7 success strategies to strangle the e-lenders.

by Rory Rowland

The word e-lenders, sends fear in to the heart of any good banker. Your pulse surges just at the mention of e-lenders. Those nasty dot.coms that won't go away. Yes, yes, yes, 12 to 15 are failing every week, but not the ones you want. You want the e-loans to fail, you want lendingtree.com to be chopped down, and you want realestate.com to go on a fire sale. But it doesn't look likely.

As a matter of fact they are growing like wild. You see that e-loan.com grew loans at the annualized rate of over 190% for the fourth quarter of last year. Staggering growth, the kind of growth that if it goes on much longer will harm your business. Only 7 to 10% of your customers have obtained loans off of the Internet. Thank goodness you say, yes, but how long will it be before they find the ease and convenience of e-lending? How can you win at this game in the consumer lending market?

Also remember, the fourth quarter of last year was the first time e-loan.com made a profit. Yes, I know it is hard to believe a dot com making money. But it is true.

There are some financial institutions that are wagging a war and winning the e-lending game. The key is to play to your strengths, and those are the weaknesses of the e-lenders.

What are your strengths? You know your customers. And then make it easier for them to do business with you. Yes, easier. You say how, read on my friend, read on.

The rule of lending in the new millennium is to be ready before they are. Yes, you don't want to have efficient systems; you want to have the loan approved before the customer applies. How do you do that? The buzzwords in the 90's were have 2-minute turn around on car loans, not now, you have to be ready before they are.

Let's remember that you know your customer, the e-lenders don't. As a matter of fact they don' want to, they want to process transactions. You want to create a long term beneficial relationships. Here is the secret, one that has been around for a while, but we haven't been compelled to use it, until now. Number one the credit bureaus will let you process your entire consumer-lending base. Then determine a criterion to see how much you will lend the consumers for a car loan, VISA, and a home equity. Then tell the customer over and over and over. One financial institution used this strategy over 3 years and grew their consumer-lending portfolio to be half of all of their consumer's car loans. Yes, over half. Unbelievable, but true. One institution grew their consumer car loans at over 25% three years in a row. Using the same formula.

Here is another secret, the power of repetition that the e-lenders don't have, and will never have. Yes, integration is the new buzzword, use integration to integrate your systems so your customers can hear the message over and over and over that they are pre-approved. This creates positive memories of your financial institution. Tom Peters says create positive memories, with the power of e-tools you can create positive memories.

Your customers will puff with pride as they hear over and over and over that they are pre-approved. You don't want to just have customers; you want to have borrowers. Every person under the age of 40 has a loan, why shouldn't you be the one to have theirs?

The e-lenders require the customer to apply with a long cumbersome application. Don't make the same mistake, make your processes easier than the e-lenders so they fall like a tree cut down.

Another secret is to make it easy for people to use your home banking products, and to obtain loans when they are at your home banking web site. When they log on with the customer number and password, you know who they are, and you can make it easy for them to become a borrower and not just a customer. Put your loan button in the upper left-hand corner of your web site. Then for t he people who are pre-approved and they have to do is say they want the loan. Don't put your savings information in the upper left-hand corner, you want loans, not just a savings and checking account.

If you use this method as a strategy, you can beat the e-lenders at their own game, and do it better than they can.

Rory Rowland is a dynamic presenter specializing in programs for leadership, communication and technology. Rory has served as president of two financial institutions, one was a successful turn-around. Rory has presented his high energy, fun and humorous programs in all 48 states as well as in Canada and Mexico. Rory is continually one of the most highly rated speakers at state and national associations throughout the country.

Rory has an MBA from the University of Missouri, and a BS degree from Central Missouri State University. He lives in Missouri with his wife and 4 children.

First published on BankersOnline.com 3/25/02