The pandemic has brought a lot of change to financial institutions, including how to engage with your borrowers, serve their needs, and drive additional revenue into your bank. For many, this includes looking at partnering with alternative lenders.
With the right lending partner, community banks can strengthen and diversify their loan portfolio through new income opportunities. A strategic partnership can provide you with access to quality loans that align with your business goals and enable you to work toward your growth plans — without additional time or cost.
These five questions can help you quickly uncover a potential partner’s credibility and commitment so you can focus on increasing your revenue while mitigating your risk:
1. What is your track record of success?
Gauge how the lender has endured market changes. The economy is still recovering and this won’t be the last downturn — seek to understand how they navigate uncertainty. You want a resilient partner that can originate quality loans for your portfolio at any time, has a track record of success and can adjust its business model to meet your needs.
2. How do you make lending decisions?
Quantitative analytics and historical borrower data are key, as they uncover variables that predict risk. Utilizing data is commonplace today, but a partner that dives deep into the analytics can make better predictions when originating loans, resulting in a stronger return on the portfolio you purchase.
3. How do you attract borrowers?
You want access to expertise and experience. The best way to attract the highest quality borrowers is through selective targeting and investing in marketing. Partners that execute innovative, highly targeted campaigns across every marketing channel and are precise in who they lend to, offer a unique advantage in the marketplace. This ultimately creates a better loan offering for your bank.
4. How does your underwriting process create efficiencies for our bank?
Evaluating credit files is time-consuming. Your partner should offer a simplified underwriting process with consistent loan packages, so you can quickly and easily analyze files to make informed purchasing decisions.
5. What is your commitment to service?
Borrowers seek out their local community bank because of the personalized level of service you provide. Your partner should also place a high value on service to ensure a positive borrower experience every step of the way.
The pandemic has been challenging for community banks across the country. It has also posed a new opportunity for banks to partner with alternative lenders to drive fee income and new revenue streams into your business. Adding high-performing assets and maximizing yields can help boost your profitability for those who are willing to seek out new partners this year.
Keith Gruebele is Executive vice president of Institutional Relationships at Bankers Healthcare Group. BHG has been lending for nearly 20 years and is the #1 source for medical and professional loans across the country. More than 1,200 banks have partnered with BHG and see a $0 loss on the BHG Core Loan portfolio, record volume available and a 3.25-6% return. For more information, visit BHGLoanHub.com.