The banking industry is a highly competitive space. When it comes to lending, not only are you competing against other banks, but you’re also competing with alternative lenders. The inception and growth of financial technology companies have revolutionized the loan application process for business owners. Because you are operating in a highly competitive environment, it’s essential to provide lending options that separate you from your competitors.
How is your bank differentiating itself?
Many institutions find it very difficult to distinguish themselves in the marketplace. Many differentiation strategies come down to pricing. In any competitive market, there will always be companies that emphasize offering the lowest price possible. It’s a viable option for some; after all, it gets to the core of what matters to many customers: cost. In any transaction, the customer will give great thought to the value that they are receiving through the purchase, not just the price of the product or service. What value does your bank bring to the transaction? If your pricing is the same as Bank B, what is going to make the customer choose you over the competitor?
There is no question about the importance of pricing when it comes to lending products. But, price-slashing is not always the best approach, as it can have unintended consequences for banks and borrowers. Customer service, the structure of the loan, how quickly the deal can be funded, and the ease of communication are just a few of the many factors the customer will take into account during the selection process. Ultimately, the race to the bottom on pricing will decrease differentiation between institutions. This will hurt the bank’s bottom line and provide the consumer with fewer options. So, what else can you do to separate your bank’s lending products from the competition without slashing prices?
Expanding Your Lending Portfolio
While many lenders are caught up in the race for increased market share by offering the cheapest products, others have chosen to beat out the competition in another way—more robust lending options. The idea behind this approach is to provide customers with more options to meet their specific needs (and beat out the competition), rather than offering the same products as your competition by simply lowering prices. By providing more options that allow customers to get the financing they need, you become known as a creative, reliable financial resource that can be counted on.
A simple way to expand your bank’s product portfolio is by working with an Asset-Based Lender like Virginia Commercial Finance. VCF is a lending partner that offers flexible financial solutions and consultative services for borrowers who are unable to secure a traditional bank loan. Products offered by VCF include Asset Based Lending, Accounts Receivable Financing, Purchase Order Financing, and more.
To learn more about differentiating your lending options, contact Virginia Commercial Finance at 804-897-1200.