By John Flynn, Open Lending President & CEO
Indirect lending is how many banks and credit unions build their auto loan portfolio. A strategy for converting these members to multiple product users should be the goal, and I know we’ve had a hard time with this. However, welcoming these new customers and members in with personalized offers – because you already have their credit report, right? – can drive the overall growth of your financial institution.
At your institution’s very first contact, it collects a wealth of information to get an initial picture of your new customer. Look at their financial situation, their credit health, income, where they have other loans and overall spending. Take the time to sift through that data and work with them to build a strong relationship with them as part of a strong onboarding process. As this relationship grows, you’ll have new opportunities to offer them products from your credit union or bank to further grow the financial relationship.
After winning the loan with the new borrowers, it’s imperative to invest the time to communicate with them. Get to know them through the data, what messaging is working best with them, and grow their trust with educational resources that fit their profile. This is not a time to actively sell new products – it’s an open learning phase for both you and the consumer. Educate them on financial matters as it relates to their loan and other characteristics you find. Host learning workshops to invite these customers in for real facetime and give them the opportunity to learn more about your expertise and your financial institution.
To build a more comprehensive picture of the borrower, it’s important to understand their long-term objectives, where they are in life, their financial habits, and what are they doing to accomplish goals. Welcome them to your institution based on who they are; they’re far more than one loan and a credit score. Once you have a trusting relationship built, begin offering products to help improve their overall financial health.
Remember, borrowers very often look at the short-term when selecting financial products. They care most about their monthly spend versus their income, and that’s important. But show them suites of products that fit their budget and lifestyle, educating them how they might save more with some tweaks that fit your portfolio and their needs. Do they have a mortgage with an adjustable rate that you can improve with a fixed loan? What about high-interest credit cards or accounts with little to no interest growth? Are they a small business owner?
If you’ve done your homework on the customer, you can answer many, if not all these questions. This new borrower who started with an auto loan can become a long-term user of your various products and services, saving them time and money while creating a more profitable relationship for your financial institution.