Embed Size (px)
Citation preview
October 23, 2013
The Loan Marketing Ecosystem: A Comprehensive Approach to Loan Marketing
Proprietary and Confidential. © Harland Clarke Corp. Shopper Alert, Refi Genius, Loan Magnet and First Touch are trademarks of Harland Clarke. All rights reserved.
Loan Ecosystem Agenda
● Economic Trends
● Loan Ecosystem
Shopper Alert™
Refi Genius™
Loan Magnet™
● Case Study
Orion Federal Credit Union
● Questions
A replay of this webcast and copy of the slides will be sent to all participants next week.
2
© 2013 Harland Clarke Corp. Shopper Alert, Refi Genius and Loan Magnet are trademarks of Harland Clarke. All other marks are the property of their respective owners. All rights reserved.
Our Industry Today
3
Challenging Environment
Slow growth economy
Regulatory burdens
Uncertain consumers
Trends
Lowest loan- to-deposit ratios in years
Competition in the market has radically
increased
Added emphasis on
loan marketing
What to do?
Be proactive
Identify consumers with needs
Market effectively
and efficiently
Signs of Life
Home lending
Auto loans
Credit cards
Economic Trends – Mortgages
5,283
5,741 5,585
5,695 5,845
5,936
5,585
4,000
5,000
6,000
7,000
Q4 - 2012 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014
New and Existing Home Sales (in thousands)
Source: Mortgage Bankers Association
Economic Trends – Mortgages
3.4%
4.6% 4.8% 4.8% 4.9% 5.0% 5.1%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Q4 - 2012 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014
30-Year Fixed Interest Rates
Source: Mortgage Bankers Association
Economic Trends – Mortgages
$178.8
$205.8 $193.7 $198.1 $202.4 $207.5 $201.3
$250.2 $269.1 $270.2 $276.0 $282.0 $283.1 $279.4
$0
$50
$100
$150
$200
$250
$300
$350
$400
Q4 - 2012 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014
Median Home Prices (in thousands)
Existing Home Prices New Home Prices
Over 58% of homeowners now have an LTV under 80%, increasing the market for Home Equity products
Source: Mortgage Bankers Association Source: Zillow, Real Estate Research, August 2013
Economic Trends – Auto
16.2
13.2
10.4
11.6
12.9
14.5
15.5
16.2
8
10
12
14
16
18
2007 2008 2009 2010 2011 2012 2013 - Forecast
2014 - Forecast
New Vehicles Sales – U.S. (In Millions)
The total number of existing auto loans stands at 61 million, a 54-month high
Economic Trends – Auto
9.6 9.7
9.8 9.8 9.9
10 10.1
10.3
10.6
10.9
11.2 11.4
8.5
9
9.5
10
10.5
11
11.5
12
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Average Age of U.S. Vehicles (in years)
Source: R.L. Polk
Economic Trends – Auto
753
773 776 766 760 755
653 661 665 663 659 657
580
600
620
640
660
680
700
720
740
760
780
800
Q1 - 2008 Q1 - 2009 Q1 - 2010 Q1 - 2011 Q1 - 2012 Q1 - 2013
Average Credit Scores by Vehicle Type
New Used
Source: Experian Automotive
Lenders continue to loosen up on credit standards as consumers clean up their balance sheets.
10 Source: Equifax®, National Consumer Credit Trends Report, September 2013
Economic Trends – Credit Cards
● The total number of credit cards issued by financial institutions reached more than 310 million at the end of June, a 43-month high
● The credit limit on those cards is more than $2.4 trillion, a 43-month high
● Credit card delinquency rates fell to 1.81 percent at the end of August 2013, compared to August 2012
11
Top Marketing Priorities
● Growing the loan portfolio
● Acquiring the right new account holders
● Deepening account holder relationships
● Increasing wallet share
● Encouraging channel shift
All of this while directing marketing dollars to the most efficient,
cost-effective and measurable marketing activities
12
The Loan Ecosystem
Loan Marketing Response Rate Drivers
Loan Need/Timing Accuracy
Fam
ilia
rity
Wit
h F
inan
cial In
stit
uti
on
Higher
Response Rates
Pre-Approved Offers to
Account Holders
Pre-Approved Offers to Prospects
Offers to Account Holders
Pre-Approved Account Holders
Considering Near–Term Loan
Offers to Prospects
Pre-Approved Prospects
Considering Near-Term Loan
14
Harland Clarke’s Loan Marketing Ecosystem
15
Solution Target
• Consumer actively shopping
• Consumer is NOT shopping • Has a loan with another financial institution • Can benefit from refinancing
• Consumer is NOT shopping • Does NOT have a loan • High propensity for a NEW loan
Loan Marketing Ecosystem: Definition
A range of complementary solutions that meets virtually all of a financial institution’s loan marketing needs
Pre-Approval Considerations
● Regulatory issues
Compliance Involvement
● Offer requirements
Firm rate offer
Minimum Dollar Amount
● Lending Department involvement
● IT Department involvement
16
Pre-Approval Requirements
17
● An indication that the consumer is pre-selected, pre-qualified or pre-approved for an offer of credit or insurance
● A listing of the terms and conditions of the offer, including interest rate
This can include a range of qualifying interest rates, as long as there is an offer if the stated conditions are met
● A minimum dollar amount of credit for which the consumer has been qualified
It is acceptable to say the consumer may be qualified for more. A range can be stated as long as there is a minimum amount
● Eligibility requirements that include a statement that credit may not be extended if:
The consumer does not meet the criteria used to select the consumer
• Income, Employment, LTV
The consumer does not meet other pre-established credit criteria
The consumer does not furnish the required collateral as specified on the mail piece
18
Credit Bureau Application Process
● Necessary to use Harland Clarke loan marketing solutions
● Pre-approvals generate a higher response and ROI than ITA offers
● Only needs to be done once
● Harland Clarke client management will help
19
Shopper Alert/Shopper Alert Prospector Program
How do Shopper Alert and Shopper Alert Prospector work?
20
Trigger Alert Marketing Makes Sense
● Harland Clarke believes knowledge fuels powerful marketing programs that produce extraordinary results
● Ideally, marketers would know when account holders are applying for a loan with a competing institution
● Harland Clarke’s Shopper Alert data-driven solution monitors credit inquiries across the leading bureaus to improve campaign effectiveness
Did you know?
• At any point in time, 4-6% of account holders are actively shopping for a new loan?
• More than 60% of shoppers will make their loan decisions and commit their loan to an FI within one week of starting the activity?
Source: Harland Clarke Data
21
Shopper Alert Results
Texas Bank
● $5 billion in assets
● Nearly $5 million in new mortgage, auto or personal loans
New Jersey Credit Union
● $400 million in assets
● Nearly $4.9 million in new loans are in process or already closed
● Borrower-to-member ratio has grown by nearly 6%
● Consumer loan portfolio has increased by 11%
California Credit Union
● $200 million in assets
● Generated a 5.9% application rate
22
Shopper Alert Results
California Credit Union
● $8.1 billion in assets
● More than $15 million in funded loans
Pacific Coast Credit Union
● $5 billion in assets
● Nearly $400,000 in funded loans
Maryland Credit Union
● $1 billion in assets
● 10.1% application rate
23
Refi Genius
How does Refi Genius work?
24
Loan Refinance Marketing With Refi Genius Makes Sense
● Harland Clarke’s Refi Genius data-driven solution identifies refinance-eligible loans
● Savings are always welcome!
● Important to include prospects in the Refi Genius solution to ensure volumes are high enough to justify the program
25
Refi Genius Auto
● Payment based on estimates of the loan’s current balance and interest rate
● Credit criteria
● Remaining balance on the loan
● “Save up to $x per month on your loan payments” messaging
Example of a lender that sets a minimum savings amount of $50
26
Refi Genius Mortgage and Home Equity
● Based on origination date and estimates of:
o Remaining balance on the loan
o Value of the home
o Loan-to-value ratio
o Length of residence
o Range of other factors
27
Refi Genius Results
Texas Bank
● In its first few months, the campaign generated $1.2 million in funded loans
● $5 million in applications still in process, including more than $1 million in auto loans, and nearly $5 million in real estate and other loans
Tennessee Credit Union
● Grew the loan portfolio by 14 percent
● Increased loan-to-share ratio by nearly 10 percent
● Increased borrowers-to-members ratio by more than a full percentage point
● Achieved campaign response rates of roughly eight percent for members and one percent for non-members
Washington Bank
● Mailings to HARP-eligible borrowers in the first 12 months helped the bank generate $107 million in loans
● $1.1 million in net income generated
● Loan conversion rate 5X greater than competing list provider
28
Refi Genius Results
California Credit Union
● Total Response Rate - 4.31%
● Total Auto Apps - 2.7%
● Fund to App Ratio - 83%
● Almost $2 million in funded auto loans
● $2.4 million in total consumer (auto, personal, credit card) loans
● Average Cost per New Loan - $50
● Average Cost per New Auto Loan - $72
29
Loan Magnet
How does Loan Magnet work?
30
Why Loan Magnet Makes So Much Sense
● Harland Clarke’s Loan Magnet data-driven solution identifies account holders and prospects with a high propensity to respond to a loan offer
● Selling new products to existing account holders is one of the best ways to decrease attrition and increase loyalty
● Single-service checking has only a 50 percent retention rate; adding a loan to a household relationship improves retention to over 90 percent
o Auto loans
o Home equity loans/HELOCs
o Personal loans/live checks
o Credit cards
Source: RPM Consulting
31
Loan Magnet Results
Texas Bank
● Identified nearly 11,000 First Financial Bank account holders who met its criteria
● Campaign generated almost $6.5 million in new auto, HELOC and home equity loans
● Case study in development
West Coast Credit Union
● Program implementation October 2012
● Visa® offer to existing members
● 15K+ offers mailed
● ~2% approval rate
Loan Ecosystem – Orion Federal Credit Union
Tara Smith
Vice President of Retail
Orion Federal Credit Union
32
● Tara has more than 28 years of experience in the financial services industry exclusively in credit unions
● Tara currently oversees nine branches, a call center, marketing and back office account services
Loan Ecosystem – Orion Federal Credit Union
● Founded in 1957 as Memphis Area Teacher’s Credit Union
● $534 million in assets
● 50,000 members
● Nine branch offices
33
Loan Ecosystem – Orion Federal Credit Union
Challenges
34
● Grow Loans
o Take advantage of demand for auto loans
● Penetrate accounts with other products and services to build deeper relationships
● Provide members and prospective members with way to save money
● Operate with limited marketing budget
● Limited staff resources to conduct programs
Loan Ecosystem – Orion Federal Credit Union
103 100
Applications Submitted to Credit Union
Member Mailings Non-Member Mailings
Response Rates - Member – 7.66% - Non-Member – 1.00%
Loan Ecosystem – Orion Federal Credit Union
$1,395,419
$99,056
$155,178
Funded Loan Balances - Member Mailings
Auto Loans HELOC Personal Loan
Total Member Loans - $1,649,653
Loan Ecosystem – Orion Federal Credit Union
$1,073,477
$10,000 $71,600
Funded Loan Balances – Non-Member Mailings
Auto Loans HELOC Personal Loan
Total Non-Member Loans - $1,155,077
Loan Ecosystem – Wrap Up
38
Challenging Environment
Slow growth economy
Regulatory burdens
Uncertain consumers
Trends
Lowest loan to deposit ratios in years
Competition in the market has radically
increased
Added emphasis on
loan marketing
What to do
Be proactive
Identify consumers with needs
Market effectively
and efficiently
Signs of Life
Home Lending
Auto Loans
Credit Cards
Solutions
Thank You!
A replay of this webcast and copy of the slides will be sent to all participants next week.
For more information contact your Harland Clarke account executive or write us at:
harlandclarke.com/contactus
39
