Lending is a vital component of your business, and you simply can’t afford to lose valuable loans to competitors. Effective lending strategies combined with a well-trained and engaged staff can and should deliver immediate, significant and sustainable double digit loan portfolio growth across all product lines year after year.
The most successful loan portfolio growth initiatives are targeted, specialized programs that are built around a compelling offer and fully backed by a well-trained and energetic staff that is focused on selling and cross-selling. According to the National Credit Union Administration (NCUA) credit unions in Alabama reported $645.2 billion in loans in the quarter ending Dec. 31, 2013, an 8% increase from 2012. If other credit unions and financial institutions are realizing organic loan growth in our post-recession economy, there's no reason why your institution can't have your very own piece of the pie!
We've identified four key areas that your institution should examine to increase your chances for big, balanced, and sustainable loan portfolio growth in 2015.
1. Audit Your Lending Systems and Processes
Processes and origination systems should be designed to deliver speed, ease, convenience, and accuracy for both your customer and your employees. Interfaces between systems can eliminate duplication for your employees, making the loan process much more efficient. The fact is, we live in the age of instant gratitude, and even when it comes to a tedious process such as closing on a loan, consumers still expect speed and efficiency from application to funding. If you can’t deliver a “10 minute loan” from application to funding on a consistent basis, I encourage you to examine this process closely. Further, advanced technology such as electronic delivery and signature of loan documents can generate a lift of 5%–10% in loan volume.
2. Effective Data Mining
Your auto loan or credit card recapture programs should begin with well-established criteria to qualify for the loan. Failure to do so may reduce not only your response rates, but also lead to upset customers who take you up on your offer, only to be denied. Whether you acquire your list of prospects organically from your existing customer base, or purchase a list of potential borrowers from a third-party provider, it’s vital that you screen that list against well-defined criteria. If you decide to go the organic route, there are several things you can do to help you build your list of current customers, such as check out your loan close ratios, current customers to potential customers, and borrowers to customers. The more time you spend building your list, the higher your campaign’s ROI and overall success.
3. It's All About the Offer
If your intention is to increase loan portfolio growth, you will have to give your customers a reason to want to borrow from you. The word "value" gets tossed around a lot when discussing offers. What exactly does "value" mean to your potential borrower? Is it a rate, the service you provide, ancillary or complimentary products, convenience with regard to transacting business, longer lobby hours, a friendly and caring staff, or is it all of these things combined?
View your loan offers, rate, and service from the “borrower perspective.” Identify your “differentiators” and fine-tune where necessary. What can you offer that is different from the competition and valuable with respect to your customers and your loan? In other words, how can your offer stand out like a "purple cow? Whatever you decide to offer, the language should be clear and communicate the value, benefits, and convenience your loan program has to offer.
4. Train Your Staff
What good is a targeted list of prospects and a compelling offer if your staff isn't trained to field questions, make outbound calls, and close the sale? Your employees are on the front lines, so they need to be informed and prepared to deal with the influx of activity that could--and should--come into your institution. Review the last 20 or 30 loans to determine if your staff is cross-selling or order taking. Do your tellers have current rate sheets, and are they armed with enough product knowledge to confidently engage your lobby visitors?
If you're running a promotion or offer, each member of your team should be knowledgeable about the effort, be armed with FAQs, have a tool box full of ways to overcome objections, and be excited to present such a valuable offer to their customers. Consider kickoff meetings prior to your campaign, engaging training, contests, compelling customer incentives that make presenting the offer easier, and staff sales incentives.
Campaign awareness is vital to any successful campaign. Daily staff updates can provide opportunities for acknowledgement, success stories, additional training, and motivation. With a well-trained, engaged staff, and a strategic plan, you can capitalize on your current customers, bring new ones into your doors, and achieve big, balanced, and sustainable loan portfolio growth.
This post is brought to you by guest blogger, Mike Dorsett, President of Portfolio Performance LLC. Mike has assisted many buying credit unions in the participation loan process, to include: locating participation opportunities, development of participation policy and credit risk matrix, seller due diligence, analysis of pool characteristics and loan economics, loan file due diligence, and final evaluation.