Commercial Lending Market Overview: The Calm before the Storm
Technology has been slow to advance in high-end commercial lending, where it is used primarily for workflow automation. As loan structures become standardized and pressure for a more liquid secondary market increases, solution providers will be forced to respond with more advanced features and functionalities.
The weakened economy is significantly shaping the market. The probability of borrower default has become greater while banks have become more risk-averse and fearful of portfolio deterioration. Banks are also less likely to hold onto assets and therefore beginning to look to secondary markets to unload distressed debt and lower their exposure to any single borrower.
"There is a push for greater liquidity in the secondary market to lower portfolio risk during today痴 turbulent times. Several factors are still making liquidity a challenge and preventing technology from being used to its full potential. But, as standardization in the commercial lending market slowly becomes a reality, the technology in this space will truly begin to take off. Current conditions are merely the calm before the storm," said Christine Barry, wholesale banking analyst at Celent and author of the report. A is available online.
of Celent Communications' Wholesale Banking research service can download the report electronically by clicking on the icon to the left.