New York, NY—
Today Novantas announces the release of its 2015 HELOC Consumer Survey, which shines light on Home Equity customer preferences for product usage, features and channels, as well as demographics, shopping habits, and rate sensitivity. As the Home Equity market advances from recovery into expansion, successful consumer lenders will implement strategies aligned to this feedback.
The Novantas 2015 HELOC Consumer Survey included 1,692 participants drawn from recent purchasers, seasoned borrowers, and prospective applications across all age and income groups. The survey was constructed to gain insight on line draw behavior and results allowed for segmentation into four distinct groups based on frequency of draw and balance carry: Revolvers, Periodic Borrowers, Pay-Downs and Emergency Only. Further study within these discrete customer segments reveals information necessary for both targeted acquisition and retention strategies.
The research reveals a very clear trend developing in a new, smaller HELOC market. While banks are still strongly winning HELOC business with primary checking relationships, customer composition is shifting toward younger borrowers who use the product for cash-management. This group, which makes up 28% of customers today, brings with them an increased preference for digital sales channels versus the traditional branch banking responsible for most of the existing portfolios.
“Understanding customer behavior is not only important for marketing purposes,” says Zach Wise, Principal at Novantas. “Behavior dictates customer profitability and should inform pricing decisions, fee structure, and product design. Banks that can improve their Home Equity products to meet these needs at optimal prices and fees will be the most successful in the growing market.”
“Branches and relationships are still playing the major roles in influencing HELOC purchase decisions, but the growth in digital preference cannot be ignored,” adds Lee Kyriacou, Managing Director at Novantas. “Larger efforts are needed to educate and market the product to improve utilization, and digital channels will be a key influencer for target HELOC segments.”
Novantas is the industry leader in analytic advisory services and technology solutions for financial institutions in the Americas, Europe and Australia. We create superior value for our clients through deep and insightful analysis of the information that drives the financial services industry — across pricing, product development, treasury and risk management, distribution, marketing, and sales management. For more information, please visit www.novantas.com.
Senior Marketing Associate