27 Oct Diversifying Loan Offerings for Better Business
Diversifying loan offerings you have available for your prospects (and your current clients!) is a great business practice, especially considering current market conditions. Qualified mortgages, TILA- RESPA Integrated Disclosure, and other developments in the residential sector necessitate that lenders have a solid portfolio of product offerings to ensure a healthy business.
Diversification in business is great because it gives you additional opportunities to serve your customers, specifically:
- Attract new customers by offering a range of products you didn’t have before
- Upsell or cross-sell existing customers
- Create opportunities for ‘sticky’ products (high-touch products like automatic savings transfer, personal line of credit, security solutions like privacy protection)
In finance, diversification reduces risk. Lenders are in the unique position to be able to use diversification of their loan products to benefit from both reduced risk and increased business opportunities. Let’s take a closer look at how you can put these ideas into action.
Ideas for better business through diversification
Market yourself as a commercial broker
Look through your list of residential mortgages and see if there are any upsell opportunities in the commercial sector. The same people that buy and successfully pay down home loans might also be small business owners who need help purchasing commercial space or equipment. Because of your successful prior business with them, you’ll have a distinct advantage over a stranger offering them a similar product—assuming your rates are good.
Know our audience
While breaking into the commercial lending sector is a great way to diversify, there is still plenty of opportunity within the residential market. Reverse mortgage loans, also called Home Equity Conversion Mortgages (HECM), allow homeowners age 62 and up the ability to access a portion of their home equity without having it issue monthly repayments. Unlike a typical home equity loan, an HECM doesn’t need to be repaid until the borrower moves, sells, passes away or fails to comply with loan terms.
In this example, if you have access to an audience of folks 62 and over, it might be time to look into offering reverse mortgages. Or if you already offer them, perhaps it’s time to market those services more aggressively.
Stay connected with your customers
Banks have a tendency to be at a client’s beck and call during the loan process, then go silent when it’s time to change their fee schedule. Clients DO notice this change in communication style, and they do not appreciate it.
Take the time to reach out and communicate things, even if they don’t make you money, in the spirit of transparency. They’ll appreciate the extra effort and think of you next time they need financial services.
In terms of both general business strategy and the financial industry, diversification is a valuable move. The ability to simultaneously reduce risk while expanding business opportunities with one move is rare—business owners in the lending industry will do well to take advantage as quickly as possible.
We’re curious—what are you doing to diversify your offerings? Sound off in the comments.