Many community bankers complain about the limited opportunities to lend in their communities, but more often than not, these lenders don't have the documented market data they need to know their market. A successful road map to expanded lending begins with an analysis of your starting point. To get to where you want to go, you must identify where you are at the beginning.
Any successful marketing program therefore, starts with the analysis of the loan market in your community. In particular, a successful loan marketing program will have two essential elements:
- an analysis of the competitive structure of the market and
- an evaluation of the key characteristics of potential borrowers. Because banking is such a regulated industry, this information is inexpensively and readily available from database vendors who have collected the government data and converted it to formats conducive to market analysis. These databases clearly reveal important lender profile data including the market rank and market share of all reporting lenders.
Moreover, they expose the market niches penetrated by lenders thereby giving insight into the competitive structure of sub-markets. For example, what are the market rank and market share of mortgage lenders in the LMI and minority markets? Beyond lender profiles, many of these databases include critical borrower characteristics data that give insight into the profiles of borrowers. Armed with this information about competing lenders and potential borrowers a bank can uncover market opportunities that are overlooked by other lenders. I can't tell you how many times I have encountered community bank presidents who were surprised by the volume of lending activity in neighborhoods they thought were dormant lending areas. With plenty of inexpensive market database reports available, even the smallest community bank can develop the sophisticated market analysis that will reveal new lending opportunities not recognized by less informed bankers. You pay the price of being in a regulated industry.
Why not reap some of the rewards?
