LISTEN TO AUDIO VERSION:
New financing and property world in sight
Daniel, at your Volksbank, you set the course for changes in construction financing advisory services early on, and we are currently experiencing a normalization in the construction financing business at a persistently low level. Clearly, the “new financing and property world” has reached customers. What were your drivers?
DW: We want to consistently align our advisory services with customer needs and serve our members and customers in line with our purpose. In addition to excellent relationship management, speed, reliability, trust and our regional focus, professional expertise in the field of home construction and improvement is a success factor when it comes to our customers who are looking for financing. The loan is the final banking product at the end of the day, but within this ecosystem we also want to deliver added value to our customers and members well in advance as a competent partner.
The market changes in the financing business have shown and continue to show a clear trend towards existing properties (purchase, refurbishment, modernization and renovation) and, above all, sustainability of properties. Regulatory requirements, in particular through the EU taxonomy, provide a direct link to the property life cycle in advisory services.
We continue to be driven by our goal of being a competent partner for our customers and members in all matters relating to home construction, purchase and improvement.
Positioning as a partner early in the customer journey
How did you manage to position yourself at an earlier stage in the customer journey and win the commitment of your construction financing specialists, who were previously more involved in the property purchase and construction business and had to find solutions quickly?
MF: The focus is primarily on the benefits and added value for our customers. The loan itself is interchangeable and does not differentiate us from the competition. Differentiation requires the consistent addition of new competencies so that our customers enter into this relationship with us.
That’s why, in the future, we want to get in much earlier, ideally before a loan commitment is made. True to the motto: “Dear customer, before we talk about the financial aspects, I would like to assist you with my experience and expertise to make the appropriate decisions beyond the loan, where people are sometimes left to their own devices.” (How do you want to heat the property; smart home vs. analog; build a basement: yes or no – starting from there, we involve our network and make recommendations and then settle the financing with an outlook on how the customer plans their home and what they dream of).
We discussed and evaluated these developments, got all advisors to join us on the journey and formed an agile project group consisting of six construction financing advisors, which developed solutions in collaboration with zeb.
We managed to position ourselves earlier in the customer journey through our landing page “Bauen und Wohnen in Mittelhessen” (Building and Living in Central Hesse). Its user numbers are constantly increasing thanks to online and social media marketing, and we are becoming ever more successful in lead generation and conversion!
Realigning the focus and outlining a road map
How did you manage to work on the target picture in a focused manner? What helped, where did you run the risk, for example, of getting lost in the detail?
DW: The aim was to evaluate the advisory service and product solutions of future-oriented construction financing and to adapt them to future requirements, for example:
- Constant focus on efficiency coupled with adaptation to future topics:
- What should an advisory process for which occasion look like in the future?
- Which topics do you drop, which do you add?
- Further development to become a modernization expert:
- Acquire knowledge on topics such as technical equipment, construction types, advantages and disadvantages of different materials, etc.
- Evaluate properties in terms of energy efficiency and potential for refurbishment/modernization
- Calculate cost-effectiveness, e.g. new heating vs. consumption costs, etc., in relation to and in the context of financing
- We had to question the way we use our networks: How can we create value in this area? Connect customers with our corporate clients in the construction industry?
- Integrating the megatrend of sustainability:
- Full range of grants and subsidies (especially regional ones), a sustainable loan and product adjustments, sustainable properties
- Sustainable refurbishment, know-how à What’s feasible? What are the current trends?
- Product adjustments in the area of refurbishment
- Filter advisory approaches for all target/stakeholder groups, readjust and rewrite the scripts, e.g. regarding tenants, owners, owner-occupiers and investors
MF: With our agile project team, we analyzed, discussed and reevaluated as many aspects as possible in just under three months. Our implementation plan took into account the necessary coordination with other areas of the bank as well as absences and vacation periods. Staying on track, thanks to a milestone plan and the required discipline, was exhausting at times, but it led to results. Our road map is in place, and we kicked off in March with our own construction financing fair for our construction finance advisors, which allowed us to get all employees on board.
Taking implications for other sales channels into account
What implications for the intermediary/platform business have you drawn from the project work?
MF: In addition to the traditional advisory business with our end customers, the intermediary business via financing platforms continues to be an important sales channel. Selling loans has shifted more and more towards online and platform formats in recent years.
Past growth shows that customers turn to a neutral intermediary in the hope of receiving independent advice and a transparent market comparison. The intermediary has become an established and accepted contact. According to all expectations, significantly higher growth rates can be achieved via platform sales partners.
DW: However, one thing is clear: intermediary platforms are currently experiencing the same overall decreases in the market that we face as a bank. In times of dampened credit demand, the additional points of contact are more important than ever for us to maintain our visibility in the market and, at the end of the day, our financing volumes.
Step by step, we will also bring our product innovations for energy-efficient refurbishment, modernization and renovation onto the platform in order to support new business growth for our sales partners and thus for our company.
Lessons learned and customer feedback confirm that we are on the right track
You are in the middle of implementation and transformation and able to report on the first successes. Looking back, what do you think is particularly important with regard to the change process, transformation and customer advisory? What did you learn from the sprint, what do your customers say and what highlights can you tell us about?
MF: First: lessons learned
- Continuously sharpen the focus and secure the meta level
- First create the big picture you want to achieve, then translate it into small work packages
- Use the Golden Circle (why, how, what – from the abstract to the concrete) in communication towards the advisory team and the bank
- Continuously question, i.e. ensure, being on course
- Implement the project from within the team to create acceptance
- Identify the needs of advisors and customers and take them seriously
- Address fears and concerns and take them seriously
- Follow up the topic with the advisors, continuously provide updates and information on small further developments
- Generally, start early enough to be able to achieve sound results and developments in the required time
DW: Second: successes
- Customers confirm that our advisory service offers more than they expected
- Increase in average loan volume through more detailed consideration of the customer situation as well as specific expertise regarding ESG issues
- Broad acceptance from the home construction and improvement team, and the good feeling of being on the right track!
- Expansion of the range of services (e.g. energy advice provided by subsidiaries, networking with PV system providers)
- Integration of additional service modules into the financing product portfolio (financing of building projects incl. financial buffer and home building course) to limit comparability and allow for different pricing
Marina, Daniel, thank you so much for sharing information and recommendations on your transformation journey from construction finance specialist to home construction and improvement advisor. We wish you continued success in market development, wallet exploitation and customer referrals!