For community financial institutions (CFIs) grappling with the latest economic recession, the flood of deposits is no surprise; nor is the rock-bottom interest rate on Fed funds. We’ve all seen it happen steadily over the last few months. Even the need for new loans may feel familiar. But the overnight shift to digital account holder service and the disappearance of foot traffic into the branch combined with increased consumer fears and reduced spending has proven to be a triple whammy for consumer lending.
With people staying inside and many branches closed, it’s also harder now for service representatives and loan officers to have in-person conversations with potential new borrowers.
The dramatic, sudden increase in unemployment has added to the complexity. Many potential borrowers who would have been an easy “yes” three months ago are no longer eligible or have chosen to hold off on big-ticket items. This means that even if you had a backlog of potential leads, the list probably needs a complete re-evaluation.
They’re already familiar with your institution and have a proven financial history with you, so they’re likely to be the safer bet. And odds are that most are holding loans with other institutions or lenders. 47% of your existing customers or members have a personal loan at another institution, and 60% have an auto loan at another institution, not to mention how many are carrying credit card debt with Chase, or Amex, or Capital One.1
That’s why you should start with the consumers you know best — the people who already bank with you. Ask them a simple question: “Are you interested in getting out of debt faster?” Let them know that you have tools to help them increase their financial freedom. Couple that with an attractive interest rate, and you can compete on something meaningful.
The Kasasa Loan®, now with Lifecycle Marketing, allows you to offer a distinctive loan product, one that helps consumers get out of debt, while protecting them against life’s curveballs. In fact, our research shows 98% of consumers would refinance all their debt at their current interest rate, just to get a Kasasa Loan.2
Preapproval campaigns are a standard approach; however, they’re expensive and require precision and consistency to make the investment worthwhile. And with consumer credit in upheaval, this approach may not supply the number of qualified leads you would typically expect to see, much less the level of consumer demand.
Imagine that your institution has a list of 20,000 consumers you’d like to target. After evaluating their credit, you end up with a prequalified list of 10,000. That list is only good for 90 days, and you need a month before your first campaign is ready to deploy, so you can only complete two direct mail drops in the time remaining. At around $1 per piece, you’ll have spent at least $25,000 to complete the pre-qual campaign just for one quarter. That cost doesn’t decrease next quarter; you have to start from scratch every time. Most community banks and credit unions simply don’t have that kind of budget ready to deploy, especially if the response rate is lower than usual.
For many of our institutions, we’ve implemented an alternative to preapproval campaigns called Lifecycle Marketing. It involves running highly targeted email offers to your current database. Using behavioral modeling developed in conjunction with Acxiom, a company that uses data to create better consumer experiences, we’re able to pinpoint the individuals with the highest propensity to purchase.
A simple Lifecycle Marketing program offering the Kasasa Loan can replace the heavy cost and effort of a typical “prequalified” campaign at a fraction of the cost. And Lifecycle Marketing programs are designed to run automatically and continuously — requiring almost no effort from your team.
To put this scenario into today’s terms, with most branches closed or offering reduced access, you need the digital infrastructure in place to handle each lead and guide them through the application process online. Consumers do not want to make an appointment for a loan application, especially if there’s another, easier way to get a loan.
There isn’t a silver bullet for your lending needs. You need a comprehensive package that includes a differentiated product, proven marketing, and a digital experience that goes toe-to-toe with your competition. When you work with Kasasa, we help you create a funnel that delivers qualified leads into the hands of your loan officers and makes it easy for them to close the deal. Contact us to learn more about Kasasa Loans, automated cross-selling, and what Kasasa can do for your institution.
1 https://www.pwc.com/us/en/consumer-finance/assets/pwc-consumer-lending-radar.pdf
2 Based on a 2017 Kasasa Consumer Study