More and more financial institutions are considering lending to higher- risk customer segments as a way to expand market share and increase profitability in their consumer lending business. Lenders who understand the dynamics of subprime lending have proven that it can be a profitable business, but because of the various risks, KPMG believes that it requires careful planning and implementation.
Competition for customers is intense. The growth and variety of competitors for consumer loans in recent years are making it difficult for bankers to keep their traditional customers. Consumers are barraged constantly by offers for credit cards, auto loans, mortgages, and personal loans.