Asset-Based lending (ABL) has risen over recent years as a popular financing option for businesses and investors alike, due to the flexibility and accessibility it offers for businesses that may not meet bank thresholds and especially in uncertain economic times. As the economy continues to stabilize, many lenders prefer ABL due to its flexibility.
With factors such as the increased demand for non-traditional financing, the expanding role in cross-border transactions, and a focus on working capital optimization, this growth is only expected to continue. By the time we reach 2028, it’s anticipated this sector will have grown to $1,263 billion at a CAGR of 12.5%.
Finding an Opportunity to Grow
Growth in the ABL market creates a large opportunity for regional banks to meet the evolving demands of their customers and offer this valuable financing option to them. But in order to offer ABL, you have to have the infrastructure—most notably the technology—to support it.
The problem is that few, if any, software providers or fintech partners to banks specialize in asset-based lending and therefore, banks typically lack the resources they need. This leaves banks with the predicament of having to either build the technology themselves, rely on manual methods or partner with a loan origination software provider. To avoid the significant investment of money and time required to build and maintain their own product, savvy banks are engaging in white label partnerships.
Understanding White Label Partnerships
A white label partnership is an arrangement between two parties where one of them provides a product or service, and the other party rebrands it and can offer it to their own customers in this case small businesses looking for financing. White label partnerships have shown a rise in popularity lately, especially in the technology sector, because they allow businesses to respond to market dynamics and gain a competitive edge. The best part is that they’re a cost-effective way to accomplish both.
By leveraging white label partnerships with companies that offer asset-based lending, banks can achieve a myriad of benefits. Here’s a breakdown of five ways these strategic partnerships can unlock opportunities for banks to fuel revenue growth.
1. Appeal to a Wider Range of Customers
White label partnerships enable banks to differentiate themselves in a competitive market by offering specialized financial technology others can’t. This can attract new customer segments, including higher-value customers. By broadening your market reach, you increase revenue potential.
2. Enhance Customer Retention
Adapting to customer needs is one of the most elementary ways to ensure you retain customers. Plus, providing a more comprehensive suite of financing services even further demonstrates to customers that they don’t need to go elsewhere to get what they need to continue doing business quickly and efficiently.
Higher retention leads to more stable, long-term revenue.
3. Eliminate Operational Costs
Building and supporting loan origination software can be time-consuming and a financial strain on resources. White label partnerships allow banks to easily add new products as your customer base grows without having to come up with the capital and build out operations to support the products.
4. Create New Revenue Streams
With white label partnerships, banks can quickly implement new customer solutions, opening up new opportunities for additional revenue. Multiple revenue streams help banks diversify their income sources, reducing reliance on a single product, mitigating risk if one stream underperforms, and creating stability and resilience against market fluctuations.
5. Scale the Business
Tapping into additional revenue sources can accelerate business growth. It provides additional capital for reinvestment into new or existing projects. It also allows for faster expansion into new areas since the product is already fully developed and ready for customers.
With reduced in-house investment in research and development, banks can:
- Take on more projects without extensive internal hiring or costly IT development
- Efficiently offer multiple financial products at once
- Quickly scale up or down based on client requirements
Choosing the Right Partner
With the anticipated growth of the asset-based lending market, regional banks need to be able to keep pace with customer demands. In an increasingly digital world, white label partnerships have emerged as a strategic way for banks to do so.
Partner with a loan origination software provider who specializes in asset-based lending. In drawing upon their expertise and resources, you can remain focused on your core competencies and how you can grow your business.
Decipher Credit knows smarter ABL loan origination, loan approval and loan management. We built our software to automate and streamline every aspect of the ABL loan process, reducing the turnaround time significantly and minimizing operational costs. Our ABL software provides more accurate and real-time analysis of borrower financials, receivables aging, borrowing base and other assets.
Our innovative technology gives your commercial applicants a smoother, faster and more transparent loan process without lenders having to develop their own technology. If you’re looking for a partner to help you better serve your customers, reach out to one of our commercial lending experts today!
