Being able to predict the future needs of customers is a great sales booster when it comes to selling any product. But it can make all the difference when it comes to loans. Offering the right type of credit card, overdraft, personal loan or mortgage to customers exactly when they need it can pump up conversion rates and build loyalty. These offers work even better when combined with customer advice or personal financial management support.
And make no mistake, customers could definitely use some professional help when choosing more complex loans like mortgages. Six out of ten homebuyers (58%) and more than half of prospective homebuyers (53%), for example, ask their lenders for advice as the first step of planning and budgeting. In addition, borrowers increasingly expect Amazon-like digital experiences in the process, where knowledge from their past banking activity is recorded and used to improve future transactions.
Here are some examples of how banks can create relevant loan and credit card offers using data-driven customer insights and data analytics.
Forecasting budget shortfalls
Digital data tools can help banks predict if their customers are likely to face a short-term financial problem in the near future by analysing their transaction history and due dates for regular payments. Warning customers about upcoming problems in advance and offering potential solutions, be it an offer for an overdraft or a personal loan, can create significant value for both sides.
Get help if your income decreases– You can detect when a customer’s salary or regular income doesn’t arrive on time or decreases compared to the average amount of payment they usually receive. Advise them to review their monthly income and check when the next transfer is expected to come through on the bank’s widget. Alternatively, offer them a short-term personal loan or overdraft to cover the potential shortfall.
No more budget problems
Actionable customer insights can help financial institutions predict how long customers can sustain their current spending levels before their account balance drops to dangerous levels or slips into negative territory. These insights are triggered by the high probability of a future ‘zero-balance event’ and can be paired with relevant campaigns, such as expert advice and product offers.
Get your budget under control – When a customer’s balance seems likely to fall under a critical level or slip into red territory nearing a zero-balance event, you can draw up detailed calculations on how to avoid it. The main goal here is troubleshooting, but it might include a specific offer for a credit card, for instance. This can work wonders for customers with irregular income profiles, such as freelancers and other participants of the ever-expanding gig economy.
Planning for life events
Certain things in a customer’s banking profile, like sharp changes in their spending habits or exceptionally large individual transactions, can be all signs that the customer is about to take a big step. Think buying a house, planning a major home refurbishment or getting ready for a long-planned, lavish holiday abroad. Advice and timely offers can make or break these situations.
Build your dream home – When customers make their first large-value purchase of furniture or home improvement items (hej, Ikea!), or their monthly average spending on such things suddenly increases compared to a previous period, their bank can suggest that they take out a personal loan or a mortgage to finance the costs.
Relocate your home savings – Banks can see if a customer starts making regular transfers to a specialised home savings institution to save up for a future home. Identifying such transactions can trigger sending out an offer to relocate these savings to their primary bank and raise a related mortgage or loan at a later stage.
Timing proactive offers
More often than not, getting the timing right is the single most important aspect of targeting customers based on their digital behaviour or spending habits. The best thing about proactive engagement is that it doesn’t necessarily require complex tools and tremendous effort on the bank’s side but it can still help them reach low-hanging fruits in consumer lending.
Complete your loan or card application – Many customers simply abandon digital loan or credit card application processes when they are not sure about certain conditions or feel that they need more information about the product. Pinging the customer with a notification to finish the process and offering them additional assistance can boost engagement, and of course, sales.
Want to see more use cases? Download our free ebook “44 use cases for banks to boost engagement and improve digital offers with data-driven customer insights”.