Email Marketing is Leading in Unsecured Loan Origination
Email marketers are beating traditional banks at loan origination, including everything leading up to disbursal of funds or declining an application to be funded. By marketers I mean people unaffiliated with the bank as opposed to a bank's internal marketing team. Marketers don’t actually lend out the money but instead have become better at meeting borrowers during their search.
Perhaps the most important advantage that email marketing has over traditional banks is that we cast a much wider net by taking in anyone “interested” in a loan not just those who qualify. Some of these users are in genuine financial hardship and may be in need of a “second chance” checking account or resources to consolidate outstanding loans into a single arrangement with a more manageable fee structure. Notice, although a lead may come in seeking a loan there is a demonstrated demand for complementary products as well.
I’ve had the opportunity to make several websites that focus on matchmaking consumers seeking short term funding alternatives to lenders. I’m careful not to emphasize the focus on brand building because the explicit goal of these sites was to connect visitors to our advertisers. See my earlier post on “Brand Dev” vs “Click and Buy Now” Strategies to understand how the strategies differ.
The evolution of email into a channel to facilitate lending came faster than anyone expected. Unfortunately, the email industry has its less scrupulous users who also know how to mine great amounts of data. I’ve written about the availability of such data. In recent years email drummed up so much demand for loan products that inevitably a sort of black market emerged. The most famous of these might be the “ping tree”, a software based solution that allows financial sponsors to bid on certain profiles of users. At best, it matches applicants with financial institutions most likely to lend them money. At it’s worse the ping tree also represents systematic exploitation of the poorest people. The email marketing industry, including myself, is still grappling with how to manage our responsibility in it all.
In broaching this topic with clients, one solution I provide is to segment data into at least two broad categories — prime and subprime. By knowing which you are speaking to, marketers have control to safeguard against abuse while still driving conversions.
For prime segments we craft messages focused on on the economic terms of a loan for example rate, terms, or rewards. This group wants to know how to more effectively use their access to financial products.
For subprime we know they are most concerned with getting approved. They are interested in loan amount and how quickly they will be able to access funds. Oftentimes, subprime borrowers are facing an unplanned emergency.
For marketers, it’s important to know both groups need products complimentary to loans. This year, forward thinking marketers will circumnavigate going deeper into predatory lending by disrupting other sectors like housing, education, and transportation in search of products complimentary to loans.