Look to Checking Customers For Loan Revenue Growth

We in banking may see lending and deposit growth as two separate service strategies, but payment companies are showing us they are two sides of the same coin.  In the American Banker article, “Why Payment Firms See Opportunity in Small Business Lending,” companies like PayPal, Amazon, Alibaba and Square point that their payment activity and volume can be used to market and underwrite loans. PayPal, example, now says it does $2 million in loans per day and is doubling volume annually.

The good news is that we at banks can use our deposit payment account along with other methods in the same way as payment companies to soundly underwrite, market and deliver small business and consumer loans to our checking customers. Many banks have used deposit volumes in manual underwriting as a proxy for revenue or income as part of analyzing "ability to repay," or underwriting small business loans,  For example, while banks have the checking accounts for nearly all small businesses and consumers, 80% of their checking customers have no business loan relationship.  Yet, over half a loan elsewhere. It is low hanging fruit for banks to grow these revenues from existing relationships.

$29 Billion Market for Banks to Serve Existing Business Checking Customers with Loans

The consumer lending market of checking customers represents the same opportunity.  The key is to apply new digital lending technology under the control and brand of the bank to serve consumers and small business checking customers with loans.  That is what our customers do with brands under their control like MinuteLender and PaySound.