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Unlocking Value with Financial Health and Wellness

On this episode of Expert Insights, Brian Vieaux, president and COO of FinLocker, spoke with our host, Joe Welu, on going beyond a transactional mindset to deliver value to consumers by helping them prepare for life’s biggest financial decisions. 

In this week’s show, Joe and Brian discuss giving consumers power over their own data and how lenders can help consumers better prepare for homeownership. Here are some of Brian’s insights. 

Empowering Consumers with Financial Fitness  

Study after study shows that the average first-time homebuyer doesn’t truly understand the process of obtaining a mortgage or what they should be doing to become financially ready to purchase a home. We know that younger generations who are now in the market for their first homes are digital natives. They expect to have digital tools at their fingertips. But most lenders in the mortgage industry don’t have the digital tools that engage a consumer around this concept of financial fitness. 

Many lenders have defaulted to transactional behaviors when they should be focusing on the relationship. There is no better way to create value for a customer and show you are invested in their success than improving their financial literacy. According to Brian, lenders need to meet customers not only before the point of sale, when they are actively seeking a loan, but even before the “point of thought,” when they are just starting to consider getting one. 

For example, there is a large bank in the Midwest that focuses on customer acquisition. Their team recognizes that it can take a decade before the customer is ready to apply for a loan. So, for about 10 years, this bank conducts an ongoing nurture campaign for that consumer, who is technically not a loan customer yet. This approach poses an existential threat for an independent mortgage banker or owner operator. If the independents don’t have a strategy to engage customers months – if not years – before they are ready to purchase, they need to look at investing in the digital tools that they can begin to build their funnel around. 

The mortgage readiness equation stacks together many different financial factors, including a general understanding of credit, budgeting, goal setting, and spending. The next two years of buyers – whether they’ve made a conscious decision to purchase or not – are engaging with Mint.com, Credit Karma, NerdWallet, and other financial upstarts. FinLocker offers a white label solution for those independent brokers to offer the very same access and counsel. 

Navigating the Financial Freeway

Brian said he views the customer experience in fintech as a series of onramps and offramps – particularly when it comes to the series of consumer financial events that happen in their lifetime. It can be difficult to get a consumer to download a lender’s app and have the confidence to trust his or her entire financial history with a lender. The pandemic likely accelerated the acceptance of digital banking, since there was no other way to conduct a transaction for many months. Ultimately, however, it is still up to the bank to instill enough trust in its brand to reduce any apprehension around sharing information. 

With FinLocker, once the lender has access to this financial information, they can run analytics on an ongoing basis around that individual consumer’s financial readiness across a number of dimensions – credit, DTI, income, assets for a down payment, etc. – and then use those attributes as engagement opportunities to pull the consumer back in. On the other end of the continuum, much of the app’s value to a consumer before and during the mortgage process remains valuable after they’ve secured a loan. They still want to track their financials, understand their credit, and track the value of their home. 

DIY Credit Improvement 

According to Brian, banks and lenders that focus on serving segments of their market that are generally considered underserved are often looking for ways to engage those in that segment differently. Ideally, these banks would love to engage them with products that get them interested in home ownership, but in a lot of cases, these segments may need different tools to get them to a place of financial readiness. Brian said several banks and mortgage companies are using FinLocker as another way to engage that underserved segment, whether through community workshops or partnering with nonprofits. 

Additionally, other FinLocker customers are using the app as an onramp to homeownership, often working with consumers to establish or improve their credit through different mechanisms. They have a version of the FinLocker product that extends into the homeownership journey, partnering with various lenders and matching the consumer with the right lender.

For more of Brian Vieaux’s insights, listen to the full Expert Insights episode.