The Smart Compliance Blog

CRA and HMDA Data: A Marketing Gold Mine

  

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Since the inception of HMDA and CRA, bankers have grumbled about the effort and expense required to collect and report their lending data. Even with the advent of automated methods for capturing and reporting, this data has been viewed by all but an innovative minority as something done merely to “comply.” For those willing to seek a different perspective, this data represents an untapped marketing resource you can mine with little or no additional expense.

The HMDA Mother Lode
Your institution’s home mortgage lending data reveal a wealth of demographic information.
Not only does it show where you are and are not lending, but it also shows the characteristics of borrowers who are approved versus applicants who are denied, as well as those who fail to complete the application process or withdraw their applications. By plotting this information graphically and numerically, you can analyze it to gain insights such as:

• Borrower and applicant race, ethnicity and gender
• Percentages of loans made to individuals versus jointly
• Specific neighborhoods where you receive few applications
• Neighborhoods that produce a lot of applications
• Average time from application to decision

You should know what various data fields on the HMDA report represent, and how relating them to one another can shed light on where and how your marketing efforts are working (or not). This type of review can also illuminate pockets of additional opportunity for your bank.

The CRA Gemstone
CRA data can provide a roadmap for seeking out new commercial relationships. Knowing how many small business and small farm loans you have made – where, when and to what size enterprises – can enlighten and inform future marketing efforts. If you have had success in a particular market sector, you can build upon it. Knowing where your efforts have been less effective might indicate a need for greater outreach or a change in messaging. Benchmarking your data against your peers can also help your executive team and Board of Directors adjust and refine your competitive strategy.

The Lucky Strike
Finding novel applications for the data you are already collecting distinguishes you from your competition. Not only does it make productive use of otherwise burdensome requirements, but it holds a wealth of information that can inform your business decisions. Using your data for more than “just compliance” can be the lucky strike that energizes your institution’s marketing programs.