4 Profitability Tips Every Lender Should Know

The rest of 2022 and 2023 could herald some good news for lenders. Bloomberg notes that consumer revolving and non-revolving lending levels keep going up. And small business lending isn’t far behind.

Since the pandemic, business formation applications have hit record numbers according to government statistics. Since many founders turn to loans to launch their startups, they’re knocking on lenders’ doors. However, lenders need to make some savvy moves to be profitable.

Why the need for marketing and operational stealth? Lenders are engaged in a competitive industry. Even legacy lending companies are rethinking their processes, tools, and tech stacks to win borrowers’ attention. For instance, many traditional banks are finding it tough to beat back the lure of fintechs per IBM’s reporting. Still, lenders aren’t without choices.

If you’re involved in lending, consider trying any of the following tips. Each is designed to bring more profitability into your institution through lead generation, speeding up the application process, branding, or sales and marketing techniques.

1. Slash your typical lending application timeframe.

Consumers aren’t willing to wait days or weeks to hear back from lenders anymore. Whether they’re building businesses or building dream homes, they want application answers quickly. The faster you can issue a “yes” or “no”, the more loans you’re likely to close.

There are a number of ways to reduce the time it takes to pre-approve loans. For instance, you might want to consider removing obstacles to verifying applicants’ incomes. Partnering with an income verification platform like Truework allows you to shorten your application turnaround. A fintech system such as Truework can return income verification data in less than a second in some cases.

Remember: Lending applicants frequently submit to more than one financial institution. Being the first to respond can give you an unparalleled advantage.

2. Upgrade your digital presence.

Most people are accustomed to being able to handle their personal banking online. Current estimates suggest that more than $200 million people bank virtually. This isn’t a huge shock. It’s commonplace to use devices to do everything from renting a car to reserving a restaurant table.

For your lending company to be seen as modern, your digital footprint needs to feel intuitive. A good example would be to invest in an app with a comfortable user interface. That way, your borrowers can gain access to their accounts from anywhere.

Be sure that your digital interface isn’t just visually appealing. It needs to have value, too. Top honors among banking apps in 2021 went to familiar brands like Bank of America and Capital One. Yet even if you’re not a lending giant, you can offer up a terrific app presence. The Bank of Hawaii isn’t large but earned kudos along with its bigger brethren. Consequently, it’s possible for any lender to make waves with a well-considered app.

3. Get a handle on your social media marketing.

People of all ages spend inordinate amounts of times on social media. Globally, the average social media user hangs out on Facebook, Instagram, TikTok, and other social sites for 147 minutes daily. That means you have more than two hours every day to engage with potential applicants.

In addition to having a business page on social, be sure that you’re experimenting with PPC campaigns. Conduct tests to see which ads appeal to your target audiences, whether they’re first-time Millennial homebuyers or Boomer RV purchasers. Be sure that the landing pages associated with those campaigns have the right language and calls to action. Even small tweaks in your creative copy or images can improve your number of warm leads.

As for your organic social marketing, make it pertinent to the social site. Plenty of lenders like credit unions and banks try to publish the same content across all social platforms. This is a mistake. Each platform has a fairly specific atmosphere. What belongs on Twitter doesn’t belong on LinkedIn. Saying the right thing in the right way will help you spur engagement and brand recognition.

4. Improve upon the borrower experience.

You may not be able to trim rates or fees. Yet you can control the experience that a borrower has from the first to last touchpoint with your institution. Every touchpoint adds to the way that a borrower feels about partnering with you in the future. Touchpoints also can boost the chances of you receiving referrals.

Speaking of referrals, you may want to take the Tangerine Bank referral route. The Canadian bank and lending institution offers generous referral bonuses to customers. Not only does this incentivize customers to brag about their lender but it opens Tangerine Bank to new lead sources. Plus, it has the added benefit of making the borrower experience literally and financially more rewarding.

It’s never a bad idea to walk through all potential borrower paths with your marketing and sales team members. As you do, look for gaps. Where could you make the experience more positive and memorable? Are there places that seem to waste opportunities to connect, educate, or support? Closing those gaps can lead to stronger bonds between you and your lending customer base.

People rely on lenders to achieve their personal and professional goals. Make sure your organization stands out and receives more applications by identifying areas of change. You’ll end up with a larger borrower base that’s more satisfied and more apt to borrow from you again.