Amazon.com was the first Internet retailer to perfect the ultimate ease-of-buying device, “1-Click” ordering which allows registered users with a valid credit card on file to literally order a book by clicking a single button (above). We expect lenders to do the same, allowing registered online banking users with a credit profile on file to arrange for additional credit by clicking a single button, i.e., “one-click lending.”

Here is a win-win situation. Loans are the most popular and most profitable financial service sold online. What do you get when you mix profitable with popular? Rapid innovation, aggressive marketing, as well as the inevitable decline in margins. So expect to see aggressive moves from traditional banks, loan/mortgage brokers, non-bank Web companies, and Silicon Valley start-ups.

What can you do to maintain or even grow your loan business in light of the coming online onslaught? Think about the buying decision. A prospective credit customer is thinking about three things:

1. Will I be approved?

2. Is it fast and convenient to apply?

3. Is the price low, or at least competitive?

And if you excel at numbers one and two, there is less pressure on number three. That’s been the secret of credit card direct marketing for the past 40 years. How can you recreate a similar experience online? Follow the leader and use the Amazon.com approach, create a One-Click preapproved loan.

There are several ways one-click lending could be implemented. In the application model (below), registered users would initiate one-click loan requests. In the preapproved model (right), registered users would receive word from you whenever they had been preapproved for a loan.

For either program, the key is getting users preregistered. Consider integrating the one-click loan registration process into your online banking set-up, so all online banking users are automatically eligible.

Version 1: Application Model

1. Users preregister pertinent info such as name, address, employer, social security number, annual income, and so on.

2. Users select loan preferences and are served pre-disclosures for applicable loan programs.

3. The bank prequalifies users for a maximum amount of unsecured and/or secured credit that the user can tap using the one-click function. When the total amount is used, users could reapply for a larger amount. Time limits would be established for refreshing the information on file to maintain underwriting standards.

4. When and if the user decides to accept the loan offer, a simple click on the one-click loan button elicits a confirmation screen verifying the loan amount and terms. Final disclosures are delivered.

5. The company then processes the loan application pulling credit bureau records, verifying employment, appraising property, etc. Assuming everything checks out, the user is notified by email that the money has been transferred into their checking account.

Version 2a: Preapproved Model: All Electronic (may require regulatory approval)

Registered online users are run through a credit scoring model and preapproved for new or expanded credit. Prospects are notified electronically through Web-based messages and email. For security, the email contains a hyperlink to a password-protected area on the lender’s Web with complete details as well as the “I accept button.”

Version 2b: Preapproved Model: Direct (Snail) Mail Integrated with Web

Recipients of preapproved credit offers are offered the option of accepting the offer on your Web site where funds can be made available immediately with a “one-click” process (subject to verification of the identity of the respondent).