Community Banks Miss $106B Consumer Lending Opportunity, Cornerstone…

Event summary

Cornerstone Advisors' research reveals community banks are ceding $106B in consumer loan demand to competitors over the next two years.
Only 46% of business owners used their primary business bank for personal loans, with 54% borrowing elsewhere due to rates, slow approvals, or lack of awareness.
Banks with higher consumer lending mix outperformed peers with median ROA of 1.44% vs. 1.15%, ROE of 13.4% vs. 10.5%, and deposit growth of 9.9% vs. 8.0%.
72% of business owners expect to need a consumer loan within three years, up from 66% in the previous three years.

The big picture

Community banks are at a crossroads where consumer lending is no longer just a profit center but a strategic tool to retain business relationships and protect deposits. The research highlights a significant market share shift as business owners increasingly turn to large banks and fintechs for consumer loans. Banks that modernize their lending processes stand to gain not only in loan volume but also in long-term customer loyalty and financial performance.

What we're watching

Competitive Response: Whether community banks will prioritize consumer lending to retain business relationships and defend against fintechs and large banks.
Operational Efficiency: The pace at which community banks modernize loan origination and automate processes to make consumer lending more profitable.
Market Share Shift: How the $106B consumer loan demand will be captured by competitors if community banks fail to act.