As I continue this four-part series leading up to the Teslar User Conference, I want to spend the second segment on what I see as the biggest issues with consumer lending in banking.
When I talk to community bankers, they usually tell me they don’t do consumer lending because it’s not profitable. But this is almost entirely confirmation bias.
What do I mean by that? Because banks see consumer lending as unprofitable, they often don’t invest in the processes and tools that make it efficient. That lack of investment generates poor processes and higher costs, which self-reinforces the belief that consumer loans are not profitable. And yet, credit unions (often significantly smaller than community banks) are originating just as many, if not more, consumer loans for a profit.
This confirmation bias appears even more when lenders tell me there’s no modern way to connect with consumers since they no longer come into the branch. Meanwhile the bank is sitting on all the transaction data that clearly shows which customers may need a loan.
This got us thinking at Teslar: What would it take to build a consumer loan origination process that allows a bank to prospect customers using their existing data (and other methods), pipeline that outreach, originate the loan, board, fund, and then monitor it, all at minimal cost? And do this without removing the lending-to-customer interaction, while also eliminating bottlenecks, never rekeying data, and no chance of violating regulations or policies.
As it turns out, that’s much harder to accomplish than it sounds. But we are ready to show you how we’re making this a reality at this year’s User Conference. Because, by its very name, a community bank should service their community. And a community is not just CRE and agriculture loans, it’s the people who need a new HVAC system, want to consolidate debt, or simply trying to cover the cost of braces for their kid.
We can’t wait to continue this conversation in Bentonville on October 8–9. See you then!