Lending strategies for engaging today’s re-inspired consumers

Despite the effects of COVID-19, loan demand remains healthy. Life goes on even while we’re staying at home, so many consumers are borrowing to buy new homes and autos, make home improvements or finance education for their children, while others need to refinance a car loan or take out a personal loan to supplement their cash flow.

So while COVID-19 has brought uncertainty to millions, it has also offered additional borrowing opportunities for consumers who remain well-positioned to capitalize on them. An improving economy will raise consumer confidence and borrowing, so it’s more important than ever for financial institutions to be ready with quality customer experiences centered around relevant, personalized offers at the time consumers are shopping.

With social distancing the norm for now, customer expectations for superior, friction-free digital service will remain strong. Financial institutions already know the importance of being customer-centric.

In a recent survey by fintech company Novantas, only 40 percent of respondents said they expect to return to branches post-COVID, indicating the shift to online is likely to stick.

Why a holistic approach to marketing makes sense

To generate sustainable loan growth today, financial institutions must rethink how they communicate with potential borrowers. Today’s consumer is more informed than ever and can choose from more lending options. With the speed, safety and convenience of digital and consumers now in the driver’s seat, modern-day financial marketers must look beyond conventional, seasonal push-marketing tactics and focus on strategies that engage prospects and account holders to achieve lending goals throughout the year.

A great way to start is by redefining a “potential borrower” as anyone who prequalifies for a loan, credit card or other product with your financial institution, whether they are currently interested in borrowing or not, and then engaging them immediately and relevantly.

That’s why a holistic loan-marketing strategy—one that both actively responds to individuals currently shopping for loans, as well as proactively creates interest among those who are not—makes so much sense in today’s wide-open economic climate.

An “always-on” approach makes it possible to reach consumers in all stages of the decision-making process, increasing the likelihood of acquisition and sustained loan growth.

For example, actively responding to a credit inquiry will help you to stay engaged with current and potential new accountholders. An offer made while a consumer is researching a product or service has far more relevance and salience than one made outside the shopping window. By executing well on event-triggered marketing, you can expect your message to receive five times the response rate of non-targeted push messages, according to Gartner. Extending an offer while consumers are researching is also highly cost-effective. In fact, Harland Clarke client data from 2018 shows that selling to an existing accountholder represents one-tenth the cost of acquiring a new account holder.

Conversely, proactively placing multi-product, recurring prescreened loan offers at the fingertips of pre-qualified loan candidates can instantly transform non-shoppers into borrowers. It delivers the ultimate friction-free consumer lending experience, while increasing the financial institution’s loan volume, reducing loan acquisition costs and streamlining loan processes.

A three-part holistic strategy for loan marketing success

1. Set up an alerts program to receive notifications from multiple credit bureaus whenever a credit inquiry is submitted for your account holders.

Using all three credit bureaus is best, as it will provide 75 percent more coverage, Harland Clarke data shows. Additionally, 60 percent of all loan shoppers will commit to a loan within a week of a credit-bureau inquiry. Monitoring these inquiries and then countering with a quick, preapproved offer via the channel to which shoppers are most likely to respond—whether mail, email or phone—will help you stay one step ahead of the competition and win market share.

2. Adopt an always-on turnkey loan program that sends multiple offers through multiple channels.

Whether you’re utilizing online, direct mail, mobile, email, branch or phone, reach out to accountholders and prospects who meet specific underwriting criteria. The goal is to create seamless, convenient experiences. Put loan offers at consumers’ fingertips in a way that they can accept anytime, anywhere.

3. Send offers quickly via direct mail, email and phone when they’re most likely to need a loan.

You will be creating quality customer experiences that can strengthen accountholder loyalty, reduce attrition and extend your brand.

In a perfect world, your accountholders would never even think to inquire about a loan from a competing institution, and you’d have the resources to get in front of every prospect. But times have changed with the availability of multiple channels and myriad borrowing options. You can, however, effectively compete for your share of consumer loans with a three-part strategy that includes reactive alerts, proactive engagement and quality customer experiences.

Stephenie Williams is executive director, acquisition solutions with Harland Clarke.