Consumer lenders cite market volatility and aggressive regulatory environment as top challenges; cross-sell and new products as top business strategies.(HEADLINE)

Rising interest rates, escalating delinquencies, compressed margins and increasing regulatory demands are all forcing consumer lenders to rethink how they extend credit to borrowers at a time when they are still expected to grow their portfolios and provide continuing revenue streams to their organizations.

These factors were identified in a proprietary study conducted by TowerGroup earlier in 2007 among US, UK, Irish and Canadian financial services institutions. Institutions responded to questions exploring the future direction of consumer lending, including home equity, first mortgage, personal lines and loans, and automobile and student lending. Seventy-one percent of those responding ranked market volatility and 43 percent ranked regulatory compliance among their top concerns for 2007.

Faced with a more difficult operating environment, lenders are refocusing their business strategies to maintain revenue streams. Innovation in products, services and channels is top of mind for these institutions, with 57% of respondents ranking innovation among their top three strategic initiatives. Business process automation came in a close second, with 50% of respondents ranking it in their top three.

"Market volatility is forcing consumer lenders to revise their business objectives and strategies if they want to be ...