Is the tide about to turn for big banks?

The loan process is a complicated one; we’re not talking about snap decisions but potentially life changing ones for the customer.

In the past this is just one factor that has enabled the big banks to gain a huge chunk of the lending pie.

But with a wave of new and innovative companies entering the market, how can non-banks take advantage of the huge opportunities becoming available and where are the more established lenders falling behind?

Heidi Armstrong is a name that many will find familiar. Heidi is the CEO of online lender, State Custodians; where she also runs the successful blog ‘Ask Heidi’. It’s been a pretty good year for the company who proudly position themselves as Australia’s Non-Bank, a label Heidi firmly believes gives them the leading edge. State Custodians has not only won Money Magazine’s Non-Bank of the Year for the last three consecutive years but has also taken out the Best Non-Bank Lender and Best Online Operator at the 2013 Australian Lending Awards.

In an age where knowing the customer and earning trust trust can potentially win business, I sought insight from Heidi on how this relatively small business has the potential to take on the big four:

“State Custodians was one of the first mortgage lenders to fully embrace the web to attract new business. We understand what web visitors want – so as well as driving traffic we know how to convert website visitors into borrowers.”

There was a time when a brand name carried the primary weighting for a customer evaluating their lending options. However, online growth has changed many of the factors customers prioritise so ‘non-banks’ have really been able to grow and compete:

“When you go up against the big banks, you have to position the company differently. Our proposition is to be the friendly authority. It goes right to the heart of what the non-bank service proposition stands for and resonates with customers looking outside banks for options.”

“We certainly don’t have the marketing dollars of banks so we have to get smarter in how we spend our dollars. A large part of our marketing involves educating the audience around the value of the non-bank proposition, what we do and how we work. We’re consistent and relevant and that’s how we build trust.

“It’s not just telling people you’re the best or safest. It’s demonstrating it in various ways. Our biggest source of new business is referrals from existing clients. This has the added benefit that those clients then do the trust positioning on our behalf.

There are two main audiences within the lending product portfolio; new customers and providing additional options and value to existing customers. Gone are the days when you can use one message for both:

Heidi explained an area where segmenting messages delivers impressive engagement results:  “For our electronic mail (EDM’s) to the lead database we’ll use State Custodians branding and deliver relevant and high value content that goes beyond pushing our own products. Typically our open rate for these is 29% with a 19% click through rate. However it is the Ask Heidi brand that we use for EDM’s to existing clients. Open rates are 41% and click through rates are over 18%. These EDM’s have been far more successful once we introduced the Ask Heidi personality into the mix.

“In the back office we collate customer information into a single database so everyone has the same picture of a customer. It allows us to provide a consistent and fluid service by monitoring and engaging with clients who provide feedback. We do this through social media including independent forums such as product review.  Responses to any negative client feedback are treated with very high importance internally and are managed at a senior level. This ensures we engage with the client genuinely but also take on-board necessary improvements and changes.”If you are prepared to listen, the client will tell you a lot about your business. They can highlight inefficiencies or where there are potential difficulties. If you are engaging well with your customers they are happy to give you honest and constructive feedback. We send an email survey to clients on settlement and we get around a 75% open rate and a 54% click through completion rate. We have real genuine engagement with our borrowers, and it’s giving us the edge.”

Hear more from Heidi during Loan Origination 2014 where she will be delivering the presentation Channel innovation: leveraging technology to provide an exceptional online experience. Heidi will also be joining an expert panel to discuss what key factors drive customer acquisition and retention in today’s “new normal?


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