The Shift in Communication and Why Lenders Must Adapt

This post builds on research from David Albertazzi, Ariana-Michele Moore in Digital Denial: The Hidden Cost of Lending’s Communication Gap, highlighting new findings in communication between lenders and borrowers.

The Shift

Communication preferences are constantly changing. Lenders and companies that sell products to customers must evolve to keep up with payments. In the past, borrowers primarily interacted with lenders via phone calls, emails, and even in-person visits. However, with the rise of technology and changes to how we communicate, text messaging is preferred—especially for younger generations.

Despite this shift, many lenders have been slow to adopt text messaging as a standard communication method. This hesitation comes with a cost. Not only do borrowers prefer texting, but lenders see more success with this type of communication. In fact, Dash Billing reduces time and effort by 80% to collect 60% more money. As the industry lags in adapting these changes, lenders risk falling behind in both customer satisfaction and operational efficiency.

Let’s explore why text messaging is essential for modern communication, the benefits it offers, the barriers preventing widespread adoption, and what lenders must do to keep up.

The Data Speaks for Itself

Consumers have spoken, and their message is clear: they prefer to communicate with lenders via text. Once lenders understand this, they will automatically collect more. Consider these statistics:

• 80% of borrowers want to interact with lenders through text messages
• About 40% do not receive any text messages from their lender
• 49% of borrowers who prefer text communication would switch lenders just to gain access to texting options

These stats are very telling. Lenders who fail to integrate text messaging are automatically collecting less money than they would be collecting if they started utilizing text messaging. In a market where customer retention and collecting money owed to you is critical to success, adapting to communication preferences should be a top priority.

The Benefits of Text Messaging

For those lenders who have embraced text messaging, the benefits are clear. Texting is more than just a convenience—it improves key business metrics and enhances customer experience. Here’s how:

Operational Efficiency

Traditional communication methods like phone calls and emails require significant time and resources. Text messaging, on the other hand, is instant and requires minimal effort from both the lender and the borrower. This is especially true with automated communication, like that offered by Dash Billing. Automated text reminders, payment notifications, and status updates reduce the need for manual follow-ups and streamline the loan management process.

Higher Engagement and Completion Rates

Borrowers are more likely to open and respond to text messages than emails or phone calls. We have found that when automated text and emails are sent, text messaging is more effective in reminding individuals about their payments or overdue accounts. In fact, that’s why Dash Billing prioritizes a mobile system that is compatible with any device. With phones at people’s fingertips, receiving a text prompting them to make a payment is forward, quick, and effective at ensuring pertinent information reaches borrowers promptly.

Improved Payment Timelines

Late payments are a challenge for anyone, but text messaging has proven to be an effective solution to this growing problem. According to Digital Denial findings, 75% of Gen Z borrowers say that text reminders help them remember to pay on time. By sending timely payment reminders, lenders can reduce delinquencies and improve cash flow immediately.

Stronger Brand Recognition and Trust

One surprising benefit of text messaging is that it helps borrowers and customers remember their lender. In an age where people have multiple financial relationships and purchase various services, consistent and clear communication keeps this top-of-mind. This is particularly important for institutions looking to foster long-term customer relationships.

Barriers to Adoption

Despite the clear advantages, many lenders and companies remain hesitant to implement text messaging. The two most common concerns are security and compliance.

Security and Compliance Concerns

Both borrowers and lenders worry about the security of sensitive financial information shared over text. With the rise of scams and fraud, there is valid concern about whether text messages can be intercepted or misused.

However, secure messaging solutions can address these concerns. Lenders must choose secure platforms that protect customer data while maintaining the convenience of text communication. Dash Billing prioritizes security, always ensuring that both borrowers and lenders information remains secure.

While compliance adds complexity, it is not too big of a challenge. By implementing clear opt-in processes, maintaining thorough records, and using compliant messaging platforms, lenders can navigate regulatory requirements while still meeting customer demand.

Resistance to Change

Some organizations are slow to adopt new technologies. This is often due to outdated internal systems, lack of leadership buy-in, or fear of disrupting existing processes. As a result, many lenders hesitate to implement text messaging—even when the demand is obvious.

Overcoming this resistance requires a mindset shift. The financial industry must recognize that borrower preferences are changing and that the cost of not following this shift in communication is higher than the effort required to implement change.

The Future of Loan Communication

As digital-first communication becomes the norm, those who fail to embrace text messaging will continue to lose customers to more forward-thinking competitors. The future of communication is centered around strategies that prioritize ease, speed, and accessibility.

To stay ahead, lenders must:

• Adopt Secure, Compliant Text Messaging Platforms: Choosing the right technology is key to maintaining security and regulatory compliance while providing seamless borrower communication.
• Security and Compliance Best Practices: Make sure your customers can identify legitimate messages to build trust and prevent fraud.
• Offer a Multichannel Communication Approach: While text messaging is crucial, providing multiple communication options (email, phone, chat) ensures all borrower preferences are met and no stone is left unturned.
• Monitor Engagement Metrics: Tracking response and payment completion rates can help lenders refine their communication strategies over time.

Get Ahead With Dash Billing

Text messaging is no longer just a convenience—it’s a necessity. The financial industry is experiencing a generational and cultural shift in how borrowers and customers prefer to communicate. The data is clear: they prefer texts.

Lenders that ignore this shift risk losing customers and money due to missed payments. By addressing security concerns, ensuring compliance, and proactively implementing text communication strategies, you not only have the potential to meet expectations but also gain a competitive advantage in the market.

The choice is simple: adapt to the shift in borrower preferences or get left behind.