Regardless of its size or client base, every financial or insurance company has to invest in these two key aspects: marketing and the underwriting process. The two of these can put a dent in the budget of any business, so naturally, prioritization is essential.
Let’s discuss the latter. The underwriting process as a critical component is the villain behind customer acquisition costs. Compared to marketing, the costs of underwriting are lower only for the most efficient of companies.
The underwriting process holds the key to success of any financial company. This is where you can find the unique (and often secret) solutions to issues, the most important of which are: risk analysis and customer satisfaction.
Risk analysis includes customer identification and scoring, and it’s a metric every financial venture must take very seriously. On the other hand, customer satisfaction holds the promise for the future. It represents the efficiency of your estimates and analysis – if you make a good calculation, you’ll make the right offer that both sides are satisfied with. But how do you make sure both of these indicators are working in your favor? You have to face some challenges:
Optimizing the customer credit application without raising the fixed costs. Among others, this includes the costs of the AML/KYC process that can vary substantially – it goes anywhere between 2.5€ for a basic check and 110€ for staff-loaded cases (*).
Obtaining and utilizing data without putting extra strain on the budget
Adapting to market trends and launching new products in the shortest time period possible – weeks instead of months, tackling each client profile cluster adequately.
Refusing to address these challenges leads to a common mistake that everyone is at risk of making – an action plan with no clear strategy. On the other hand, facing these challenges and not coming to any solid solutions is not the worst thing in the world as long as you keep the long-term vision of your business in mind.
Do not be fooled by how obvious these steps may seem. Increasing the company’s market share and improving efficiency by investing in new technology at the same time is only possible if you have the resources for everything. If this is the case, there are many paths you can take in order to grow. However, the companies with a limited budget should, in general, put off getting new tech until their market share grows.
Unfortunately, there is no universal recipe for success.
(*)Source: European Digital Lenders, Autonomos Next, 2018.
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