LOAN GENERATION: Understanding Your Target Markets

Loan generation is what we at refer to as the process of increasing your bank or credit union’s loan assets. If you’re part of a financial institution, you already know how vital loan generation is to the health and growth of your business. With smaller banks and credit unions providing a wider and wider range of low-rate loan products, including credit cards, auto loans, mortgages and commercial loans, they are offering serious competition to larger financial corporations. 

But how do you develop meaningful strategies to better serve your members and increase your loan generation? The first step is to understand the market: identify the needs and expectations of your members based on important factors such as age and income. 

Take a look at your membership or customer base divided by generation:

Millennials (Ages 18-34 in 2016)

Millennials have had a slow start into the adult world, starting with higher rates of unemployment and underemployment, largely due to economic issues during the early 2000s. A combination of lower job prospects and shifting social values means Millennials, in general, are less likely to have credit cards or mortgages and are delaying marriage.

But Millennials are not a market to ignore when considering prospective loan applicants. Baby Boomers are moving into retirement, Millennials are making the transition from college to career and, in 2015, Millennials surpassed Gen Xers to become the largest sector of the American workforce. Their spending power is huge, and businesses and marketers are all trying to capture Millennials’ attention, so what can you do to stand out?

1. Personalize your offer. With so many online networks of communication, Millennials are used to engaging interactively with businesses, so the typical mass media messaging isn’t going to stand out. Targeted, responsive, diverse and personalized marketing is the new norm. (Check out our SmartTrack program to learn more.) 

2. Digitize the loan process. Millennials not only prefer an online experience, they expect it. If you offer an online loan application and a streamlined, user-friendly digital experience, you’ll set yourself apart from your offline competitors. (Marketing Automation can help you ease into digital marketing.)

3. Identify needs within the market. Millennials strive for financial stability and debt elimination, but they are unlikely to have a plan for managing their finances. Identify relevant products and demonstrate their value to meet Millennials’ changing needs and goals. For example, while Millennials value their credit scores, the majority don’t have credit cards. 

Generation X (Ages 34-50 in 2016)

Gen Xers are in their prime earning and spending years: they’re established in their careers and are likely to have mortgages, children at home and thoughts (however distant) of impending college and retirement costs. Yet economic woes have not overlooked Generation X. Many middle-income Gen Xers feel they’ve been stagnating in their jobs and falling behind with their debt. 

With so much focus on hip, new Millennial marketing, sometimes Generation X feels like the forgotten generation. So how do you demonstrate to Gen Xers that you’re keeping their needs and concerns in mind?

1. Focus on families. Above and beyond any career ambitions, raising happy families is the top priority of middle-income Gen Xers. College loans, home equity lines of credit and other similar loan products could be incredibly important when helping your Generation X members achieve their family-oriented goals. 

2. Address the high earners. Despite high rates of debt anxiety, Gen Xers still have higher average incomes than Millennials or Baby Boomers. With these higher incomes, members are more likely to travel for pleasure, make luxury purchases and spend more on their health, homes and families.

3. Support the entrepreneurs. Gen Xers are in the prime age range for starting businesses. While we might think of their younger counterparts as having the time and energy to put into a new business, Gen Xers at 40, 45 and older generally have greater financial resources, business networks and professional savvy to get their businesses up and running. Commercial lending can offer crucial support.

Baby Boomers (Ages 51-69 in 2016)

Ah, the Baby Boomers. This is the generation that has been so ubiquitous, so relevant, that the term goes beyond describing a simple demographic and instead covers an entire cultural movement. (Let’s not forget, this is the generation of The Beatles, the Civil Rights Movement, Watergate, the Cold War and Woodstock.)

Baby Boomers have been special and important from their very beginning, but now they, like the younger generations, are seeing the impact of economic issues on their finances. Many Baby Boomers lost value in investments during the economic crisis and have delayed retirement. Despite setbacks, Baby Boomers have maintained their joie de vivre – they buy the latest hi-tech gadgets, travel and stay active. The Economic Anxiety Index shows that Baby Boomers are feeling less stress than most other groups (the higher the number, the greater the financial stress).

Baby Boomers might not be the typical demographic to look to for loan generation as they are more likely to be eliminating debt as they enter retirement, but there are still opportunities to serve this group in significant ways with your loan products.

1. Rethink the situation. After supporting their children through education, Baby Boomers are now facing retirement saddled with student debt. And for those who haven’t yet paid off their mortgages or other loans, there’s the worry of how to make payments after retirement. For Baby Boomers facing these types of concerns, refinancing loans or consolidating debt could be a welcome solution. 

2. Plan for retirement. With retirement either on the horizon or already here, Baby Boomers are adapting to new ways of living. Downsizing the large family home, purchasing a retirement home or electing for a reverse mortgage are all serious considerations for Baby Boomers. 

3. Align with the lifestyle. Thanks to more disposable income (with children grown) and more free time (with partial or full retirement), Baby Boomers are big travelers and consumers of new technology. Credit cards and loan products that cater to Baby Boomer lifestyles, with perks like rewards points and low interest rates, could be appealing and useful.

At the end of the day, the most effective marketing occurs when financial institutions better understand and identify the needs of their various customers and members, perhaps before they even recognize the need themselves. 

If you haven’t yet taken advantage of’ personalized marketing programs, click here to learn more about how you can put yourself in the enviable position of offering exactly the right loan product at exactly the right time.


Posted by - March 02, 2016