Enhance Retention, Minimize Fallout with Differentiated Loan-Level Competitive Intelligence

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BLOG VIEW: With the increasing competitiveness from both established players in mortgage lending as well as newcomers threatening to disrupt the industry, lenders are placing more emphasis on areas such as mitigating portfolio runoff risk and better understanding prospective borrowers’ needs. 

Monitoring trends associated with portfolio attrition has increased in importance as lenders work to understand the possible dynamics that could lead to existing customers looking elsewhere for a new loan. This level of insight enables lenders to make any necessary refinements to their existing retention strategies and gain a competitive advantage with current customers who are looking to refinance or are in the market to sell their current home and purchase another.

Additionally, lenders regularly invest in purchasing lists of leads to market their loan products to, but then have a difficult time determining why certain pre-approved prospects did not ultimately close the loan. This, in turn, leads to a suboptimal ROI on lenders’ marketing campaigns and a subsequent pipeline fallout ratio that is below the industry average – all of which can threaten a mortgage lender’s ability to sustain a profitable business model over time.

To effectively combat these issues, mortgage and home equity lenders require better insight into consumer behavior – as well as competitor activity. This enables lenders to make more informed, growth-driving decisions. 

The challenge for lenders is often in developing decision strategies and then deploying them in-market, which can be a disconnected, complicated and time-consuming process. Utilizing a solution that offers a unified experience, using analytics, combined with loan-level competitive-intelligence, helps lenders adjust their strategies to better align with their growth objectives. 

This actionable intelligence approach is designed to influence multiple business areas including the following: 

  • Portfolio Run-off: The ability to identify run-off trends and strategies improves customer retention. Having insights (like knowing if a borrower has sold the home, refinanced with a different lender, and if so, which lender won the business) helps lenders better understand who they are losing business to, and which products they could have – or should have – offered to retain their current portfolio and increase customer satisfaction. 
  • Pipeline Attrition and New Business: Assessing fallout improves closing rates. Even though the average pull-through rate (loan closings to applications) was 71% in Q2 2020, it is important for lenders to understand why loans are not always closed with them. Greater insights help lenders uncover whether the prospect obtained a loan with another lender, if the prospect ultimately ended up with a different loan product, if the time to close was too long, what groups and credit bands they are losing and what competitors are winning leads. 
  • Marketing Spend: Seeing trends in age bands, generational activity and risk tolerance, helps lenders understand more clearly if their marketing spend is in fact targeted to the right market. Insights into things such as whether the lead obtained a new mortgage loan, the actions the prospects took, which lender the lead ultimately went with, if they are still a viable lead, and if they even fit the target audience, helps ensure marketing initiatives are effective and that marketing ROI is maximized.  
  • In order for a mortgage or home equity lender to capitalize on these valuable insights they must have access to a unified solution that combines data and analytics with decisioning execution. A platform that provides these insights should have the following:  
  • Powerful Data: Leveraging multi-sourced data and offering access to exclusive, diverse data assets that span beyond traditional credit information ensures actionable insights.
  • Automated Deployment: Tools that use big data and distributed computing to quickly create models that can be seamlessly deployed using machine-learning modeling techniques and efficient decisioning technology enables lenders to a quicker go to market strategy. 
  • Keying and Linking: With the ability to key and link disparate data across multiple sources enables a single comprehensive view of a customer. This improves data quality, consolidates customer data, and reduces risk by using keys rather than PII to manage portfolios. 

The most successful mortgage and home equity lenders are those that are able to best meet customer expectations and demands. Smarter insights drive smarter actions and having the right combination of data and analytics can provide the insight and confidence lenders need to help anticipate and capitalize on fast-moving market opportunities.

Jeremy Serfling is vice president, product management, mortgage and housing, at Equifax.

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