When you add up the high costs to assess the risk of applicants, with lead purchasing becoming more competitive and the quality of leads becoming harder to verify with traditional methods, the financial returns are often outweighed.
In fact, the odds are likely that you’re spending too much on poor-performing leads. Too often we see lenders purchase a lead, and quickly move towards verification, only to discover that nearly 8 out of 10 purchased applications cannot be funded. Whether due to the lead being unable to pass additional underwriting, unwilling to provide more information, or simply to the lack of contactability, the outcome is the same—a loss. Once you reduce these obstacles, you’re headed in the direction to reduce cost per funded loan and expand profits. But to truly maximize portfolio profits, lenders must leverage alternative data solutions earlier. Technology holds the potential to extensively reduce the costs of lending with effective innovations that yield data critical for making informed decisions on borrowers. Here we discuss how the right data solutions can help you reduce cost per funded loan to help you maximize portfolio profit.
After lead purchase, one of the major reasons for the lack of conversion is the inability to contact the prospect for additional verifications. At this point, you’ve spent the money on the lead and can’t get ahold of them. However, there is an uncomplicated way to increase conversion at the point of lead acquisition by simply verifying the contactability of the lead. ValidiFI’s Contactability Score ensures that the contact is valid, belongs to the individual, and all pieces of PII are linked with each other. Looking across hundreds of thousands of sources of how a consumer provides information identifies which prospects are providing the most correct and consistent information. Knowing that the application information submitted is real, belongs to the individual, and is the best contact information ensures the chances of contacting the prospect.
Identify In-Market and Willing Leads
If knowing the information provided is real is the first step, then the second step to strengthening conversion is identifying those who are currently in-market. Focusing your efforts to people that are more actively searching for a loan, could lead to a huge increase in profits and a reduction in your cost per funded loan. This is where ValidiFI’s Lead Conversion Score really shines, leveraging the most powerful Inquiry Attributes to identify consumers with a recent history of interest. Which is directly correlated to those that are most likely to convert. By gaining insight into the intent of the consumer more fraudulent applications are reduced and better converting consumers are revealed, significantly reducing the overall cost of customer acquisition.
Eliminating a high-friction process.
After the inability to contact, and in market behaviors, another major cause of profit loss is application abandonment. Of the studies we have conducted, we found of the population that makes it to a manual or credentialed bank verification process, 60% will not convert. The bad news is you have already paid for the lead. But now you do not have to force them to go through the bank account login process. Fortunately, key information you would obtain through a credentialed or manual bank verification process can be achieved without consumer interaction. The less laborious the lending process, the more likely your lead is to convert.
The manual or credentialed bank verification process can easily be replaced with real-time bank and payment data. ValidiFI’s real-time bank and payment data provide similar insights to the bank account verification process including, patterns and behaviors associated with the bank account status, indications of fraud, and the number of positive or negative payments. Often this real-time information can be incorporated further up the waterfall to weed out prospects earlier in the process, making the need for post-origination verification of the bank account obsolete. ValidiFI’s latest Payment Instrument Risk Score leverages real-time bank and payment data, our Payment Attributes, to allow for the assessment of the consumers’ credit and payment risk before you purchase the lead. Utilizing this product at lead purchase helps you streamline your verification process while reducing defaults and returns.
Reducing Cost Per Funded
In order to create a lead-converting, profitable business, the key is a strong data strategy focused on improving the validation of customer information, assessment of intent, and removing processes that impact customer interaction. By leveraging data efficiently to eliminate bad leads before acquisition you will optimally reduce the cost per funded and maximize portfolio profit. ValidiFI has the solutions you need to improve your cost per funded loan. Schedule a demo and let us show you how, contact us online or call us at (754)-209-2511.