Consumer Lending: TRANSFORMED

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Information about Consumer Lending: TRANSFORMED

Published on February 28, 2014

Author: DaveBuerger



Stop investing in educated guesses, and start investing in relationships. A preemptive lending strategy is the key.

The Financial Brand asked 300 bank and credit union marketing executives to share with us the biggest challenge they face in 2014... Source: The Financial Brand - February, 2014

“Sustaining loan growth given that the refi boom has for the most part passed.” — Bank VP ($1 billion to $10 billion in assets) Source: The Financial Brand - February, 2014

“Keeping up. Offering all the technological conveniences consumers demand.” — Credit Union VP ($1 billion to $10 billion in assets) Source: The Financial Brand - February, 2014

“Access to big data to create and measure effective online campaigns and next best offer marketing.” — Bank Director ($10 billion to $50 billion in assets) Source: The Financial Brand - February, 2014

“Interpreting the vast amount of data that we have and turning it into actionable strategies.” — Credit Union VP ($100 to $500 million in assets) Source: The Financial Brand - February, 2014

“The move to electronic/mobile services while maintaining excellent service in traditional channels. A big part of this is recognizing and offering consumers what they really want, and not making assumptions based on age/economic demographics.” — Credit Union VP ($500 million to $1 billion in assets) Source: The Financial Brand - February, 2014

Priorities & Themes for 2014 Drive-to-Digital Impacting delivery, marketing and service usage Payment Disruption New players, technologies and innovations Focus on Customer 3.0 Digitally astute, social and yearning for insight Breaking Down Silos Product and data silos begin to crumble Simplifying Engagement Removal of friction and steps to engage Improving Contextual Experiences Leveraging data for improved service Source: Bank Marketing Strategy, Retail Banking Trends and Predictions for 2014 (survey)

Focused on Customer Growth & Cross Sell The growing importance of customer-centric banking strategies is evident as 62% of survey respondents cited mobile banking, payments and data-driven sales and marketing initiatives as the IT-related projects they will focus on most for customer growth. Source: KPMG

The goals are clear. But our methods are antiquated.

Financial institutions spend billions each year mining data for “intelligence” that they can use in attempts to deliver a loan offer at the opportune moment.  Propensity modeling  Segmentation strategy  Predictive analytics  Event triggers

Less than 2% of the time they succeed in capturing the attention of an interested consumer… At which point they present a loan application.

Loan applications suck.

Meanwhile… “Help - my customers are moving to mobile in droves!” Now what?

The industry’s response? Simplify the application.

Strip it down. Pre-populate it. Dress it up in a fancy outfit. Cram it on a 4” screen. And guess what? It’s still a loan application.

Here’s the really absurd part… Financial institutions have tremendous amounts of customer data at their disposal. In most cases, they already have all of the information necessary to make a responsible loan approval decision. So why do they still make customers jump through unnecessary hoops?

If the major friction point in the loan process is the application… DITCH THE LOAN APPLICATION

Don’t tell them what they want. Listen.

Don’t wait for them to come to you. Use your knowledge, your data, to better serve their financial needs.

Stop investing in educated guesses, and start investing in relationships.

Empower the consumer with Perpetual Loan Approval Status • No more loan applications • Financial Institutions benefit from deeper customer relationships and “Top of Wallet” advantage. • Preemptive Lending Strategy Their customers know where to turn for credit when they decide to pull the trigger on their next big purchase, with convenient preapproved access to highlypersonalized offers at every touchpoint.

Consumer Lending Strategies SIT AND WAIT REACTIVE o Initiated by customer (fundamental flaw) o Application required ASK FOR THE BUSINESS PROACTIVE o Promotions (seasonal or need driven) o Targeted pre-approvals & pre-qualifications o New account cross-sell (application required) EMPOWER THE CONSUMER PREEMPTIVE o Comprehensive Pre-screened Lending (CPL) o NO Applications o Perpetual loan approval status o Multi-product o Omni-channel o Customer-centric o Online applications o Instant approval o Many providers o Little differentiation o Little/no competitive advantage o o o o o “Spray & Pray” marketing initiatives Advertising & promotions Teaser rates & incentives Segmentation & targeting strategies “Instant” applications w/ cross sell o o o o Constant/consistent messaging All touchpoints All direct channels Instantly actionable response

Comprehensive Pre-screened Lending (CPL) CPL Strategy: Utilizing advanced customer relationship profiling and risk-based pricing criteria to pre-approve individuals for a personalized array of loan/credit products, then managing simultaneous communication and acceptance of the multi-product offers at all key customer touchpoints ― online and mobile banking, direct mail, email, in-branch and at the call center. CPL can be thought of as a personalized, pre-approved rate sheet, granting consumers perpetual insight into their personal credit worthiness and buying power. Pre-approved funds are just a click or a tap away. Anytime, anywhere. No loan application necessary! Preemptive Lending: Over time, customers become conditioned to know that they have credit conveniently available when they need it, positioning the FI as their customer’s primary lending resource.

Does it Work? You Bet! Award Winning pilot program at a $2 billion FI achieved more loan volume in its first year than traditional methods had yielded in the previous four years combined. Response rates more than doubled, and acquisition costs were cut by nearly 80%.

― CUneXus client

Online Banking SSO Interface 1-Click Access to Pre-Approved Loan Offers Inside Online Banking

Significant Revenue from Mobile? Absolutely! Mobile Offer Acceptance: Easy as…

― CUneXus client

ONE-STOP DIRECT MAIL & EMAIL FULFILLMENT SERVICES PROVIDED BY PSB INTEGRATED MARKETING  Data Processing  Collateral Design  On-Premise Digital & Offset Presses  On-Premise Mailhouse

Cross Sell Interface The Ultimate Sales Tool  Simple  Powerful  Effective

Winner of the DEMOvation Challenge Join us for a live demo at March 3-4, 2014 • Seattle L EA RN M O RE AT CUNEXUS.COM

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