As Small Business Lending Rises, Retention Opportunities High

Mortgage Customer Retention

In an effort to curb reckless lending, financial institutions have had to more carefully scrutinize credit applicants in recent years, thereby limiting access to credit for small businesses nationwide. However, a recent report shows small business lending may be recovering, an increase which represents a significant opportunity for many lenders to reconsider customer retention strategies.

FICO released the results of its most recent quarterly survey of banking professionals, conducted every three months by the Professional Risk Managers’ International Association. According to the report, lenders are again opening the spigot to accommodate the loan needs of many small businesses, with 53 percent of respondents now expecting their loan supply to satisfy existing credit demand.

In addition, 73 percent of respondents expect delinquencies in the small business market to stay the same or decrease within the next six months, a positive sign that some stability is returning to the lending market. Similar positive results were recorded for other types of loans, including credit cards, mortgages and car loans.

“It looks like the consumer credit markets are now performing pretty well,” said FICO’s chief analytics officer, Dr. Andrew Jennings. “The economy may not be going gangbusters, but credit activity seems to be picking up and lenders appear to have a handle on risk.”

Financial institutions that expect higher loan demand may want to consider evaluating their existing originations technology to determine its ability to handle new business, although the improved state of corporate lending also presents opportunities for lenders that wish to establish long-term client relationships.

To that end, case management software might help banking executives identify the products and services most relied upon by existing customers, providing the type of data and insight that can lead cross-sell strategies and improve customer service.