Since the 2008 financial crash, lenders have been particularly cautious with their lending strategy. But as the market returns to form, banks are seeing stronger loan growth. The FDIC supports this optimism, reporting total loans and leases increased by $99.7 billion during the first three months of 2016.
True to the old adage that banks need to lend money to make money, CSI Resources states that loan growth and interest income are the greatest revenue opportunities for financial institutions. But vying for customer attention today is competitive. Given multiple lender options, banks need to better engage their loan customers – or they’ll take their business elsewhere.
Sell the Benefit, Not the Loan
Personal loans are on the rise in the U.S., with about 24 million Americans likely to take out a personal loan in the next 12 months. So, how do banks attract and tap into this market demand? The standard default strategy of most lenders is to promote “competitive” loan rates. But with customer demand for more personalized messages and targeted bank services, generic rate ads fall flat.
An alternative approach is to promote the “benefits” of a personal loan.
Unlike mortgages or auto loans, personal loans aren’t earmarked for a specific purpose. Bank customers take out personal loans for any variety of reasons – from home improvements, to unexpected medical expenses, to financing a dream vacation.
One of the most common needs for a personal loan is refinancing and consolidating high-interest debt. A single personal loan covers the consumer’s other multiple debts – with the benefit of structured, scheduled payments over time. NerdWallet notes that debt consolidation is a good option for consumers to pay off debt, and a good credit score provides very reasonable loan rates – even more consumer benefit.
Engage Your Existing Clients
Customers typically consider their own bank first when shopping for a personal loan. But banks need to give customers a reason to better engage. Customers should be reminded that they can source very competitive personal loans from their own bank – someone they already know and trust.
Yes, loan interest rates and fees are part of the customer’s consideration. But they also consider more aspirational benefits of the loan – more space for the kids in a newly renovated home; surprising your spouse with a second honeymoon abroad; that sigh of relief by consolidating high-interest credit card debts.
Engage the customer through an emotional connection – market what a personal loan actually means to them.
Marketing Personal Loans
A rebounding economy, steady job market growth and increased consumer confidence are driving more spending – all creating a boon in the personal loan market. But as banks set their personal loan marketing strategies, don’t forget to add customer engagement to the list.
Bank location, mobile accessibility and products alone are not enough to attract and keep customers. Engaging bank customers means marketing to their individual needs – what’s driving them to apply for a personal loan in the first place?
Want to learn more? Request a free briefing with one of our Loans Processing Specialists.