A Method for Generating More Loans on Bank and Credit Union Websites
Retail financial institutions (banks and credit unions) face the challenge of triggering a need for some of their products, such as car, home and similar loans. Putting a loan on “sale” doesn’t create the need for the product, rather it makes the product more appealing to a customer who already has the need. In other words, if a customer isn’t shopping for a car, she has no need for a car loan. So how can a bank or credit union use their website to increase loan volume by creating a need for something like a car loan? Is it possible to even create a sort of “impulse need” for a loan using a bank or credit union website? This is one question that Research Federal Credit Union posed to us when they hired us to create a new eBranch website for them.
As I said earlier, the trouble with marketing loan products is that people only shop for them when they’re buying something for which they need a loan. The bank needs to be the first source a customer considers when she realizes the need for a loan. Banks try to put themselves in this position by publishing a steady stream of statement stuffers, banner ads, direct mail, email, tweets and Facebook posts, all broadly targeted to their customer base at large, most of whom consider the messages spam or junk. Nearly none of this marketing creates the need for a loan though.
Mortgage Refinancing was Low Hanging Fruit
Research Federal asked us to think of a way to actually trigger a need for a loan. The low hanging fruit we first identified was for mortgage loan refinancing, which we could accomplish by setting up opt-in rate notifications that allow a member to choose a loan product and a trigger rate. When the rate for the mortgage loan product reaches the trigger point the member chose, our system would send a personalized email notification & offer to the member. This is great when interest rates are falling, but not so useful if rates are stagnant or rising. Research Federal wanted something that would drive more than just mortgage loans though.
How to Generate a Need for a Car Loan
Is it possible to generate an impulse loan application? Yes, sort of. We knew that members only needed a loan if they had something they wanted to buy. We also knew that many people find it hard to pass up a “good deal” (see Groupon & Living Social for recent proof, or eBay in its formative years), often impulsively buying products they don’t really need. Perhaps could generate impulse purchases on products that required a loan, such as boats, motorcycles, snowmobiles, used cars and classic automobiles.
Research Federal’s primary field of membership was General Motors workers, many of whom we can definitively call car buffs. GM workers get special pricing on new GM vehicles, which means they also often sell them used at very reasonable prices (aka, good deals). What if we allowed members to post cars and trucks for sale on the credit union’s website? In fact, what if we included common “toys” that are also often impulse buys, such as motorcycles, snowmobiles, boats and RVs?
Using a Dependency as the Catalyst to Trigger a Need
We had built classified ads systems before, but had never put the system into a financial institution’s website. We pitched the idea of creating a members only classified ads system on the credit union’s website that members could use to post big ticket items that they wanted to sell. Since loan generation was our goal, we also created a series of tightly integrated, user friendly loan applications on the website. When a member posted an ad, credit union staff approved it and the website automatically linked each item to the appropriate loan application.
We featured the newest ads prominently on the home page and in very short order members had submitted dozens of ads for cars, boats, classic cars, homes and even tractors. Within three months of the website’s launch, the classified ads area was the second most popular area on the website, second only behind the Internet banking logon.
Members could apply online and get pre-approval for any item listed for sale on the website. We also saw a steady flow of loan applications whose point of origin was the link featured on each ad.
Members got the added benefit of being able to post ads, with pictures, for free on the credit union’s website, which they saw as a benefit of membership. By all accounts, this experiment worked and has proven successful on other banking websites where we’ve implemented the solution.
Get in touch with us if you want to talk about adding our classified ads system to your credit union website or bank website.
Also, if you’ve tried other successful methods to increase loan volume, share your ideas here.