If you have been paying attention to the world of alternative lending, then you probably have noticed that banks seen alternative financiers as a huge threat. With the way that they have managed to break into the merchant processing industry, offer online banking, and also offer up business financing, alternatives to banking have become exceptionally common place. And now, Payments Week and other publications are noting a trend that suggests that banks are no longer “too big to fail.” Here are two major reasons why banks are shuttering their doors.
The Decline Of In-Person Banking
Online banking was traditionally something that was left to alternative lenders and other “alt banks” during the Recession. Now, it’s become commonplace. For banks, this means that they have less customers needing to do in-person transactions. In order to reduce the amount overhead, banks have begun to close their brick-and-mortar locations in favor of online banking.
This trend is a global one, and that means that bank workers around the world should be shaking in their shoes. In the UK, HSBC has shuttered about 25% of all their branches. Meanwhile, around 55% of people have said that they have used mobile payments to do transactions in the last year.
Alt Lending Stealing Clients
Now that businesses don’t have to worry about getting finance from banks, many groups are now just making the switch to alternative lenders and banking for their business needs. Banks have been struggling to make profits ever since the Recession made people shy away from standard business loans. In some cases, people who felt really betrayed with banking practices during the Recession ended up opting for small party lenders and online banks instead.
This is especially true with business loans, which often require collateral. During the Recession, many people lose their homes because they couldn’t make ends meet. Considering that alternative funding doesn’t require collateral, people now feel safer borrowing from alternative lenders than they do banks.
Bye Bye, Big Banks
Banks are very well aware of the fact that they’re struggling - and they’re also desperately clawing at ways to smear alternative lenders. If you are wondering what alternative bankers have to offer, you need to get the real scoop. Call CPS, and ask for a qualified specialist to talk to you about what alternative lending can do for your company.