Sarah. Cooke, Monday, May 13
Consumers’ attitudes toward buying cars is evolving as ride sharing and city living grow more prevalent, and reliable autonomous vehicles seem not too far off in the future. As consumer spending on health care, housing and ‘experiences’ rises, how can lenders shift with them? We recently co-hosted a webcast, Challenging the Sacred Cows of Auto Lending ,’ with our strategic partner, Open Lending , moderated by Melina Palmer, behavioral economist and founder of The Brainy Business .
I served on the panel (I consult for both Ser Tech and Open Lending), opening up with the bigger picture of where consumers are spending their hard earned money. According to the latest data from the Bureau of Labor and Statistics, spending on food increased 10% between 2015 and 2017. Healthcare spending is up 12%, education spending is up 13%, and, what I found really interesting, entertainment spending is up nearly 13%. At the same time, transportation and car purchase spending are up just 1% during that same period.
When asked how to tackle this, James Lee, COO of Ser Tech , responded, “As we're speaking to financial institutions today, we really encourage them to continue to be strategic, be nimble and adapt to whom they're serving and who their customers are. So, I think it's just continuing to be mindful of using technology and data.”
What are the data showing us? James continued, “We're starting to see buyers of cars be stuck into higher rate loans where our clients can really compete for those loans. We work with them to be strategic about it. So, while broader car buying volume has probably slowed just a bit, those opportunities are still out there for those that are buying cars and getting stuck in difficult loans. And what we help our clients with is to use that data to target the right people - know which of your customers are in a loan that is outside of your institution. Focus on those people and bringing that loan back. Target those that are actively shopping for a loan and make sure you get your name in the hat to compete for that loan.”
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But, as the discussion continued, the impacts of ride-sharing and multi-lending came into discussion as to how it affects auto lending. Many cars are not in use 95% of the time, and corporate entities such as ZipCar and Car2Go have arisen to utilize vehicles and offer alternatives to traditional auto ownership. Are these having an impact?
The relevance of car ownership is shifting. There are still definitely opportunities as the panelists discussed during the webcast. And to take advantage of those opportunities, Ser Tech can certainly help your financial institution generate those leads.
James elaborated, “We're going to adjust the letter that says, ‘hey, our financial institution is here for you as you're going through this tough time,’ and targeting the right people for that message is something we're very focused on.”
And as it relates to the financial institution, James added, “We also encourage that our clients make the loan offer process, acceptance and underwriting process as efficient as possible. We’ve got to make it as direct as possible for the consumer to accept a loan to get it funded. We'd love to be a part of that process.”
Melina, our moderator, expert in behavioral economics and founder of The Brainy Business , concluded that marketing messaging also must be on point. The brain processes 90% Fat Free Beef much more positively than 10% Fat, so we must keep that idea in mind when talking rates and other matters of lending. She added, “Don't get sucked in by ‘I'll start Monday.’ Think about what can you do today? What should you do today? How can you be working now to make sure that your financial institution and all of your customers or members are in the best possible space moving forward, and that the work that you're doing is just messaging to the right people the right thing at the right time?”
To drive the auto-loan process and adoption, it’s about keeping up with the times and adjusting your messaging. A more efficient business process when combined with the right messaging can help you drive your loan portfolio while lowering your risk. To learn more about how Ser Tech’s Fetch Marketing, Triggers and Flitter can help your financial institution safely increase auto or any type of consumer loan or mortgages, contact us today!