Community Banking's Big Opportunity with Existing Customers and Digital Consumer Lending

Two new reports show the big opportunity for community banks with digital consumer lending.  Daryl Jones article in BAI Banking Strategies documents that new technology allows community banks to get back in consumer lending after giving up market share to large credit card companies and credit unions.  Further, Nick Clements points out in the American Banker that new digital lending technologies have competitive advantages over credit card companies.  Both show how our digital lending and payment account strategy, PaySound^®, is such a big revenue and service win for community banks.

In 1984, community banks had two-thirds of all unsecured consumer loans.  By 2014, the market for unsecured consumer loans has grown in size by more than 10 times to $1.3 trillion dollars.  But community bank unsecured consumer loans dropped in half during the same period, and now community banks have less than 10% of the total market.

Why?  The largest reason of course is credit cards where a handful of companies now have virtually all of the credit card market place.  Community banks generally do not have the marketing scale to compete with national credit card providers.  Further, community banks have avoided the compliance problems and inefficiencies of small consumer loans making them unprofitable.

But PaySound^® digital payments and lending technology platform lets community banks automate all lending, compliance, underwriting and customer delivery to profitably deliver unsecured lending to win back market share and compete with new marketplace lenders like Lending Club and Prosper. Further, these new services do not cannibalize existing overdraft revenues.   In a time when revenue growth is tough to come by, community banks can re-capture the $48 Billion in revenues their current customers are giving to competitors.