What You Can Do About Declining Loan Business

Do these words from a recent Wall Street Journal article explain why your loan business is down: Unemployment remains high, driving consumers to spend less, and small businesses see that and they’re not going to put the money into expanding or hiring new people.” Yes we know, it appears the “low hanging fruit” has been picked but if you buy into that reasoning and are resigned to waiting until things turn around, you need to read on. For all those bankers bemoaning the effects of the economy on their business, there are progressive ones turning up loans and additional revenue from customers and members they’ve never even met.

In this post, we’ll tell you the approach the progressive organizations are taking, what customers and members are responding to and describe the experience of an FSR at one of our clients as she uncovers some loan business.

This is not your old sales and service culture

We predict that just as the old account passbook morphed into a more efficient and profitable electronic version, eventually so will the old transactional selling model that’s been around in banks and credit unions since the early 1980’s: staff is trained and given incentives to sell isolated products to the “walk-in masses” (Cross Selling’s Unintended Consequence). However, progressive banks and credit unions are proactively connecting with targeted customers or members who don’t visit the branches and may even be disengaged. This is a huge untapped market segment. (These skills can also be used with face-to-face customers or members.)

Once they make a connection, they’re building relationships by engaging them in conversation about their financial goals, dreams and aspirations. Why? Research shows that this approach builds trust and loyalty and creates advocates so when they need to borrow or get any service for that matter, it’s less likely they’ll shop around. As you’ll see from the real life example below, sometimes the mere intention of connecting with a customer or member without having to sell them a product comes through and puts them at ease enough to bring up a need. In fact, in our relationship management training, we ask the staff to begin making introductory, thank you calls from their assigned list and highly discourage pitching any product.

So what does that look like in real life?

Example of a real life, outbound introductory call to a member

Recently Andrea, an FSR with a credit union client of ours was excited to share her experience with us.

I left two voicemail messages for Tom Givens (pseudonym used), one of my assigned members asking him to call me. I’ve never met him as he doesn’t visit our branches. As his relationship manager I thanked him and let him know I’m there to help him in the future. He didn’t return my calls, so I sent a nice note with my business card. About a month later his wife Susan called, told me she handles all the banking and was pleased I would be their personal contact.

We chatted casually about her kids and family for a few minutes. Near the end of the call I ask her, what expectations do you have for me as your relationship manager and how can I help you now or in the future? Susan then mentioned she had several high-interest credit cards, needed to get a more reliable car and had a baby on the way. She sounded stressed about how they would deal with all this. The discussion naturally led to a home equity loan and she was so thankful that we reached out to her family. The loan will close this month and I feel proud to be able to help the Givens. I plan on staying in touch and eventually introducing them to our financial advisor to discuss protection (sic) for their family. P.S. She also mentioned that her husband was about to shop around regarding loan rates and my call was very timely.

What customers and members respond to positively 

Note that it takes a certain amount of effort to connect with a customer or member and initial calls don’t always result in new business. It usually takes time to build the customer or member relationship. What’s important, however, is most customers and members respond positively to being thanked for their business and shown appreciation. They especially like having a personal contact they can call in the future and not getting a sales pitch right from the get-go. There are qualified people out there in need of loans and other financial services and it’s up to us to root them out!

Right now I bet you have some disconnected customers or members just like the Givens. They may have multiple services with you but feel no relationship. Are you seizing the opportunity to reach this virtually untapped market, retain their business and grow your bank or credit union organically? Is your staff trained, confident and comfortable in managing relationships versus transactional cross-selling?

We are interested in your feedback. www.HighDefinitionBanking.com

Agree or disagree? Do let us know what you think by scrolling down and commenting below.



Rate Your Organization on Banking Relationship Management Basics

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The Banking Relationship Management Experience – A Strategy for Becoming a Trusted Financial Partner and Increasing Revenue and Profitability

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