Community Banks Rapidly Losing Small Business & Consumer Loan Market Share

Posted by Michele Rehm, Marketing Manager on Apr 17, 2018 10:57:25 AM


The growth of digital lending—and community banks' failure to keep up with the pace—is illustrated clearly (and pretty harshly) in the charts below. 

According to FDIC and Fintech industry data, community FIs have lost nearly half their market share of small business loans under $100k to large banks and Fintech companies in the last seven years. This is unfortunate considering that small business loans have been a distinguishing strength of community banks in the past and serve as a key pipeline for future loans.

market share sm bus loans

Further, TransUnion reports that FIs are rapidly losing market share to Fintech companies for personal loans. In fact, FinTechs have grown from a mere 1% of personal loan originations in 2010 to one third of the entire personal loan market in 2017, while community banks have lost 21% of the share. 

personal loan mkt share

WHAT IS THE SOLUTION? Fintech companies like Kabbage and OnDeck and some larger banks have embraced digital technology to deliver the frictionless customer experience and operating efficiency the market demands. The journey to catch up with these leaders does not have to be a long and arduous one, however. 

Community banks already have the customer relationships, lower and more stable cost of funds, sound underwriting and established compliance. The only factor they lack is the technology, which is now available by adopting a digital lending platform that automates the entire lending process—from online application to loan offer in just minutes. It streamlines the process so greatly, in fact, that digital lending for a community bank is now more efficient and profitable than credit card lending at the largest FIs. 

With a digital lending platform, customers can access the service on a computer or smart device, in-branch or out—all under your brand, with your underwriting and under your control. 

New Lending Strategy

Topics: Digital Lending, non-bank lenders, Small Business Loans, Fintech, Consumer Loans