Using data to create efficiencies in targeted loan marketing
By Stephen Nikitas, Senior Strategy Director at Harland Clarke
As competition in financial services continues to grow, technology and data analytics will play a key role in shaping how banks optimize their business and capture market share. To fend off fintech entrants and new online lenders entering the space, banks must focus more precisely on customers who need their products and services - when they need them. By honing in on those who are actively looking for loan products, banks have a greater chance of converting them to customers or retaining their business.
Growing loan portfolios is a big business for banks. In January 2018, there were $157.2 billion in new mortgages originated, a 26.5% increase year-over-year. Automobile loans also increased 1.8% to $43.7 billion, according to the Consumer Financial Protection Bureau. Banks are turning to technology to help capture that business, with 85% of the largest banks in the US indicating that implementing a digital transformation program is a key priority in 2018. Two-thirds of banks are investing in technology to acquire, engage and retain customers, according to an Ernst & Young survey.
A new paradigm in loan marketing
While trial-and-error has long been the standard for marketing campaigns, many marketing executives are discovering the power of technology solutions in harnessing data to more accurately target their campaigns. Data analytics have become increasingly more sophisticated, so targeting customers actively looking for loans and reaching out to them with offers is easier and more efficient than ever. This provides additional benefits to account holders since customers appreciate that they’re receiving offers relevant to their needs, thus the ROI for marketing campaigns increases.
In March, the Federal Reserve raised interest rates 25 basis points and indicated that there will likely be three rate increases in 2018. With rates beginning to rise after 10 years of remaining historically low, borrowing will become more expensive for consumers. This means banks should be marketing credit products now in order to attract credit-worthy customers who will qualify for products.
Here are three ways to make your loan marketing more efficient:
- Segment by credit worthiness: Analyze customer data to know who will likely qualify for a particular product and reach out to those customer segments with appropriate products.
- Focus on current customers: Offer your account holders pre-selected loans, which will reduce the chances they might shop around for products. By presenting current customers with favorable rates, they’re more likely to remain loyal.
- Know your customers’ needs: Nothing is more frustrating than receiving a discount code for a previously purchased product. The same is true with banking. Don’t offer a home loan to someone who recently closed on a house. The objective is to anticipate customers’ needs and offer relevant products.
There are more than 25 billion gigabytes of information about the behavior of businesses and consumers gathered each day. As the amount of information continues to grow, those with proper analytical capabilities are poised to become even more relevant to consumers.
Harnessing the power of this data and using it to create targeted, personalized loan offers increases the reach of loan marketing campaigns. By making the most of innovative technology, banks can show measurable gains in loan volume and profits.
About Stephen Nikitas
Stephen Nikitas has more than 30 years of experience in strategic planning, marketing, public relations and executive speechwriting. As Senior Strategy Director at Harland Clarke, he provides clients with consultative services, helping them craft marketing and retail strategies to take advantage of existing market and financial conditions while growing targeted portfolios.
Stephen speaks on a variety of topics, including loan portfolio growth, account holder retention and turning regulatory issues into opportunities.
About Harland Clarke
Harland Clarke is a leading provider of customer engagement solutions that help connect businesses and people how, when and where it matters. The company’s check, card, lifecycle marketing, contact center, transactional communication, treasury management, promotional product and GRC solutions help its clients and distribution partners optimize the quality of experience had by their customers. Visit www.harlandclarke.com