Transforming Commercial Lending

Payments Leader

Posted on October 31, 2016

Commercial Lending

Transforming Commercial Lending

Summary:  This white paper is about current challenges most banks experience and offers strategies for improving banks’ primary growth engine: commercial lending. Commercial lending provides financial institutions important opportunities for both increased revenues and performance enhancement. When completed correctly, a commercial lending company’s process improvement efforts can attain both goals.

Key Stats:

  • 93% importance – top issues facing CEOs in 2015 was growing loans
  • 91% importance – top issues facing CEOs in 2015 was compliance and risk management challenges
  • 89% importance – top issues facing CEOs in 2015 was managed costs
  • 85% of bank respondents indicated that the greatest organic loan growth potential lies in commercial real estate
  • 82% of banks plan to grow via organic loan orientation within the next 12 months
  • 41% of banks plan to grow via bank acquisition or merger within the next 12 months
  • 22% of banks plan to grow via de nova branch within the next 12 months
  • 85% of banks see their 3 greatest organic loan growth opportunities in commercial real estate
  • 56% of banks see their 3 greatest organic loan growth opportunities in C&I loans
  • 45% of banks see their 3 greatest organic loan growth opportunities in residential mortgages

Key Takeaways:

Bank executives’ primary means to improve revenue continues to be growing loans. Within that area of concentration, commercial loans provide the most room for growth. However, commercial lending processes can obstruct growth if their implementation initiates inefficiencies and redundancies. The four steps for creating improvement are understanding the current commercial lending environment, examining processes closely, looking for improvement opportunities, communicating thoroughly and adjusting as needed.

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