Loans of all types are high on the list of consumer priorities over the next year as they look to make large lifestyle purchases. Many are beginning home improvements, planning vacations, buying new homes and autos or financing their children’s educations.
And while the report shows that 86% of people are generally happy with their primary financial institution and get what they need from the relationship, the one critical product where they’re open to working with a different financial institution is loans.
When you also factor in inflation concerns, tight supply chains, expected rate hikes, and the increased popularity of neobanks,² particularly with millennials, the competition for loans will be fierce.
For these reasons, it’s more important than ever for financial institutions to be ready with relevant, personalized loan offers at the time people are shopping for a loan.
6 Ways to Stay Competitive In An Open Lending Market
- Market your rates in your messaging. Interest rates are expected to creep up this year. Make sure people are aware of your competitive rates by highlighting them in your marketing.
- Target “in-market” customers and prospects. If you intend to be competitive in this tight loan acquisition market, the key lies in striking while the iron is hot. You must reach prospects with your best offer precisely when they’re in the market for a loan. You must also anticipate the needs of your current customers and keep your preapproved offers top of mind so they know you stand ready to serve them.
- Offer multi-loan pre-approvals to existing customers. People often lack confidence in their ability to be approved for a loan. Eliminate the concern with pre-approvals so when they are in the market, they think of you first. And with multichannel multi-loan pre-approvals, customers can access, review and accept multiple prescreened loan offers at every touchpoint, driving loyalty and revenue.
- Adopt an always-on, omnichannel approach. Discover the importance of implementing an effective 24/7/365 strategy that puts loan offers at shoppers’ fingertips to accept anytime, anywhere. Communicating with consumers through multiple channels, including email, digital, mobile, direct mail and connected TV is a proven method of increasing loan acquisition and driving revenue.
- Set up an alerts program. Receive notifications from multiple credit bureaus whenever a credit inquiry is submitted for your customers. Using all three credit bureaus will provide 75% more coverage.³ Monitoring these inquiries then countering with a quick, pre-approved offer via the channel to which shoppers are most likely to respond will help you stay one step ahead of the competition and win market share.
- Make loan shopping easy. Think like Amazon® and keep it simple and easy. If it involves too many steps, requests too much information or takes too long, consumers will abandon the process. Take a cue from fintechs, who have gained favor by making the loan application process easy for applicants.
“Consumers are much more rate and payment aware and discerning of the loan terms they receive than we saw during the most recent down-rate environment, so they’re more likely to shop around for the most favorable loan package,” says Stephenie Williams, Vericast’s vice president, financial institution product & strategy. “You must make your loan marketing proactive and clear, and your offers easily actionable.”
In a perfect world, your customers would never consider applying for a loan from a competing institution and you’d have the resources to get in front of every prospect. But times have changed and there are now multiple channels and myriad borrowing options now available.
You can effectively compete for your share of loans with a six-part strategy that puts the customer at the center of your marketing efforts.
Contact Vericast to more about how strategic, data-driven marketing improves program optimization, achieves explosive loan growth, and gives your credit union a much-needed competitive advantge.
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1 Vericast 2022 Financial Services TrendWatch
2 Lake, Rebecca, “Surprising Millennial Banking Trends,” The Balance, February 27, 2022
3 Vericast client data