How to Build a Loan Program that Attracts All Consumer Demographics

By Brian Timson

Timson Brian

There are a lot of companies out there competing for your loan business. At the same time, rates are soon going to increase, which will lessen the pool of prime and super prime borrowers and make loan revenue even harder to attain.

But while these challenges exist, they also open up the door to new opportunities for attracting more consumers and achieving larger loan yield – you just need to start thinking outside the box with your loan offerings. 

So how exactly can you revive your loan program to attract more borrowers without isolating current borrowers or expanding your risk? 

Understand the Different Loan Needs of Current & Future Consumer Demographics: 

Baby Boomers (currently make up the large majority of financial institutions’ consumers):

  • Rate-centric: They are more focused on loan rates than term lengths/flexibility
  • Satisfied with more traditionalloans, as long as they can keep their lower monthly rates 
  • Includes many prime and super-prime borrowers

Millennials (soon to become the largest consumer base for financial institutions):

  • Payment-focused and term- centric: Not fans of long-term commitment, unlike Baby Boomers
  • Looking for non-traditionalloans that allow for shorter/flexible term commitments and affordable/flexible payments
  • Largely made up of non-prime borrowers, many of whom have negative equity resulting from student loans and/or credit card debt

Other Steps to Take

  • Expand your lending channels beyond traditional auto & mortgage loans to attract the newer, younger markets.  These include student lending and refinancing programs, specialized mortgages for first-time home buyers, residual based financing options, small business loans, and crowd sourcing programs.
  • Adjust the terms and conditions of your loan products to offer more flexible repayment options.
  • Invest in third party collateral risk management services to protect your expanded loan portfolio with little-to-no impact on your day-to-day operations.
  • Leverage the right data to build a more accurate picture of your current and prospective consumers, predict borrower risk, and personalize interactions and sales communications.
  • Offer loan education programs to build consumer trust and reduce loan risk by helping first-time borrowers make smarter, more informed loan purchases.
  • Give the ‘Amazon treatment’ to all consumers by delivering a consistent customer experience – from loan fulfillment and servicing to customer service interactions – that is easy, accessible, and relevant to their needs; in a word: pleasing. 

By diversifying your loan options, channels, and terms to include these recommended additions, you allow yourself to attract emerging consumer demographics (Millennials & Gen Z), while not damaging relationships with your current consumer demographics (Baby Boomers & Gen X). 

The more you willing you are to expand your offerings and the more pleasing you can make interactions for all consumers the better chance you’ll have of delivering real value, building trust, and winning sales across allconsumer demographics.

Brian Timson is National Vice President, Partner Development & Innovation, with Allied Solutions.

 

 

Section: Standard
Word Count: 620
Copyright Holder: CUToday.info
Copyright Year: 2019
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URL: http://www.cutoday.info/THE-tude/How-to-Build-a-Loan-Program-that-Attracts-All-Consumer-Demographics