Improve retention, minimize fallout thanks to differentiated competitive intelligence at the loan level

BLOG VIEW: With the increasing competitiveness of established mortgage players as well as new entrants threatening to disrupt the industry, lenders are placing more emphasis on areas such as mitigating the risk of portfolio runoff and a better understanding of mortgage needs. potential borrowers.

Tracking trends associated with portfolio attrition has grown in importance as lenders work to understand the possible dynamics that could cause existing clients to look elsewhere for a new loan. This level of knowledge allows lenders to make the necessary improvements to their existing retention strategies and gain a competitive advantage with current clients looking to refinance or who are in the market to sell their current home and buy another. .

Additionally, lenders routinely invest in purchasing prospect lists to market their loan products, but then struggle to determine why some pre-approved prospects did not ultimately close the loan. This, in turn, leads to a sub-optimal return on investment on lender marketing campaigns and a subsequent pipeline payoff ratio below the industry average, which can threaten a mortgage lender’s ability to maintain a profitable business model over time.

To effectively address these issues, mortgage and real estate lenders need a better understanding of consumer behavior, as well as the activity of competitors. This allows lenders to make more informed and growth-friendly decisions.

The challenge for lenders is often to develop decision strategies and then deploy them in the market, which can be a disconnected, complicated and lengthy process. Using a solution that delivers a unified experience, the use of analytics, combined with competitive loan intelligence, helps lenders adjust their strategies to better align with their growth goals.

This actionable intelligence approach is designed to influence multiple business areas, including the following:

  • Portfolio execution: The ability to identify trends and trickle-down strategies improves customer retention. Having information (such as whether a borrower sold the house, refinanced with another lender, and if so, which lender won the deal) helps lenders better understand who they are losing business for and what products they are doing. may have – or should have – offered to keep their current portfolio and increase customer satisfaction.
  • Pipeline attrition and new business: The impact assessment improves closing rates. Even though the average success rate (loan closings on demand) was 71% in Q2 2020, it’s important for lenders to understand why loans aren’t always closed with them. Better information helps lenders find out if the prospect got a loan from another lender, if they ended up with a different loan product, if the closing time was too long, which groups and tranches of credit they lose and which competitors gain leads.
  • Marketing expenses: Observing trends in age groups, generational activity, and risk tolerance helps lenders more clearly understand whether their marketing spend is in fact targeted at the right market. Information on such things as whether the prospect got a new mortgage, what actions the prospects took, which lender the prospect was ultimately chosen with, whether they are still a viable prospect, and even ” they match the target audience, help ensure that marketing initiatives are effective and that marketing ROI is maximized.
  • For a mortgage or home equity lender to capitalize on this valuable information, they must have access to a unified solution that combines data and analytics with decision execution. A platform that provides this information should have the following:
  • Powerful data: Multi-source data mining and access to proprietary and diverse data assets that go beyond traditional credit information ensure actionable insights.
  • Automated deployment: Tools that use big data and distributed computing to quickly build models that can be deployed seamlessly using machine learning modeling techniques and efficient decision-making technology enable lenders to accelerate entering market.
  • Entry and link: The ability to capture and link disparate data across multiple sources enables a single, comprehensive view of a customer. This improves data quality, consolidates customer data, and reduces risk by using keys rather than personal information to manage portfolios.

The most successful mortgage and home equity lenders are those who are able to best meet customer expectations and demands. Smarter insights lead to smarter actions, and having the right mix of data and analytics can provide the insight and confidence lenders need to help anticipate and capitalize on evolving market opportunities. fast.

Jeremy Serfling is Vice President, Product Management, Mortgages and Housing, at Equifax.

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