U.S. Financial Institutions Optimistic About Consumer Lending
A survey by Wolters Kluwer Financial Services finds that a majority of U.S. financial institutions expect their consumer lending businesses to grow or remain steady in 2011.
The majority of U.S. financial institutions expect their consumer lending businesses to grow or remain steady in 2011. However, they acknowledge a soft economy and increasing regulatory burdens could stand in the way of that growth. That’s according to a survey of more than 1,000 banking professionals Wolters Kluwer Financial Services conducted in January.
Seventy-nine percent of respondents to the Wolters Kluwer’s survey anticipated their institution’s consumer loan volume would rise or remain the same this year. Only 5 percent predicted a decline and 16 percent weren’t sure. Institutions with more than $250 million in assets were most likely to anticipate an increase in loan volume.
Financial institutions responding to the Wolters Kluwer survey cited a soft economy (30 percent), stricter compliance regulations (24 percent), reduced loan demand (18 percent), and increased competition (17 percent) as the most common barriers to increasing consumer loan volume.
Upcoming regulatory changes tied to the Dodd-Frank Act and mortgage lending requirements topped the list of respondents’ compliance concerns. One quarter said Dodd-Frank will likely have the most significant regulatory impact on their operations. Another one quarter said Truth-in-Lending Act (TILA) and Regulation Z changes probably will. And nearly one-fifth said revisions to mortgage disclosures and new originator requirements could.
“It’s encouraging to see financial institutions optimistic about their consumer lending businesses in 2011,” said Craig Focardi, senior research director for Consumer Lending at TowerGroup, a Corporate Executive Board company. “Job growth will play a large role in the ability of consumer lending markets to recover this year. But so will the amount of regulatory change occurring and the strategies lenders put in place to address it. Financial institutions that are proactive in their efforts will have a definite advantage over those who don’t.”
“To proactively address rapidly-growing and increasingly-complex regulatory challenges at a time when internal resources are already constrained, it will be essential for financial institutions to find help in the form of a trusted compliance provider with deep and broad expertise,” added Lisa Fraga, vice president and general manager of banking for Wolters Kluwer Financial Services.
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