The lending environment is evolving amidst economic uncertainties, with consumers and financial institutions navigating a landscape shaped by inflationary pressures and shifts in monetary policy. While interest rates are slowly falling amid tightened underwriting guidelines, opportunities for capturing loans remain strong. Additionally, competition is intensifying like never before as disruptors continue to make inroads, using fintech advances to target consumers with increasingly personalized offers.
Here are some critical questions for financial institutions to consider when assessing whether their current loan marketing strategies are effectively aligned with today’s dynamic and competitive marketplace.
Six Questions When Evaluating Your Current Loan Program
- Are you collecting and analyzing the right kind of data?
- Do your prescreened offers accurately target eligible customers and prospects on a recurring basis with one or multiple loan offers that meet their borrowing needs?
- Are you providing a loan acquisition experience that’s multichannel?
- Does it provide loan offers where consumers are: depositing a check via their mobile banking app, in a new car showroom, going through their mail, monitoring account balances on their financial institution’s website, checking email?
- Can they conveniently access and evaluate prescreened loan offers, respond with one click (and no application), and get a quick reply?
- Are enough qualified consumers responding to your campaigns, and is the process cost-efficient, enabling you to reach your ROMI goals?
Migrating From Current Practices to Progressive Practices
With the traditional loan marketing model used by numerous banks and credit unions, institutions waited on the customer or prospect to walk through the doors or land on the website looking for a loan. Many financial institutions are proactive in consumer lending, mailing preapproved credit card and loan offers to customers and prospects who meet the institution’s general credit criteria, but many prescreened loan offers lack two important Ts: timing and targeting.
These aforementioned loan acquisition campaigns send mostly untargeted promotions for a single product to consumers on a predetermined schedule, perhaps quarterly, or driven by interest rates or traditional peak demand periods (post-holiday debt consolidation, spring home-buying, etc.).
In addition, they fail to take advantage of consumer data that financial institutions have access to — both in-house and from external sources — that can provide deeper insight regarding risk assessment, pricing, and targeting, all of which can identify customers or prospects likely to be the most profitable and interested in specific loan types.
Thus, when evaluating the above questions, it’s important to ask if your offers are both timely and targeting the right individuals. Ultimately financial institutions need to leverage technology to meet consumer expectations as well as their own profitability goals. Those who rely on traditional methods may be left behind by the competition.
The Good News
The good news is that developments in digital lending technology are now available for financial institutions of all sizes, leveling the playing field in a market crowded with non-banking lenders. By combining automation, targeting and risk assessment, banks and credit unions can get in front of customers and prospects at the right time. Using data-driven technology to generate timely, personalized, prescreened offers, not only simplifies the loan acquisition process for the institution but also vastly improves the customer experience.
