Unlocking hidden opportunities in commercial lending: A thought leadership perspective

As we continue to see a challenging backdrop for commercial lending-with changes in National Insurance, Business Rates and wages-adapting to business situations, and finding the right businesses to lend to is more important than ever.

The opinions expressed here are those of the authors. They do not necessarily reflect the views or positions of UK Finance or its members.

Identifying hidden opportunities for growth can seem challenging, but using the right insight can help you better understand where those opportunities lie and how to maximise them.

The changing dynamics of commercial lending

Over the past few years, the commercial lending market has experienced significant shifts. Economic fluctuations, regulatory changes, and technological advancements have all played a role in reshaping the industry. More lenders are active in the market, with a wider range of lending products—and there is now a diversity of options available to businesses when seeking finance. Understanding these changes in the market is vital for lenders looking to refine their strategies and stay competitive. One of the most overlooked aspects of commercial lending is the potential revenue from rejected applications and accepted but not taken up applications. These missed opportunities often represent good credit customers who find financing elsewhere. By leveraging advanced data analytics, lenders can identify these opportunities and develop strategies to capture this untapped potential. In fact, in reviewing historic applications, one Tier One bank on a single product line identified a potential additional £14 million of business lending that could have been written without increasing risk appetite. 

Mitigating hidden risks

Risk management remains a cornerstone of successful lending. However, traditional datasets alone may no longer be sufficient. Lenders must now consider the broader financial behaviours of their customers, including their credit agreements with other lenders across the full breadth of the lending spectrum. On-time payments to Tier 1 providers alone may not be fully reflective of a business’s circumstances. Indeed, one lender uncovered £350m+ exposure where businesses were struggling to meet repayments on debts with non-Tier 1 lenders. By staying informed about these external factors, lenders can proactively mitigate risks and protect their portfolios.

The integration of data-driven insights into the lending process is transforming how decisions are made. Advanced analytics enable lenders to refine their application processes and customer management practices, potentially increasing lending without additional risk. This approach not only enhances decision-making but also improves overall efficiency and customer satisfaction.

Gaining a competitive edge with comprehensive credit data

Access to comprehensive credit data is a game-changer for lenders. Solutions incorporating commercial bureau data provide a more complete picture of a business’s credit commitments, offering a competitive edge in the market. This holistic view allows lenders to make more informed decisions and uncover new opportunities for growth.

The path forward

As we look towards a future focused on growth, it's clear that the commercial lending landscape needs to adapt, taking in new technology and data capabilities to identify the right lending opportunities. Lenders who embrace innovation and leverage data-driven insights will be well-positioned to capture hidden opportunities and drive better financial outcomes. 

Our upcoming webinar will provide valuable insights and strategies to help you navigate this dynamic market effectively.

Join us

Don't miss out on this opportunity to gain a deeper understanding of the commercial lending market and unlock hidden opportunities in your credit decisioning. Register now for our webinar, "Unlock Hidden Opportunities in Your Credit Decisioning," and take the first step towards driving better financial outcomes for your business.

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