The Great Recession of 2008 sent our economy into a tailspin, affecting consumers and businesses alike. While Americans lost jobs and watched their retirement savings plummet, financial institutions saw their pool of qualified borrowers and an important revenue stream dwindle. Five years later, our economy has started to rebound, showcasing the resiliency of the American people and strength of American businesses.
As consumers dust off the uncertainty of an unstable economy and begin to make major purchases again, financial institutions are seeing an increased stream of loan activity. Consumers have regained their confidence and are starting to buy homes, cars, and even non-necessities such as RVs and boats. Another indicator of renewed confidence is the increasing number of Americans that have taken the leap of faith and started small businesses. According to the Global Entrepreneurship Monitor (GEM) U.S. Report published by Babson College and Baruch College, “an increasing proportion of the U.S. population believed there were good opportunities for starting businesses, and Total Entrepreneurial Activity (TEA) hit its highest level since the GEM survey started in 1999.”
As a result of this increased consumer confidence, financial institutions are enjoying a healthy rise in auto, mortgage, and small business lending activity. However, despite a high closing rate, excellent member service, and satisfied borrowers, your lending strategy might still be incomplete.
When formulating lending strategies, many financial institutions only think about what it takes to close more loans. This type of model is typical, yet it’s far from optimal. If you want to increase the value of your borrowers and your bottom line, it’s important to think beyond loan closing.
Ask yourself: What is the one thing that every person who closes a loan will need?
The answer: Insurance.
Insurance — whether it’s homeowners, auto, or commercial — should be a key component to your lending strategy because these two things go hand in hand. If you’re not offering the coverage your borrowers will inevitably purchase, you’re turning down business and revenue that could have easily been yours. Think about it this way — not offering insurance with every loan you close is like selling shoes but making people go somewhere else to buy shoelaces. It just doesn’t make sense.
Offering insurance at loan closing is a simple, cost-effective cross-sell opportunity that not only generates revenue for you but also saves your borrowers the hassle of going somewhere else for the protection they need to satisfy their loan agreement.
If you’d like to provide insurance to borrowers but don’t have the resources to run your own in-house agency, contact SWBC today (866) 316-1162.
Frank Castellano is Vice President of SWBC Insurance Partners, and he enables financial institutions to offer personal lines insurance products that help increase fee income and customer retention and add value to their customer services.