The Impact on Fee Income from Slowdown in Industrial Lending

Commercial and Industrial lending is down within the past nine months, according to a recent article in American Banker*.

The impact on the bank comes in the form of reduced income from interest. It becomes more critical than ever for banks to have a balanced revenue portfolio to ensure a steady stream of fee income.

Revenue portfolios are comprised of many elements including bounced check fees, overdraft fees, credit card transaction fees, interest fees and product usage fees (such as Billpay).

Revenue growth in the banking industry has been modest since 2009. This is partly a reflection of the challenging interest-rate environment. **

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And while these fees earn the bank revenue, imposing them onto clients is not necessarily good for the relationship.

Credit card transaction fees only drive revenue for your bank when customers are using cards to make payments. This goes for both your retail and commercial customers.

Interest fees, as we discussed earlier, are dependent on the market and needs of commercial clients. Rates fluctuate and companies are either in a good place to borrow or become extremely cautious and wait.

Banks should be looking at what is driving revenue for them and where they can make changes to move the needle.

Since fee income solutions are just not sensitive to interest rate changes, banks can accurately forecast revenues based on technology subscriptions sold to commercial clients.

Invoice-to-Pay enables banks to provide their clients with a solution that eases the pain associated with manual accounts payable management. In turn, usage of the solution by the client generates fee income for your bank. An added benefit is that it is that much easier for your customers to use their bank-issued credit card to make B2B payments. 

How is your bank addressing the C&I loan decrease?

* “The real story behind the C&I lending slowdown,” by William Lee and Jonathon Adams-Kane, May 17, 2017, American Banker.  

** “Opening Statement of FDIC Chairman Martin Gruenberg: Second Quarter 2015 Quarterly Banking Profile,” published by FDIC 9/2/2015


BC Krishna is the founder and CEO of MineralTree, Inc. MineralTree, a First Data partner, provides invoice and payment automation solutions for US businesses. Over the course of his career, BC has been a software engineer and an entrepreneur having started three venture-backed software companies. His companies include FutureTense, one of the first to create software for Web Content Management; Memento, which delivered the first product to enable financial institutions to systematically monitor employee fraud, and most recently, MineralTree. MineralTree’s solution automates invoice payments for US businesses, which waste $30B to $150B annually on antiquated, manual, paper-based, risky, poorly controlled processes.


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Disclaimer: The views and opinions expressed in this article are those of the guest blogger, MineralTree CEO BC Krishna, and do not necessarily reflect the official policy or position of First Data.