During the past couple of years, banks have been in a self-preservation mode, virtually boarded up to protect themselves from plummeting conditions and struggling consumers who could hurt the bottom line. Even banks that wanted to lend had a hard time finding creditworthy causes. As a result, lending funds were often redirected into secure investments such as government securities.
As the economy recovers, rates are changing and banks are going to have to return to higher-yielding investments for their money — by allocating it back to loans. Those with the assets ready to invest in lending are at a distinct advantage, but they still need the infrastructure to support this strategic shift. An increase in loans will require technology and support staff that have not flexed their muscles in some time. With the proper alignment of funds, technology and employees, a bank can position itself for great success.
Banks that do not have an excess of assets ready to reinvest need to be more creative in order to compete.
Waiting much longer or until the economy has fully rebounded to repair the foundation of lending processes, technology and strategy will likely be too late.
Banks that have begun or begin now will have the tactical advantage and will be prepared to handle new loans while bringing in new customers.