38 MARCH / APRIL 2018 DIRECTORS / SENIOR MANAGEMENT Best Practices to Grow Your HELOC portfolio Home equity lines of credit (HELOCs) are again becoming a relevant strategic instrument to accelerate loan growth. While consumer interest in HELOCs has revived and will likely continue growing, many financial institutions are struggling to capitalize on these opportunities. Last year began with several key housing and economic indicators pointing favorably to a continued resurgence in HELOCs. However, despite HELOC-friendly indicators, HELOC growth has proven to be an uphill climb. It isn’t that community financial institutions aren’t trying. Many are devoting considerable resources to gain traction with HELOCs, only to have their efforts rewarded with lackluster results. If you ask officers at one of these under-performing institutions to explain their financial institution’s subpar HELOC results, they might point you to a long list of legitimate frustrations. Often these are valid concerns; however, a select number of community financial institutions are successfully identifying and attracting new borrowers through the use of innovative strategies. The results are significant growth through increased loan volume and enhanced income. What’s the differentiator? Why are some financial institutions succeeding, while others flounder? Research shows successful execution of a HELOC strategy requires attention to three key areas: process, product and promotion. While many financial institutions may believe they have these elements in place, most do not have a formal foundation to drive actual results. Process Without a defined process, a successful HELOC strategy cannot be effectively implemented. Developing a consistent organizational process includes internal education for all team members and a dedicated internal process. Internal education. Internal education should focus on recognizing HELOC opportunities – specifically, what is a HELOC, and how can consumers actually use a HELOC? In addition, employees need to know who the dedicated product owner is, and how to make a successful referral to the HELOC specialist. Internal process. The HELOC growth strategy must have dedicated owners who are HELOC experts. Each product owner must have access to an online application process, which is well defined, intuitive and easy to navigate. In addition, financial institutions must have clear processes around loan closings. Specifically, what is the internal documentation process, and where will they be closed (e.g., in branch, online, in a lender’s office, etc.)? Product With the process defined, it is time to focus on the product. Although it is not always obvious with a product such as HELOCs, there are significant ways a financial institution can differentiate itself. For example, will your financial institution focus on a fixed-rate offer, or on an introductory rate offer? Consumers will want to compare rates, so it is important to understand how compelling your rate offering will be to prospects. David Carlson Senior Vice President Haberfeld Associates dcarlson@haberfeld.com Haberfeld Associates is an associate member of the Indiana Bankers Association. Article author
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