In January, major banks reacted to a changing landscape across the U.S. With the roll-out of multiple vaccines on the horizon and a new comprehensive stimulus relief bill on the table, big banks like JP Morgan Chase, Wells Fargo, and Citibank all began to release money from their emergency stockpiles. The action sent a signal to community banks that some pandemic precautions could begin to wane.
JP Morgan Chase released $2.9 billion from its rainy-day funds based on its economic outlook and rising mortgage and auto lending demands, while Wells Fargo released $757 million based on the sale of its student loan business. Citigroup released funds based on lowered expectations for the year’s unemployment rate.
The takeaway? The nation’s biggest lenders have a growing—albeit cautious—optimism for 2021. And as community banks begin to follow a similar path, how will you put those funds to good use?
Digitize your lending operations
With the prospect of more non-PPP loan requests from small businesses, now is the time to invest in your lending operations, allowing you to meet the needs of more small businesses in need of capital. Eliminating in-person meetings may have started out of necessity during the pandemic, but this will carry on as customers embrace and expect digitization in everything they do. Applying technology and automation to the lending process frees up valuable time and gets money to the businesses that need it faster. And because the banking world won’t fully return to its pre-COVID ways, investing in digitization now puts you in a more competitive position moving forward.
Implementing a digital process—from origination, document uploading and organization to underwriting and communication—and offering a completely automated, user-friendly process is crucial in attracting small businesses to your bank.
Leverage existing relationships
Prior to the pandemic, lending to small businesses may have been a secondary consideration. But now that studies have shown that small business owners are willing to pay more for the convenience of an easier and more efficient lending process—and banks see the value in shorter-term loans for businesses that need a fast cash infusion—small businesses are the ideal customers to boost your profitability.
Cross-selling to small business owners with an existing depository relationship, who are looking to simplify their financial operations, can turn them into borrowers, as well—here, the simplicity of digital lending complements the personal connection you have already worked hard to foster. That, and your responsibility to the businesses in your community through the Community Reinvestment Act, helps you engage with nearby businesses and improve your local economy.
Stay ahead of the competition
Digitizing and investing in your existing relationships are paramount to keeping your edge against the growing competition—and facilitates access to the profitable market of small businesses that are seeking loans. Where large banks, fintech companies, and other lenders succeed with convenience, you can too—while going one step further, providing easily-accessible and fast-turnaround service.