Pub. 17 2020 Issue 3

12 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S T he state of lending for financial institutions has changed, causing many banks in New Mexico to shift their priorities — but at what cost? Danielle Walker, Chief Strategic Officer at Bankers Healthcare Group, offers a fresh perspective on how to embrace a growth mindset to build and diversify your portfolio during a volatile market, and what characteristics to look for in a financial partner to reach your goals. Since the COVID-19 outbreak erupted in the United States, businesses, the economy, and society have been turned upside down. The lending market is no exception to this level of disruption. The tremendous uncertainty of the pandemic has put significant pressure on banks, borrow- ers, and the financial decisions they’re making. When the SBA announced the Economic Injury Disas- ter Loan (EIDL) Program and the Paycheck Protection Program, small-business owners moved quickly to secure financing to assist with payroll and other business ex- penses. Other borrowers opted for working capital loans for a fast injection of cash to cover what the government funding couldn’t. And in April, the U.S. Bureau of Eco- nomic Analysis announced that the personal savings rate hit a historic 33%, highlighting that instead of spending or borrowing money, some consumers were saving more than ever before. Market Volatility Continues The severity of the economic impact has caused many issues for traditional banks. Stories of banks working around the clock — putting all their resources toward help- ing the business owners in their communities get govern- ment funding — are not uncommon. And as we enter into PPP loan forgiveness territory, equipped with its own set of challenges, a new hurdle has emerged: mortgage rates have reached a record low, causing many lenders to reconsider the return on their investment for originating or purchas- ing these types of loans. At a time when banks would have been focused on loan volume and building their income streams instead of reacting to market volatility, it begs the question: how can banks grow for the future? Embracing a Growth Mindset This question holds substantial weight for banks. Now is the time to put growth plans into action and consider new partnerships to build, strengthen and diversify your loan portfolio. Many have seen the value technology has brought during the pandemic: to communicate with one another, to engage customers, to streamline operations and more. Historically, community banks have considered FinTechs or alternative lenders as competition, but now they’re looking at these partnerships to strengthen their bottom line. While partnering with nontraditional lenders has its benefits, it’s important to note that not all lenders who claim the “FinTech” title have the same impact financially. These companies can originate loans with ease, but their real differentiator — and the ROI for your bank — are in their historical data. Not only does this offer insight into borrower character- istics and performance, but it can also help determine per- formance potential and even the credibility of the lender in the industry it serves. This is valuable information when determining who to partner with and the impact it will have on your business, but it’s just one of a few key charac- teristics to consider: 1. Track record of success You want a financial partner who can endure chang- es in the market and can originate quality loans for your portfolio at any time. Early on in the pandemic, EMBRACING A GROWTH MINDSET — AND NEW PARTNERSHIPS — DURING A VOLATILE MARKET By Danielle Walker, Chief Strategic Officer, Bankers Healthcare Group