Shadow Banks Poised to Take Billions from Traditional Lenders
Protect your bottom line by streamlining your processes with our Fund Control software
According to analysts from Goldman Sachs, traditional lenders stand to lose at least $11 billion in annual profits as a new generation of “shadow banks” creates more competition in the marketplace.
Shadow banks include many different kinds of non-bank lenders, including asset managers, online lenders, and peer-to-peer lenders like LendingClub Corp. and CommonBond Inc. These players have gotten into the game by leveraging technological advances to fill consumer demand for lower interest rates on loans. The rise of the shadow banks has also been fueled by tougher regulation, including capital rules.
Based on the activities of shadow banks, experts expect the competitive landscape in the lending industry to undergo a significant shift in the next 5 to 10 years. More shadow lenders will launch, and some activities may move out of the traditional banking system altogether.
The fact that shadow banks have much lower infrastructure costs is one reason they are able to offer lower interest rates than traditional lenders and still turn a profit. Another key to their success is the ability to gather more information on borrowers and weed out individuals likely to default in order to reduce their risk.
If traditional lenders can’t react and adapt, analysts project that shadow lenders will draw off over $11 billion, or 7 percent of the banking industry’s annual profit, each year.
Our Fund Control Software Can Help You Compete
In order to compete with shadow banks, traditional lenders will have to adjust their business models. More than likely, this will mean cutting prices on products, which of course spells lower returns.
When operating on a tighter margin, it becomes increasingly important to eliminate any inefficiencies, redundancies, or delays that are driving up your costs unnecessarily. Our fund control software suite can help you do this.
Our single-entry system contains all the functionalities needed to manage and administer the loan process from start to finish, and can replace the current disjointed set up you may have now that requires information to move between multiple systems. We can customize the software to suit the way you do business, including programming in features to accommodate any kind of specialty loan.
Our system also helps improve accuracy and oversight, because the online access portal allows every authorized player to see loan information in real time.
If you would like to learn more, please contact us for your personalized online trial.