Are You Losing Money to Shadow Loans? ECL Software Can Help
Traditional bankers might lose at least $11 billion in yearly revenues, according to Goldman Sachs analysts, as a new breed of “shadow banks” increases market competitiveness. Asset managers, internet lenders, and peer-to-peer lenders like LendingClub Corp. and CommonBond Inc. are among the non-bank lenders that make up shadow banks.
These newcomers have entered the market by utilizing technical advancements to meet customer demand for reduced credit interest rates. Tougher regulation, particularly capital restrictions, has also aided the emergence of shadow banks.
The future of shadow banks
Experts predict that the competitive environment in the loan business will change dramatically in the next 5 to 10 years as a result of shadow bank activity. There will be more shadow lenders, and some operations may be moved out of the formal banking system entirely.
What is the appeal of shadow banks?
One reason shadow banks may provide lower interest rates than regular lenders while still making a profit is because they have substantially cheaper infrastructure expenses. Another key to their success is their capacity to collect more data on borrowers and select out those who are more likely to fail in order to decrease risk.
Analysts predict that if traditional lenders do not respond and adapt, shadow lenders would siphon up approximately $11 billion, or 7% of the banking industry’s yearly earnings, each year.
Our Fund Management Software Can Assist You in Competing
Traditional lenders will have to change their business strategies to compete with shadow banks. More than likely, this will imply lower product pricing, which will imply poorer returns.
When you’re working with a smaller profit margin, it’s more critical than ever to cut out any inefficiencies, redundancies, or delays that are pushing up your expenses needlessly. This is something that our investment management software package can assist you with.
Our single-entry system has all of the features needed to handle and administer the loan process from beginning to end, and it can replace your present fragmented system that requires data to be transferred between several systems. We can tailor the software to your specific needs, including adding capabilities to support any type of specialty loan.
Because the internet access gateway allows any authorized participant to examine loan information in real time, our technology helps increase accuracy and monitoring. Please contact us for a tailored online trial if you’d like to learn more.