The Loan Application Tradeoff Lenders Don’t Have to Make

Every loan, mortgage, or credit card application comes with a tradeoff.

The shorter the form, the easier it is for consumers to complete — leading to higher completion rates and more leads. But, fewer questions used to also mean less information for lenders to verify identity and understand existing financial obligations.

Longer applications offered the opposite. More information to fill in built confidence in the applicant and the application, but every additional field created another opportunity for consumers to abandon the process. 

In fact, our research shows 1 in 5 consumers abandon a loan or credit card application because it asks for too much information most of the time — with 8% saying they always abandon when an application asks for too much. Among Gen Z consumers, the likelihood of abandoning an application half the time or more jumps to 50% when it asks for too much information. 

Consumers increasingly expect financial experiences to be fast and intuitive. When an application feels unnecessarily cumbersome, they will decide that applying isn’t worth the effort.

A shorter application removes this barrier. But lenders still need to establish that an applicant is who they say they are. They need to assess financial circumstances and existing obligations. 

The tradeoff has historically been whether to optimize for completion or information. But, here’s the thing — lenders already have access to most of the information they need to verify a consumer’s identity and understand their current credit reality. 

Instead of asking consumers to manually fill out dozens of form fields and outline every debt and financial obligation, solutions like Spinwheel change the equation. Less data entry for the consumer. More information and confidence for the lender.

Verified consumer identities without adding friction

Traditional verification methods can create unnecessary friction by asking consumers to complete multiple disconnected identity workflows or manually connect accounts. In addition to higher application abandonment rates and lower conversion rates, they also increase operational costs and fraud risk.

With Spinwheel, lenders and credit providers can authenticate consumers instantly using just a phone number and date of birth. And, using phone-verified identities and consumer-permissioned data, it also helps lower fraud risk from common attack vectors like credential stealing.

Complete debt profiles without the manual work 

A traditional application might ask consumers to manually enter their outstanding balances, creditors, account types, and other debt information. This doesn’t just increase the likelihood that they abandon the process. It can also lead to missing or inaccurate financial information. Without full visibility into a consumer's financial position and liabilities, lenders are making decisions based on limited information, self-reported data, or incomplete financial context. 

With authenticated data, lenders can obtain a richer picture without requiring consumers to do all of the work. Spinwheel delivers access to a real-time view of a consumer's existing obligations, balances, borrowing costs, and financial position. 

Lending applications should require less typing, not less diligence. With just a phone number and date of birth, consumers get a simpler path to apply while lenders gain verified identity and a fuller view of the financial obligations behind the application. That’s how lenders can reduce friction without sacrificing confidence.