A Solid Channel Lineup
Another key component to a successful lending business in the future will be banks' channel strategies. According to Annette Tirabasso, a principal with New York-based Deloitte Consulting, the Web channel will take center stage. In a recent Deloitte study, "The Silver Lining in Lending," Tirabasso noted that moving much of the lending function online can yield banks from 50 percent to 80 percent in origination cost savings, in addition to meeting customers' service needs. The report also concludes that consumers tend to be happier with an online lending experience versus other channels and, as a result, are more likely to recommend their banks to others.
"Banks and lenders that provide strong delivery channels will be better positioned in the market when we come out of the crunch," Tirabasso says. "This is a way for them to position themselves for growth."
Metavante's Brin says this trend is starting to take hold. "I'm seeing more demand for Web portal-type capabilities a lender can implement to enable its customers to go online to get detailed information on the loan products and start or complete the application process," he relates. "This can be either online or at the branch via a kiosk."
Keeping People in Their Homes
Of course, getting the customers is one thing. Keeping them -- and keeping them out of trouble -- is another opportunity for lenders. Many are trying to create strategies where they work with customers who are at risk of defaulting and nipping the problem in the bud. Fiserv and other vendors offer customer/home-retention services to lending clients on an outsourced basis. They provide the lenders with the staff and technology to help them deal with an ever-growing volume of troubled customers.
According to Fiserv Lending Solutions EVP Walter Morgan, the company manages multiple pieces lenders need when they approach distressed borrowers for loan modification. "Lenders just don't have the staff to handle all the calls," he contends. "They're overwhelmed. We're taking the load off. The idea is to keep people in their homes. This service is in high demand now from our customers. They're all realizing that for the vast number of borrowers, mitigating loss and making modifications to loans to help keep the house saves everyone money in the end."
Bank of Nevada's Sleasman says monitoring existing portfolios is crucial to avoid foreclosures. "Lenders must pay attention to the portfolios they have. They have to use available technology to monitor them, [and] identify and evaluate existing loans that indicate trouble, such as when a customer overdrafts too much," he relates. "Work with the borrowers. We focus on full banking relationships with customers. If there are indications that there could be stress, we will talk to those people."
"Retention services is a great idea," adds TowerGroup senior analyst David Hamermesh. "Opportunities like this have been talked about since last fall. The tools are better to help banks do this effectively. But there are so many factors to consider here that make it challenging. First and foremost is making borrowers aware that they have options like this. I think everyone is trying to figure out how to do this best."