With tight margins and increasing compliance costs, many U.S. based financial institutions look to loan growth as a way to preserve profitability. Competitive loan markets, alternative lenders and at-capacity loan officers can obstruct the path to easy growth.
For growth-minded institutions, the answer typically includes either additional staff to find and build relationships or new technology that allows existing staff to generate more loans per employee. While either method (or a blend of both methods) may work for a given institution, there can be added benefit to growing through technology:
1. Borrower Experience – Expectations among borrowers are evolving to include more real-time decisioning, online interactions and an abundance of choice when it comes to finding capital. As a result, growth-seeking banks and credit unions may look to technology to meet and exceed these expectations and give potential borrowers a convenient customer experience through digital portals, faster turnaround times and transparent processes.
2. Profitability – Without technology in place, some institutions allocate the same resources to underwrite a $1M loan as they would for a $250,000 small business loan. Such practices make small business less profitable and less desirable as a target for loan growth. However, with the right technology in place, the process can be expedited for both faster response times and lower origination costs.
- Reclaiming Your SMB Lending Market
- The High Cost of Originating a Small Business Loan
- Growing Your Small Business Lending Portfolio
- Uncovering and Preventing Holes in the Lending Process