Blog

Community Banks Rapidly Losing Small Business & Consumer Loan Market Share

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

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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

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

ABA Says Digital Lending Technology Works Best When Strategically Applied

Posted by Jeff Harper, President, BSG Financial Group on Jan 15, 2018 12:07:46 PM

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With consumers increasingly expecting a seamless lending experience and more non-bank digital lenders entering the market, banks must embrace digital lending technology to remain competitiveHowever, it must be applied strategically. 

As Rob Morgan, Vice President at the American Bankers Association (ABA), wisely pointed out in a recent article in the ABA Banking JournalDigital lending isn’t an across-the-board pursuit for banks; it's a strategy surgically applied to specific lending areas.”  The article, entitled Three Big Trends in Digital Lending and How to Get In on Them, suggests financial institutions should focus their efforts on those areas of lending that are easiest to digitize—namely, small business lending and personal loans.

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Topics: Digital Lending, non-bank lenders

Small business loans <$100K must be digital in order to compete with non-bank lenders

Posted by Michele Rehm, Marketing Manager on Jan 2, 2018 9:48:40 AM

The recently-released 2017 U.S. Digital Lending Landscape white paper by S&P Global Market Intelligence projects that digital lenders will originate $62.84 billion in new loans in 2021 across the personal, small and medium enterprise, and student-focused segments. This prediction represents a compound annual growth rate of 16.5%, although SME-focused lenders are projected to grow the fastest over the next five years, with an estimated CAGR of 21.5% through 2021.

With 99.7% of all businesses in the U.S. classified as small businesses (according to the U.S. Small Business Administration), these projections should be encouraging to community and regional banks that are investigating the plausibility of offering digital loans to this market. The numbers indicate that there is no shortage of small businesses looking for funding.

DOWNLOAD THE ARTICLE (PDF)

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Topics: Digital Lending, non-bank lenders

The business case for adopting digital automation for small business and consumer loans

Posted by Trevor Knott, Sr. VP Business Development on Dec 4, 2017 5:47:53 PM

The small business and consumer unsecured loan market is enormous—$1.3 trillion by some estimates. For community and regional banks under $10 billion in assets, however, this market is quickly becoming a missed opportunity. Banks this size have a mere nine percent penetration into the market for small business loans under $100K and only an 11 percent share of the personal loan/credit card market. These paltry numbers are disappointing, especially when you consider institutions of this size used to stake claim to these loans before ceding them to non-bank, online lenders.

DOWNLOAD THE ARTICLE (PDF)

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Topics: Digital Lending, non-bank lenders

Personal loans can be profitable loans with digital technology

Posted by Trevor Knott, Sr. VP Business Development on Oct 17, 2017 7:06:01 AM

This article originally published on CUInsight.com, October 12, 2017

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Topics: Digital Lending, Consumer Loans

Three Strategies Financial Institutions Can Use to Generate More Revenue in 2018

Posted by Jeff Harper, President, BSG Financial Group on Sep 27, 2017 10:23:31 AM

Heading into 2018, Service Fee Income, Digital Solutions and Deposit Growth will be high priorities for financial institutions according to a recent BSG Financial Group poll of bank and credit union executives. Further, 90 percent of the respondents say they plan to embark upon the process of budgeting and planning for these strategic initiatives within the next 30-60 days. 

Is your institution on track to identify areas of profitability and growth before year end? 

BSG Financial Group's "Revenue Strategies for 2018: A Video Series" introduces financial institutions to three proven income-building solutions, which incorporate innovative technology along with validated best practices and procedures.

Each 15-minute video in the series provides a brief overview of one solution that provides increased revenue and enhanced customer service–without taxing technology or compliance resources. See Strategy #1: Digital Lending below.

To watch the videos, go here.

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Topics: Courtesy Overdraft, Fee Income, Budgeting, Digital Lending, CDs, Deposit Accounts, Selling Strategies

Lending at credit unions continues to lag, but the right technology can help

Posted by Michele Rehm, Marketing Manager on Jun 13, 2017 7:53:31 AM

This article was originally published on CUInsight.com.

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Topics: Digital Lending, Small Business Accounts, Retail Banking, Consumer Loans

Dive into digital with an end-to-end lending platform

Posted by Michele Rehm, Marketing Manager on May 3, 2017 9:15:37 AM

This article originally appeared on CBInsight.com, May 2, 2017.

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Topics: Fee Income, Technology, Digital Lending, Digital Lending Underwriting

Watch the Video: Digital Lending in Action

Posted by Michele Rehm, Marketing Manager on Feb 20, 2017 1:55:19 PM

What would your account holders' online lending experience look like if your institution offered it? View an excerpt of our most recent Educational Webinar, "The Digital Lending Opportunity for Community Financial Institutions," in which digital lending expert Bob Giltner demonstrates the online loan application process.

In this short video, you will see how two banks allow account holders to easily apply for loans from their own websites and get approval.... all in under three minutes! The banks incorporate digital lending technology using their own branding, underwriting parameters and risk tolerances to profitably offer account holders small business loans under $100,000 and consumer loans under $30,000.

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Topics: Digital Lending, Online Lending

Be Like Uber and Lend More Competitively

Posted by Trevor Knott, Sr. VP Business Development on Oct 26, 2016 4:44:58 PM

When the app-based driver service Uber hit the streets in 2010, it quickly siphoned off a large percentage of business from the taxi industry. Uber won over taxi riders with its on-demand response and digital delivery method.

Today, the same thing is happening with Online Lending and your customers.

In record numbers, consumers and small businesses alike are getting the short-term loans they need from online, non-bank lenders like LendingTree and OnDeck—preferring their rapid approval and delivery to traditional lending methods.

Unless you innovate like Uber, your institution could lose up to 60% of your retail and small business profits to non-bank entities in the next five years, according to a study by the consulting firm McKinsey & Company. 

The industry advisory firm Bain & Company concurs, saying, "Banks need to accelerate investments in digital lending if they are to avoid a material decline in profits and loss in market share."

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Topics: Digital Lending, Innovation, Online Lending