Don’t Miss New Opportunities - How You Can Quickly Spot Shifts in the Lending Economy

How is your company staying on top of changes in consumer credit activity? Ask yourself these questions:

• Do you know how changes in interest rates are impacting consumers' ability to borrow?

• Are you tracking which loan types are showing increasing demand?

• Can you tell which consumer segments are struggling to meet debt commitments?

If you don't know the answers to these critical questions, you could end up taking on more risk than you expected. In today's fast-moving economy, staying up-to-date with consumer credit trends is a key part of making the right decisions to drive growth and minimize risk across your lending business.

These trends could have a huge impact on your strategy. If you miss big changes, you might miss out on new opportunities to grow your credit portfolio. Here are three ways you could use credit trends to help your organization drive growth.

1. Use credit metrics to optimize your origination strategy

Let's say you discover that the number of originations for bankcards is increasing across all lender types (banks, credit unions, fintechs, auto, etc.). Is your organization also experiencing an increase in bankcard originations?

And, what if, when looking at the trended data, you find out that the average loan amount for new bankcards issued from your peers has grown 10% in the past two months compared to your business's loans? Could they have loosened their standards? Their offers could be more competitive than yours, which means you could lose market share. You might then consider:

• Adjusting your origination criteria to allow for higher loan amounts, so your offers match your competitors. This strategy could help you grow market share.

• Staying the course. Keep your loan amounts steady, so you continue to pursue business from a possibly less risky population. While this strategy might not help you capture more market share, it could help you avoid increased delinquencies and charge-offs down the road.

2. Understand credit trends to fuel your acquisition

Let's assume you work for a credit union and are looking specifically at auto loans. You know that prices for new and used vehicles are down from a year ago, but you also know that interest rates are higher than average. By analyzing recent credit trends, you could discover that the average amount for new auto loans is down across all lender types, not all that shocking.

But, you also see that the average credit score for consumers that have obtained auto loans from credit unions in your state has decreased 15 points. The average score for auto loans from fintechs is down even more. How do you respond? Should your credit union change its acquisition strategy?

Your credit union's annual goal is to increase auto loan accounts. So for the next quarter, based on these insights, you decide to loosen your prescreen criteria to widen your prospect pool and target consumers with lower scores. This could help you win business that might otherwise go to another credit union.

3. Track delinquency trends to inform your portfolio strategy

Having access to credit trends data could also help you manage your portfolio and minimize delinquencies. Now imagine that you work for a mid-size bank and you see that bankcard delinquencies are on the rise overall. But the increased delinquencies are not impacting all lender types equally. Big banks show steady delinquency rates, but mid-size and small banks and fintechs show rising delinquency rates. Your company is concerned that delinquency rates will continue to increase as consumers struggle with rapidly changing economic conditions.

What's your next step? You decide to evaluate how tightening origination criteria for the upcoming quarter might impact the volume of new account openings and expected delinquency rates. You are not afraid to lose a little business to the big banks knowing that your portfolio's delinquency rates are more likely to remain steady.

Track lending metrics on a consistent basis to react quickly to market changes

How can your company stay on top of the lending landscape and quickly recognize shifts that could impact your business? The solution: CreditTrends 360, an online app specifically designed to help lenders track credit originations, portfolio balances, and delinquencies across all key loan and lender types with data broken down by score segments. And it is customizable to help you evaluate your firm against your peers and in your target geographies. Imagine all of this detailed lending data, updated monthly, right at your fingertips.
If you are not incorporating a macro level review of changes in the credit marketplace into your strategies, then you could be overlooking opportunities to grow or to minimize risk. Credit Trends 360 can help you answer some tough questions about if or when you should alter your lending strategy and how you compare against your competition.

Keep Your Business Goals Within Sight

We hope you'll join us for future Market Pulse webinars. To ask questions in real time and gain deeper insights before anyone else, you have to be there. You can register - as well as find our monthly reports, the Market Pulse podcast, and more - at our Market Pulse hub.

Broaden your perspective with insights that inspire bold innovation, confident adaptation, and decisive leadership through Trends and Insights.

Want to learn how you can fuel lending with comprehensive insights and analytics? Discover resources to help you stay on top of the credit landscape, improve prospecting, approve more customers, grow relationships, and manage risk.
Finally, connect with us on YouTube and LinkedIn for even deeper insights.