How North Bay commercial banking is changing with nontraditional lending, 24-7 digital business services, AI
To move a business from idea to reality, or a business from revenue of $100,000 a year to $1 million, the world relies on commercial bankers.
The Business Journal asked the area’s top commercial bankers about key issues facing the industry. In their responses, they discuss topics such as the growth of nontraditional lending, how customer preferences for 24-7 banking are shifting the business landscape, SBA loans, small business digital lending and artificial intelligence.
Senior Lender, Live Oak Bank
100 B Street Suite 100 Santa Rosa 95401 707-921-1102
Year you assumed this position: 2014
What trends are you seeing in clients opting for loans from non-traditional lenders?
Early growth phase borrowers seek capital wherever they can find it. Quite often that is with “non-traditional” or alternative lenders. These lenders offer a valuable service by providing debt when traditional lenders will not. This is more expensive but cheaper than equity. Refinancing high interest debt to a lower rate and better terms is a large part of what we do.
How important are real-time or same day transfers for companies and what are banks doing to improve them?
The ability to move money in a secure, efficient and expedient fashion is important. This trend will continue as we make advances in technology. Everyone benefits when you have a dependable way to send and receive money.
A bank that understands their business. Many borrowers, especially in the craft beverage industry and other rapid growth industries have had negative experiences because their bank didn’t understand the industry. A bank without industry experience will often panic during a downturn putting pressure on borrowers to find another lender. Craft beverage is an excellent example. It looks like a fun space to be in, but it is incredibly competitive. When it enters a down cycle many banks exit the industry. They don’t understand the industry’s history, cyclicality or what forces are driving change. Many times regulators will put pressure on them to exit the industry because they don’t employ lenders with industry experience.
What automated processes will continue to evolve in 2020?
Live Oak Bank through its subsidiary nCino has been a pioneer in providing cloud-based systems to the banking industry. The need for seamless secure banking systems to transact business will only increase. Banking has traditionally been paper-intensive, employing numerous different server-based software systems, most of which are closed architecture, in design. The move to open architecture cloud-based systems allows for “plug and play” additions to services offered.
What revenue streams do you envision expanding or coming online in 2020?
We continue to develop new products for the marketplace. If our clients have a need we want to address it. For example, we created an Asset Based Working Capital Line of Credit secured by barrels of bourbon, whiskey and brandy. It allows producers to leverage their inventory to fund operations and increase inventory production. We also offer C-PACE (Commercial Property Assessed Clean Energy) financing. It is an innovative way for commercial property owners to finance energy efficiency upgrades, renewable energy projects, seismic retrofits and water control measures. There is no upfront cash required and it can be treated as off balance sheet financing.