Why Banks are Embracing Loan Marketplaces as a Solution to Liquidity By Simon Fisher, CSI The pandemic created a unique confluence of events that affected the lending market. As recently explored by the Federal Reserve, bank deposit growth soared during the pandemic, with total deposits increasing more than double the pre-pandemic growth rate. In addition, many banks took a more conservative approach to lending, concerned about the potentially negative impact of the pandemic on employment and businesses. And consumers’ declining credit quality, paired with the still-approaching CECL transition, forced institutions to provide for greater losses. Many trends have continued into 2022, leaving banks flush with liquidity. As lending remains a primary revenue driver, many institutions are revising their lending strategy to generate yield for investors. Such strategies include embracing digital lending systems, streamlining small business lending processes or navigating loan marketplaces for participation across the country. How Does a Loan Marketplace Work? A trusted loan marketplace connects bankers with access to loan participations and options to buy or sell whole loans or loan portfolios, creating a curated network of regional community financial institutions, thirdparty originators and investors across the U.S. This technology can streamline existing procedures, help you optimally align with target relationship profiles and drive return from excess liquidity. Since there’s no cost to look at potential loan wvbankers.org 12 West Virginia Banker
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