

With AI-powered virtual assistants, many basic banking interactions will become even more human-like with conversational AI. Bank of America has a substantial lead in this area with their AI-powered virtual assistant, Erica. These interactive enhancements go beyond simple functions like checking balances to also perform more involved tasks like acting as a financial concierge. The latest financial reports from Bank of America show that more and more customers are using its virtual assistant, Erica, more frequently than ever before. Erica’s presence and the AI’s capabilities have greatly improved in the last year and the last quarter, so that now they are a key part of the bank’s digital strategies.

Many organisations are already using artificial intelligence to simplify back-end operations, and banking is set to follow suit. The innovation process will improve as more employees get involved. Achieving real-time insights into product performance, service levels, and customer needs will add significant internal and external value.

Mobile-First Design with Cross-Device Support

Most financial institutions are transforming their digital banking operations to start with mobile-first methods. Mobile-first transformation includes improving products, services and experiences through a mobile lens, while other channels benefit as well. This requires a rethinking of everything, both internal and external, that has an impact on the customer, including business models to more accurately reflect consumer and business mobile banking trends.

In a world where more consumers access the internet using their smartphones rather than their desktops, mobile shouldn’t be considered as a channel to add to digital transformation strategy. Rather it should be a driving force behind customer-centric applications and future development.

Taking a mobile-first perspective opens doors to innovative new solutions for increasing customer acquisition, engagement, relationships, and loyalty. A mobile-first approach will also contribute to increased efficiencies through the integration of artificial intelligence, robotic process automation, and biometrics. These enhancements are not so much about the device as they are about how to make the most of the device’s capabilities.

Taking a mobile-first approach to digital banking means that you can align your business model around your customers’ needs as well as support digital banking solutions in the future. Financial institutions are increasingly bypassing legacy branch processes, deploying digital devices to staff for improved internal and external experiences. Generally, applying a transformation to both online and physical channels is relatively easy.

A New Approach To Back-Office Processes

Despite increased consumer demand for experiences powered by digital devices, many financial institutions still use outdated back-office processes and processes based on people and paper that impede the implementation of fast, simple and seamless solutions. 

To increase efficiency and improve customer experiences, financial institutions should not simply digitise their existing back-office processes but rather start from scratch, using new technologies and automation.

Financial institutions could employ much smaller departments to run value-added tasks, such as deal origination, KYC validation, data collection, and distribution.

Robotic process automation results in cost reduction, increased efficiency, improved accuracy, and improved customer experiences. 

A New Workforce Model

Many jobs have seen their skills change from 2016 to 2019. While new technologies and the shift to digital banking are driving the demand for new skills, many new jobs require soft skills, not just hard skills. Employees of financial institutions should have the ability to thrive in the face of a disruptive business environment through collaboration, innovation, adaptability, and perseverance.

Many workers are abandoning the traditional work environment in favour of either hybrid options or the gig economy or abandoning the active workforce altogether, as shown by the term “The Great Resignation“.

To be competitive in the digital banking era, financial institutions will need to recognise that many of their employees will consider flexible working arrangements when selecting an employer. The shift will require many banks and credit unions to rethink their existing workforce models.

Why API Integration Is Important In Digital Transformation

It can be difficult for local financial institutions to keep up with the latest must-have features when digital technology is always evolving. This is where APIs can help position a lender quickly respond to the needs of the digital borrower. 

Increasingly, banks and lending institutions are using APIs to adapt to the evolving needs of their consumers and become more innovative in their digital banking efforts. In fact, banking and lending institutions use APIs every day. With API functionality, digital banking features like income deposits, bill pay and money transfers between accounts are possible.

What Are APIs?

API stands for Application Programming Interface. They are simple tools for communicating between software applications. Using APIs, financial institutions are collaborating with third parties to advance the banking industry. APIs allow bank applications to connect with existing technology from other firms. Thanks to APIs, this allows banks to provide seamless, efficient customer experiences while creating innovative banking solutions. 

Common Examples Of APIs In Everyday Use

It is possible to use APIs to connect virtually any process in practice. They can provide teams with premade tools and features, saving them the effort of creating these tools from scratch. Here are just a few common examples of APIs:

Weather Snippets: Google Search, Apple’s Weather app, and even your smart home device can provide rich weather snippets through an API that sends them global weather information in a format that’s easy to read.

Travel Booking: In addition to collecting flight and hotel availability via third-party APIs, travel booking sites are able to present the cheapest option for thousands of flights and destinations.

Online Payments: Stripe, PayPal and payments companies provide APIs to make integration of payments into any online application easy.

How Can Lenders Benefit From API?

Using APIs within digital lending technology allows third-party product developers to connect and seamlessly add new functionalities to the existing applications. Through a digital lending product that has an open API feature, banks and Credit Unions can customise their interfaces, much like mobile phone applications enhance the smartphone and help users easily complete all needed tasks. 

How Luna Connect Uses APIs To Transform Lending

Providing a digital platform for small and medium-sized financial institutions, Luna Connect’s features help institutions provide a better customer experience, make better decisions, and optimise customer interactions. Artificial intelligence, big data analytics, APIs and automated KYC are some of the technology tools that have contributed to the benefits. The platform is powered by multiple technology tools, and in several of these tools APIs are integrated. 

Digital Tools

Online Enquiries and End-to-End Applications

Provide personalised online experiences that mimic in branch and face to face experiences, enhancing the already great customer experience. APIs are used throughout this process to access proprietary and 3rd party data.

Remote Onboarding of New Customers

To comply with regulatory requirements, KYC (Know Your Customer) and ID&V (Identity and Verification) checks are conducted automatically via API calls. Luna Connect’s web interface and API integration enables users and their clients to perform this function without needing to download and install additional apps or software.

Management And Marketing Tools

Marketing integration

Luna Connect streamlines digital and traditional marketing campaigns with the integration of customer information, 3rd-party data, and lead sourcing. Leads for all channels are centralised on the platform, enhancing the efficiency of marketing campaigns. A user can instantly access and turn the data from an inbound channel into a useful piece of information via API integrations for online and email inquiries, and referrals.

Integration Tools

Integrating data from external sources, such as banks, is possible with Luna Connect platform’s integration layer.

Third-party information sharing 

Open banking and credit bureaus can be accessed securely and in real-time using API technology.

Agile/Open APIs

With Luna Connect third-party platforms can be integrated, including core banking platforms, quickly and easily using the Luna API platform.

5 Things Local Financial Institutions Can Do To Acquire New Customers In 2022

There are numerous ways for a financial institution can find and welcome new customers this coming year that take the very best of the finance customer relationship and breathe new life into touchpoints and interaction. By making your financial institution customer and service centric, you can reach more clients, leverage the right tools, and gain more customers in the coming year. Here are our recommendations for your financial institution in 2022.

1. Embrace The World Of Digital 

Going digital opens up an entirely new connection platform for customers. Online consumer trends being what they are, it would be foolish for a financial institution not to make themselves available to their clients online. If your company is not elevating its customer experience to include and optimise digital lending, then you need to start today. Make sure your potential customers know that they can reach out to you on a digital platform or make use of tools online and spearhead this angle for marketing to new customers.

2. Promote The Use Of Higher Security And Safety Measures For Customer Confidence And Protection

Customers want to feel bolstered and secure when using your platform or service. Luckily, we are at the height of some of the greatest modern technological advancements that prioritise security and overall safety for financial institutions and customers alike. Ensure you provide ample information (without revealing sensitive or proprietary data) in your marketing and welcome packages in terms of the secure measures that your clients can enjoy. Use the safety and reliability of your institution as a hook to secure more clients (pun intended).

3. Leverage Access To Local Clients 

In the face of embracing a digital world, many institutions may worry about the loss of client connection ‒ nothing could be further from the truth. In fact, human connection is seen as one of the most important aspects of the customer experience for 2022, highlighted by The Financial Brand in their article Top Five Customer Experience Trends in Banking for 2022. And far from making it more difficult, an online platform allows you to be more connected and intuitive to your customer’s needs. 

Through digital connection, your financial brand now has access to a whole new world of proprietary information that you can use to further hone in on the desired client experience and user journey. Even more importantly, as a local financial institution, you have the advantage of offering your customers the personal touch and empathy that they are craving.

Between improved audience segmentation and finer client service, there is an entire world of possibility to be explored in your access to local customers that will greatly increase your client base ‒ both existing and loyal as well as brand new!

4. Incorporate AI Learning and Smart Tech Into Daily Business

As a financial institution in 2022, there is a myriad of smart tech tools at your disposal. Most tools, such as the integration of AI learning, offer more than one avenue of value. For example, AI learning can greatly improve the ability to discern and assess application approval models, but it can also be used to detect potential next steps and predictions for customer behaviour which can be used in the marketing strategies that your brand develops.

More than knowing what to expect next and adjusting your marketing to follow, you can use the developments available in smart tech to welcome more customers ‒ use it as a hook ‒ to a world of stabilised and trustable digital lending.

5. Increase Awareness And Accessibility Online

This ties in quite closely with some of the points mentioned above and serves as an entire strategy on its own if done right. Simply becoming available as a digital version of your financial institution is not enough. You need to actively incorporate the various online advantages you can now offer and ensure their accessibility to potential customers. Simple measures such as alternate text or accommodations for differently-abled customers ensures that you do not cut off an entire market section through sheer ignorance. Make your financial institution truly inclusive and reach out to sectors that need to know that you are inclusive to discover and welcome more customers in 2022.

There you have it. Our top five recommendations on how you can improve your financial institution’s reach, service, and customer appeal in 2022! Luna Connect enables local lending institutions such as banks, credit unions, and asset finance firms to provide a personalised customer experience, automate repetitive tasks, and utilise AI-driven insights and analytics in weeks with no capital investment.

Luna Connect Featured in Irish Times Business and Innovation

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Take The Leap Towards Transforming Into a Digital Lender

Digital lending is by no means a new concept. With the nature of today’s consumer in a fast-paced world where everything is available via the internet, from ordering a pizza to the latest research on quantum mechanics, people have grown accustomed to anything they desire being fast, convenient, and accessible via a computer or mobile device. To meet this demand, many institutions have leaned into digital transformation and become digital lenders. 

Digital lending opens up a world of new opportunities to banks and financial institutions ‒ the sky is truly the limit. And with the rate at which technology is constantly evolving, this is only the beginning. Digital lending platforms such as Luna Connect are tangible proof to promote digital transformation.

Digital Lending Allows You To Benefit From Current And Future Technologies

The future of the financial ecosystem is digital, and it’s inspiring new collaborations and business models all the time. By embracing digital technologies, you have access to powerful tools. For example, with digital lending, the applicant’s information is captured digitally. This saves time and also reduces the risk of human error. 

Increase Revenues And Reduce Costs With Digital Lending

Lenders see a huge boost in efficiency when making the move to digital lending. With Artificial Intelligence, machine learning and digital automation, many of the processes involved in lending have been streamlined and automated. These processes, previously handled by humans, are now completed more quickly ‒ and with fewer errors which could cost you money ‒ than before. The staff who were previously tasked with those processes can be reassigned to more valuable work. That means your company is getting more done without any additional hires or expenses!

Digital Lending Brings The Ability To Make Better, More Informed Decisions

With more accuracy and better data, digital lenders have the advantage of making better lending decisions more quickly and consistently than traditional lenders. Using big data and algorithms, you can make better decisions. Banks and other digital lenders can make more quick and consistent lending decisions by employing advanced algorithms, accurate data, and standardised processes. 

Ready to take the leap and become a digital lender? Luna Connect has a digital lending platform to promote digital transformation that is quick, easy and efficient. Contact us now or visit our website to find out more!

Data Driven Marketing for Local Financial Institutions

Data Driven Marketing for Local Financial Institutions 

We are excited to kick off a series of monthly guest posts by friends of Luna Connect. Greg Serandos is a digital marketing strategist from the US and is passionate about helping local businesses compete against large financial institutions. One of those ways is to more effectively use customer data, then launching smarter campaigns to gain competitive advantage. 

Introduction

I have been involved in Google advertising since it was invented in the early 2000s, and Facebook advertising since the mid-2010s for banks, insurance companies, and technology startups. So, as digital marketing has become quite mature, I’m surprised that most companies don’t use their proprietary data they have gathered to gain competitive advantage in the market.

Every company has proprietary data. If you only have one customer, you have proprietary data. You know what that customer bought, how much profit you made from them, and if your marketing is set up properly, how they found you. Consider; you spend $1000 on Facebook and $1000 on Instagram, and both return 30 interested customers, that doesn’t help you. But if all 30 Facebook leads turn into approved loans, and none of the Instagram leads convert to loans, you have proprietary data and you can use it to cost-effectively acquire new customers, in this instance, through Facebook advertising.

Digital marketing is indeed complex. The marketing technology (or MarTech) stack is five full layers, each with multiple products, and each product being offered by multiple vendors. The stack includes:

  •      Marketing and Advertising
  •      Experiences & Clickstream
  •      Back Office
  •      Analysis & Activation
  •      Governance 

For example, the Experiences & Clickstream layer by itself includes web & mobile web, e-commerce, user experiences & Voice of the Customer, A/B and Multi-user testing, personalization, and web analytics. If you are a marketer, you are probably hearing from these vendors almost every day. 

Ironically, the bigger the company, the more impossibly complex managing systems and data becomes. Some of your large competitors don’t know how to use their data at all, or they suffer from ’analysis paralysis’ —they go down a rabbit hole trying to create the perfect and most accurate data set and end up feeling overwhelmed and doing nothing with their data. It’s counter intuitive but is good news for small and medium financial institutions..

How you can win

What we marketers should really be trying to do is exploit our proprietary data to make better marketing decisions, and not let perfect get in the way of the good. Should we spend more money marketing to males or females, certain age groups, geographic locations, time of day, week, or month, lead source (Google, Facebook, etc.)? When do we sell certain products to which audiences?

Forget about perfecting the marketing stack. Your proprietary data sources can come from just three systems: 

  •      Customer Data comes from your CRM
  •      Marketing Data comes from your website analytics 
  •      Product Data comes from your core banking system or ERP

You can readily link these together without hiring radically expensive data scientists and AI experts.

Most of your competitors don’t use their proprietary data to create a marketing advantage. Either they give up before the results are achieved, or they get so inundated with thousands of data points that they throw in the towel. Again, the bigger the company, the harder it is. 

You should consider engaging an expert to perform a digital data assessment and make recommendations on how you can use your own data to make better marketing decisions. Once you have a strategy to gain a competitive advantage through your proprietary data, execution becomes the key. Here are the steps.

1. Identify your target audience

There is no greater waste of resources than pushing your advertising campaigns to people who will not benefit from or have any interest in your offering. Data-driven marketing helps brands avoid this by cutting through the clutter to reach the eyes interested in your product or service. 

Moreover, once you have succeeded in identifying those online users, you’ll want to build a basis for acquiring them as repeat, loyal customers. The best way of doing this is by having insight into who those individuals are and to target them.

2. Improve Your Customer Experience 

Credit unions and local financial institutions have built strong relationships with families and communities, often spanning generations. After all, it’s human experiences that people hold on to – even cling to – especially in the Covid era. Sure, digital technology can handle transactional tasks better, cheaper, and faster than people can manually, but the human touch still matters. That’s why just 15% of US consumers bank exclusively with a consumer fintech.  

Successful financial institutions of the future will effectively blend traditional relationships with digital efficiency, speed, and convenience. This is especially true when it comes to borrowing, which has more of an emotional component than, say, savings or investing.. 

The truth is, most major banks have outsourced so many processes and driven so much cost out of their systems that, unless you are a high value client, their service levels have fallen dramatically.  This is the opportunity for local financial institutions like credit unions – to augment strong relationships with really great digital experiences. The secret is to always be customer centric at every step of the customer journey..

3. Use Tailored Messaging to Build Highly Targeted Campaigns 

Data-driven marketing can aid in creating the right kind of campaigns to capture your target consumers’ attention. With highly targeted, unique campaigns consisting of personalized messaging for each customer, businesses can build solid business-to-customer relationships and a loyal customer base. 

Organizing your data will help you create all your content with greater intent for better engagement. With information about your customers’ interests, lifestyle, and online activity, you can craft content that they would like to see. Your messaging should be unique and consistent across your chosen channels to capture your audience’s attention and to position your brand as a reputable source. Tailored messaging will make you memorable over your competitors fighting for similar customer recognition.

4. Segment Your Audience 

In the digital age, offering a personalized customer experience is achievable by segmenting your audience. Segmenting your audience tends to every interested pair of eyes at various stages in the sales funnel. As an example, perhaps several potential customers have not completed their applications; a friendly prompt to consider completing the purchase is appropriate targeted messaging at this phase. 

Because your customers are at different stages of the buyer’s journey, you must craft separate messaging to help urge them forward. Personalization is another integral part of successful data-driven marketing as it aids the automatic updating of customer data, otherwise called bi-directional integration. Personalization also provides direction regarding which platforms are most suitable to yield the best possible results for your offerings. 

Conclusion

To begin embarking on the data-driven organization journey, you must establish a specific set of goals that will be the driving force behind all your marketing decisions. Usually, a common goal is to grow your customer base, attract new customers, and increase your loan book. Your proprietary data can help you do that by indicating weak areas and those of strength that you could push even further. In turn, this can help you allocate your marketing budget more effectively and eventually help you streamline your processes. 

During this digital age, businesses will find the most benefit in using proprietary data to make intentional marketing decisions. The benefits of doing this include improved personalization, a better customer experience, more creativity, and increased ROI. 

There are four things you can consider taking on to achieve this:

  1. Proprietary data assessment to unpack your data sources to identify ways to gain marketing advantage.
  2. Digital assessment to identify gaps and provide the basis for a technology roadmap.
  3. Customer journey mapping to ensure you continue providing great customer experiences as you digitize your business.
  4. Digital experience platform that integrates with your core banking systems so you can provide digital experiences in days and weeks.

Explainable AI: Building Trust In AI For Digital Lending

Artificial Intelligence and Machine Learning are certainly hot topics on everyone’s lips lately. With AI seemingly present in every facet of modern life, from checking in with Siri or Alexa about tomorrow’s weather to the chatbot on any given website, the possibilities are seemingly endless. Many people know the surface-level basics of what AI is and can do, but may not know just how much AI affects the financial sector. A lack of understanding often leads to mistrust of the technology, especially when money is involved. Understanding Explainable AI and what it could mean for you will open your eyes to a whole new world of possibilities with Luna Connect.

Explainable AI 

Unlike “black box” machine learning, in which even its designers are unable to explain why an AI model made a specific decision, Explainable AI includes the results of the solution readily understandable to humans. This understanding is important to have so that both engineers and management benefit from identifying areas of weakness and bias, and users can more actively engage with it

 Accuracy Measures  

Part of what is appealing about AI is the accuracy associated with it. To understand this accuracy, in a confusion matrix analysis, the model prediction is compared to the real outcome known from the history of the data, and the number of true positives, negatives and false positives is reported. 

  • True Positive Rate
    Proportion of applications that were correctly predicted as approved.
  • False Positive Rate
    Proportion of applications that were incorrectly predicted as approved.
  • True Negative Rate
    Proportion of applications that were correctly predicted as declined.
  • False Negative Rate
    Proportion of applications that were incorrectly predicted as declined.

These rates can be shown as follows:

  • True Positive Rate
    True Positive / True Positive + False Negative
  • False Positive Rate
    False Positive / False Positive + True Negative
  • True Negative Rate
    True Negative / True Negative + False Positive
  • False Negative Rate
    False Negative / False Negative + True Positive

For simplicity, we can shorten these terms to be:

  • TP: True Positive
  • FP: False Positive
  • TN: True Negative
  • FN: False Negative

A model’s predictive accuracy is defined by how many accurately predicted cases are included among all the cases. The formula for accuracy is defined as follows:

TP + TN / TP + FP + TN + FN

When using predictive models to make credit decisions, a low false-positive rate is much more important than a low false-negative rate. To understand this way of thinking, a real-world, practical example can help: 

A person would like to borrow money from a lending company. If the lending company makes the false prediction that this person will be a good credit risk, the lending company can suffer. Giving credit to the “good” credit risk, which turns out to actually be bad, is going to cost the lending company money if the person fails to make payments. 

In another scenario, a person is classified as a bad credit risk and denied a loan. If this prediction turns out to be false and the person was actually a good credit risk, the worst that has happened is that the lender denied the person a loan. 

If we compare the outcomes of having a false positive and a false negative, it’s easy to see that predicting a false positive will be far more detrimental to the business than a false negative.

The Importance of Context 

When assessing the accuracy of predictive models, context is crucial. Medical diagnoses, for instance, can also result in false positives and false negatives. Again, a practical example can demonstrate this:

In this scenario, a patient comes in complaining of an illness. The doctor examines this patient, does some testing, and, upon the results of the test, comes up with a diagnosis and treatment plan. 

In one case, we have the test come back with a false positive. Because the test came back positive, the doctor makes their diagnosis and prescribes a course of treatment. In this case, any treatment the patient receives is unnecessary.

In the second case, the tests come back with a false negative. Because the tests came back negative, the doctor does not make a diagnosis or make the wrong diagnosis. No treatment or the wrong treatment is prescribed for the patient. It is easily deduced that a false negative can lead to a missed diagnosis of serious diseases and missing the opportunity for treatment of said disease. 

By looking at these examples along with the previous scenario with our borrowers, we can see the difference in consequences of false-positive and negative results. In the medical scenario, a false negative is much worse than a false positive. In a financial scenario, it’s the opposite – a false positive is worse than a false negative. 

There Are More Ways To Measure Accuracy

Receiver Operating Characteristic Area Under Curve (ROC- AUC) score:

This method helps one to visualise how well a classifier is performing. The Receiver Operating Characteristic (ROC) curve is a graph that plots the true positive rate against the false-positive rate at various thresholds. The Area Under this Curve (AUC) measures how likely a classifier is to rank a positive instance higher than a negative instance chosen randomly.

Cohen-Kappa coefficient (κ:)

As a statistical measurement, Cohen’s Kappa identifies how often two raters are reliable, as well as how often the two raters agree when they are rating the same quantity.

Specificity:

Specificity indicates how accurate a diagnostic test is at identifying normal (negative) conditions. It refers to the proportion of the true negatives correctly identified by a diagnostic test. Accuracy is the proportion of true results, either true positive or true negative, in a population.

Cross-Validation Mean Score:

Cross-validation refers to the evaluation of a model by resampling based on a small sample size. In k-fold cross-validation, a specific value for k is chosen. The sample is split at random into k equal-sized sub-samples. Following this, the mean accuracy score is calculated.

Test error rate:

The test error rate refers to the frequency of errors that occurred. The formula to determine test error rate is (1 – Accuracy)

Prevalence 

The accuracy of the model if the majority class was always predicted (baseline metric).

At Luna Connect, we use sophisticated AI and Machine Learning to change the world of money lending with our digital lending platform. We have changed the game by using modern technology and algorithms that allow us to identify applicants’ credit risks and other essential data, which allows for more successful lending. 

To make the move to digital lending or to find out more, visit our website.