It’s easy to pay the cost for the traditional origination process of middle market credits. There’s plenty of margin. But what happens when the size of the business credit is smaller—say $250,000 or less? How do you generate enough money to pay for originating small business loans?
The definition of a “law of nature” is “a regular occurring or apparently inevitable phenomenon observable in human society.” The sun rises in the east, sets in the west. Death and taxes are inevitable. In finance and business, capital needs to come before debt in the construction of a sustainable business balance sheet. Are we seeing a FinTech force that is trying to work against a law of nature? Is there a bait and switch tactic going on in the industry that is being masked by “digital experience” and technology?
There are many reasons for a banker to lose sleep these days. The issues affecting banks year after year are myriad: increasing competition from traditional and non-traditional players, margin compression in the low interest rate environment playing havoc with bank income statements, ongoing saga of additional regulation means more work to an already stretched workforce.