Financial institutions have long been wary about lending to small companies – the conventional thinking is that the risks tend to outweigh the profits. Over the last few years, however, the small-business community and fintech upstarts have begun to form relationships that have helped lead some lenders to reassess the market’s potential.One example worth noting involves Farm Read More
Almost by default, large legacy financial services organizations still command the strongest hand when it comes to consumer lending. It often boils down to the fact that those large organizations — by a nearly 3-to-1 margin — are considered a consumer’s primary financial services provider. BAI Banking Outlook: Trends in 2020, a recent BAI survey of consumers Read More
As banks consolidate—a fact of life since the financial crisis—they also feel pressure from non-bank competitors to get leaner, more efficient and bolster customer experience. This stands as more important than ever as banking becomes increasingly digital; today’s banks invest in big data technologies, customer analytics and mobile banking platforms. The banking sector stands as one of Read More
For those who seek to expand into new lines of business, improve operational capabilities or tap new markets, the question so often amounts to this: Should you build, buy or partner your way to success? While it’s becoming a more-than-common question, the answer often carries with it this salient truth: Technology has always been disruptive and established Read More
Perhaps you’ve seen ads for “Mortgage approvals in minutes!” just by using a mobile phone. They often run during halftime of a football game or before our favorite prime-time TV shows. The “approved in minutes” concept has grabbed the attention of many consumers, but those of us in the mortgage industry know that behind the marketing gimmick Read More
No matter the business, digitization holds the key that unlocks groundbreaking opportunities and prevents small issues from blowing up into multi-billion or even trillion-dollar problems. The ability to access the right data at the right time not only provides a benchmark for a company’s past performances—it also creates a roadmap to future industry trends. Access to accurate, Read More
As the economy continues its post-Great Recession progress, interest rates are expected to continue rising in 2018 on almost all financial products, including personal loans and mortgages. With these rate increases, the industry forecasts a reduction in mortgage rate refinancing. A study by Black Knight reported that in just the first six weeks of 2018, about 1.4 Read More
When Corey Vandenberg worked in retail banking—for 17 years, in fact, before he set up shop as mortgage banker in Lafayette, Indiana—he was always stunned at all the paperwork customers had to furnish to show proof of income to buy a house. “A traditional bank requires two years of tax returns and more proof to prove income,” Read More
Perhaps you’ll see this one coming like an angry regulator pacing up to the door. But if you wonder what federal mandates, a motorcycle, a baby boomer hairdresser and a blown business opportunity might have in common, read on. Our story of regulatory woe on the go begins with 60-year-old Geri Michael of Vero Beach, Florida. The Read More
Not long ago, bankers tallied creditworthiness with a fat envelope full of papers they assessed over the course of weeks. Then electronic reports took hold, with the three major credit bureaus (Experian, Equifax and TransUnion) ruling the roost and brandishing that all-important FICO score. To borrow from FICO’s paradigm, its importance to borrowers might as well be Read More
Perhaps more than any other generation, millennials embody a slew of contradictions. They labor under a host of pejorative labels: “lazy,” “entitled” and “narcissistic.” At the same time, they have been praised as “entrepreneurial,” “optimistic” and “idealistic.” Nowhere do such contradictions emerge as obviously as in their relationship with money and the role it plays in their Read More
Both major government-sponsored enterprises, Freddie Mac and Fannie Mae, are working to streamline the mortgage manufacturing to make securing and acquiring mortgages more efficient. Both seek to enhance borrower and originator experience by offering different toolkits and resources. And one example of a loan-underwriting program available from Fannie Mae, known as Day 1 Certainty, can greatly enhance Read More
When the peer-to-peer loan service LendingClub arrived 2007, many envisioned a major disruption to end the bank loan business as we knew it. What next: Lending money on Facebook? (Talk about an excuse for consumers to press the “like” button.) Amidst the speculation, some industry leaders put their ear to the ground and heard the low rumble Read More
In their attempts to answer the question that never goes away—“How to drive portfolio growth in the current lending environment?”—many financial institutions have turned to commercial real estate. That’s led to intense competition to win deals. But along with the ever-present question comes an ever-present imperative: Banks growing their CRE portfolios must satisfy regulators’ concerns over loan Read More
A customer walks into a bank to apply for a car loan and finds out they don’t qualify. What happens next? Usually, the bank issues a rejection letter—and indeed, the customer feels rejected. Then the customer possibly (or probably) applies for credit at a different bank … and the original bank is in turn rejected: They never Read More
There are 28 million small businesses in the United States. Let’s take a closer look at that number: It comes to one business for every 11 or 12 people in the U.S. Clearly, this market is ripe with opportunity. And yet, reasons abound as to why banks haven’t fulfilled small business loan requests. For starters, small business Read More
Make no mistake: Competition for small businesses is heating up among big banks, credit unions, alternative lenders and every institution in between. Small business owners now field a barrage of ads, direct mail pitches and sales calls that promise fast funding access. The competition then heats up when you add these ingredients: low interest rates, business investors Read More
In articles one and two of this three-part BAI Banking Strategies series, we outlined CECL, the Current Expected Credit Loss standard issued by the Financial Accounting Standards Board. Those pieces discussed a savvy approach to gather the required data, consisting of two crucial elements: First, assemble the right internal team to pull accurate data, with representatives from Read More
Small businesses constitute the civic backbone of our communities and largest drivers of job creation and economic growth. The U.S. Small Business Administration estimates that 28 million small businesses in America account for 54 percent of all U.S. sales and provide 55 percent of all jobs. Yet, small businesses today face a range of challenges, including numerous Read More
So, how hungry are you? In the financial context, this question extends far beyond the usual banking bill of fare. In fact, the recipe relies on the most important aspects of your bank’s lending strategy. Your “risk appetite” refers to the amount of risk your institution will accept in pursuit of loan growth. Defining the metes and Read More
