15 Jan The Good Side of Recent Banking Regulations for Short-Term Lenders
Recent banking regulations have caused banks and third party payment processors to back away from processing for short-term online lenders. That’s the bad side, and we’re certainly not making light of it. However, there is also a good side to the situation.
The good side is that these stricter regulations have caused the potential cost of buying customer leads to dramatically decrease. If you are paying anywhere in the neighborhood of $160 for your online lending leads, this is the perfect time to re-examine and adjust your lead-buying strategy.
Though lead prices have dropped, the quality of leads is just as good as it’s ever been. Carpe diem! Carefully review the amount you’re currently paying for leads. Do a comparison test of your existing lead source against the outcomes of lower cost leads. By lower, we mean in the $100 range. Given the market (and in spite of the new regulatory environment), we think you’ll experience little, if any, change in your conversion and default rates, which in turn will decrease your acquisition costs.
Historically, the slow time of year for online lenders starts after the second week of January. That doesn’t mean that there is not considerable volume out there. With the cost of leads down, is there a better time to test the waters? No. Try different lead options. Analyze the conversion rates and determine whether or not it makes sense to continue paying what you do now. We’re willing to bet that you’ll be pleasantly surprised at the cost versus profit ratio.
Changes in industry regulations have forced many online lenders into reevaluating their systems and policies to ensure they are compliant. They have also negatively impacted banks’ willingness to work with many online lenders. No doubt there’s been a sense of uncertainty in our industry in recent months and banks aren’t helping matters much. But the good news is that there is still a substantial number of quality leads available, and they can be yours for far less than what you’ve been paying in the past.