Credit Union Member Services Leveraging Data Analytics In Lending


Leveraging Data Analytics In Lending

bigstock-Teammates-Gathered-In-Boardroo-456681377The cold, hard truth is lending isn't what it used to be. Everything has changed in recent years, forcing lending institutions to change too. As rates continue to increase and the financial landscape keeps evolving, credit unions must acquire new lending strategies to remain competitive in the industry. So, how should CUs adapt to these rapid changes? One of the most critical things you can do is take advantage of data analytics, which can help identify and target the right individuals based on a number of factors, from behavior and demographics to specific life events. In this article, we'll outline what's currently trending in the market and how your credit union can effectively harness the power of data analytics to benefit your members and bottom line.

2022 Market Trends

Staying up-to-date on current market trends allows your credit union the chance to be proactive and better-informed before offering your members certain products or services. For example, if home equity is high, you'll most likely want to focus on offering home equity and home equity line of credit loans.

There are several trends occurring this year, specifically for homebuyers, from mortgage rates to sky-high home equity. Consider these facts as you're determining the most relevant products and services and prepare to be flexible, as the market is always changing!

  • Loan prices have increased due to the housing shortage, supply chain problems, low-interest rates, and labor shortages.
  • 30-year mortgage interest rates have increased by 3% since Q1 of 2022.
  • Home equity has risen drastically since 2021, increasing by almost 20%.
  • Purchase mortgages are currently the most popular home loans due to lower interest rates.

Oftentimes, market trends dictate member actions, and this can help your credit union when deciding on what products would best suit your members at a particular time. It's important to know which product or service to highlight and when, as timeliness and relevancy can be the difference between obtaining a loan or losing it.

Back when interest rates were lower, more people were interested in refinancing. However, now that these rates are rising, along with home costs, homeowners have acquired more equity. So, instead of refinancing, they want to make improvements to their home and consolidate their debt. To be successful in today's climate, it's important that your CU focuses more on promoting other valuable products like purchase mortgages, second mortgages, auto loans, personal loans, and home equity lines of credit. Once you've switched up your advertising strategy according to the latest trends (as mentioned above), you'll want to use data analytics to pinpoint the members who will benefit most from these specific products.

Drive Lending Opportunities With Data Analytics

Data is at the core of every business, and data analytics is the art of examining raw data and making conclusions about the available information. It's the process that allows for better decision-making, increased efficiency, optimized performance, and maximized profit. As big data has entered the scene, it has completely transformed the financial world, along with lending. With this innovative tool, you can effectively pinpoint the people who are best suited for a particular product or service, and pairing these insights with existing market trends will ultimately lead to a more effective targeting strategy.

Data analytics detects specific indicators that tell you whether a person would be a good candidate for a specific product or service. Some of these include:

  • Life Events: Certain events in a person's life can signal a significant financial change and help you determine whether they would be interested in a product or service. Some examples of these events can include having a baby, an expiring auto lease, or a child getting ready to go to college. From these signals, you'll be prepared to promote things like college loans or car loans, depending on the situation at hand.
  • Behaviors: Sometimes a person's behavior can alert you that they may be ready to invest in a new product or service. Paying attention to behaviors like online searches for realtors and credit inquiries can help you recognize when a member is in the market for a mortgage, car loan, or another financial product.
  • Passive Data: This type of data is collected without direct action from the individual. For example, passive data could be the fact that one of your members has a lot of debt that needs consolidation, or they have a large sum of untouched money in their savings account. These are clear signs that this member may benefit from a CD or consolidation loan.

After you've acquired the necessary data on your members, you can target them with omnichannel marketing, using a combination of mail, social media advertising, online ads, emails, etc. Remember that a targeted message is much more effective than a generic message. You may think that you're covering more ground, but in reality, you're wasting time, money, and effort on people who probably aren't even interested in your product or service. Personalization and relevancy are critical in your marketing campaigns, and data analytics provide you with the insights you need to be successful.

Transform Member Data Into Lucrative Loans

Credit unions can leverage data analytics in their lending in order to gain valuable insights into member behavior, which can help them effectively target the right people with the right messages. When you offer to fulfill members' needs before they even ask, you are developing trust and a deep, meaningful connection with your members. Doing so lets them know you understand them and are ready to help them reach their financial goals. And that's exactly what your CU's mission is, to assist your community with their finances while having their best interest in mind.

With FLEX and SavvyMoney, your credit union can benefit from detailed analytics that discovers loan opportunities based on your members' credit profiles and your specific lending criteria. This analytics platform allows your team to spend less time identifying leads and more time helping your members find the savings they're looking for. If you're interested in learning more about increasing member engagement while also discovering more lending opportunities through analytics, download our eGuide today.

FLEX & SavvyMoney Integration eGuide

Preston Packer

Written By: Preston Packer

Executive Vice President | CMO at FLEX Credit Union Technology
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