Just about every bank in the country uses loan portfolios to stimulate personal growth and the economy. By taking advantage of the lending opportunities that loan portfolios provide, banking institutions are increasing their liquidity, which is much needed after the recent recession.
Here are just a few ways banks are benefiting from loan portfolios:
Loan Portfolios in the Banking Industry
With strong loan portfolios, banks are better able to extend lending opportunities to a wider range of businesses and individual investors. And, the larger the portfolio, the more room there is to grow.
Although many smaller banks have loan portfolios that meet the need of the local economy, national banks are growing their loan portfolios like never before.
According to a recent report by Forbes, the largest banks in the country have loan portfolios in the billions.
Bank of America has a loan portfolio of just more than $900 billion, which is the highest of any banking institution in the country. Wells Fargo takes second place with loan portfolios equaling $825 billion.
Although these numbers are impressive, the question is, how do banking institutions both large and small benefit from loan portfolios?
Built-In Cross Selling
As the following article looks at, there are a number of ways loan portfolios offer growth opportunities for banks, including the possibility of cross-selling to current customers.
By reaching out to current loan customers with different loan opportunities, banks can expand their lending practices under the same loan portfolio umbrella.
Encouraging current customers to utilize more bank services allows banking institutions to cross-sell and expands on business they already have.
Cultivating Relationships and Referrals
The larger the loan portfolio, the more borrowers and investors a bank can do business with. This is hugely beneficial in terms of cultivating relationships with customers, which ultimately leads to an increase in referrals.
When banking institutions create lasting relationships with loan recipients, it has the potential to lead to more business with qualified borrowers through word-of-mouth referrals.
By cultivating these relationships, banks stay in the forefront of their customers’ minds, which always leads to growth.
National branches and local banks alike are able to get involved with the local community through the loan portfolio process.
This leads to an increase in visibility for banks and their lending practices, which brings in more business from local borrowers and businesses.
Not every borrower has the same requirements for their loan.
Whether it’s an individual investor or a small business just setting up shop, banking institutions have to be able to meet specific lending needs or potential customers will go elsewhere.
Fortunately, loan portfolios give banking institutions more flexibility with their lending practices.
Not only do portfolio loans have flexible interest rates, bank operations officers and other decision makers usually handle them. This means borrowers receive a customized loan based on their specific needs and financial preferences.
When it comes to the growth of the banking industry, it’s plain to see why more and more banks are cashing in on loan portfolios.
About the Author: Adam Groff is a freelance writer and creator of content. He writes on a variety of topics including finance and banking.