Persistently high interest rates, cautious consumer behavior, and elevated operational costs are putting fresh pressure on banks and credit unions to find new ways to increase loan revenue. Although economic recovery has gained momentum post-pandemic, commercial loan growth remains tepid as businesses weigh expansion plans against inflation and global uncertainty. According to the latest outlook from Fitch Ratings, loan growth is expected to stay subdued in 2025 due to still-soft demand and tighter lending conditions.
In this environment, commercial loans continue to be the most efficient way for banks to grow revenue. These loans carry higher balances and more profit potential than consumer loans. But realizing those profits hinges on improving the efficiency and cost-effectiveness of loan origination, underwriting, and servicing—where digital lending platforms are now playing a pivotal role.
Challenges to Growing Loan Revenue in 2025
Banks aiming to grow commercial lending revenues this year face three main challenges:
1. Intensified Competition
Over the past several years, fintechs and non-bank lenders have captured significant market share by delivering fast, frictionless digital loan experiences. In contrast, many traditional banks still operate with legacy systems that slow down approvals and frustrate borrowers.
Business owners—especially younger, tech-savvy entrepreneurs—are more willing than ever to switch lenders if it means faster service and a better digital experience. According to a recent survey by Cornerstone Advisors, nearly 50% of SMBs that applied for credit in 2024 did so with a lender outside their primary bank.
2. Heightened Risk
Lingering inflation, global supply chain issues, and geopolitical tensions continue to challenge small businesses. These external factors contribute to uncertain cash flows and lower confidence in long-term investments. In this climate, assessing credit risk has become more complex and time-sensitive.
3. Regulatory Complexity
Compliance remains a moving target. In addition to traditional lending rules, banks must now contend with stricter risk-based capital requirements and evolving environmental, social, and governance (ESG) reporting standards. For institutions participating in government-backed programs—such as the updated SBA loan options launched in 2024—rapid regulatory changes require a high level of operational agility.
The Strategic Role of Commercial Lending
Commercial lending remains one of the most attractive revenue drivers for financial institutions. With higher principal amounts and longer repayment terms, these loans offer a substantial return—especially when combined with cross-sell opportunities like treasury services, merchant processing, and credit lines.
But increased volume alone doesn’t translate to increased revenue. Costs associated with manual processes—such as underwriting, documentation, and compliance reviews—can eat into profits. The key to unlocking the full value of commercial lending lies in using digital tools to automate, streamline, and scale the loan lifecycle.
8 Ways Digital Lending Platforms Can Grow Revenue in 2025
1. Deliver a Seamless Omnichannel Experience
In today’s hybrid world, SMB borrowers expect to move between digital and in-person experiences without disruption. A modern digital lending platform supports omnichannel engagement, letting applicants start a loan request on their phone, continue it on a laptop, and finalize it with a banker—all while syncing in real time.
2. Implement Smarter Risk-Based Pricing
AI-driven credit models can assess borrower risk based on hundreds of data points, from cash flow patterns to sector-specific economic forecasts. By refining risk scores and automatically adjusting pricing tiers, banks can offer more competitive yet profitable loan terms.
3. Speed Up Lending Decisions
With automated workflows, approvals that once took days can be completed in hours—or less. Some institutions now offer same-day funding for approved digital applicants. Speed isn’t just a competitive advantage; it’s a customer expectation.
4. Monitor Portfolios with AI and Analytics
Real-time portfolio monitoring enables banks to flag issues early, respond to signs of distress, and maintain a strong risk posture. Predictive analytics can help institutions proactively manage exposures based on market shifts or borrower behavior patterns.
5. Ensure Compliance Through Automation
RegTech integrations embedded within lending platforms help banks meet ever-changing regulatory requirements. Automated rule updates, audit trails, and real-time validation ensure compliance with federal, state, and ESG guidelines—reducing the risk of penalties or reputational damage.
6. Expand Market Reach
Digital lending transcends geography. A cloud-based lending platform allows banks to tap into underserved markets, rural regions, or new industries without the need for physical branches. Enhanced inclusivity features can also minimize bias and promote equitable access to credit.
7. Improve Customer Retention
Digital tools help bankers identify renewal opportunities, upsell additional services, and automate recurring decisions like line-of-credit extensions. By reducing friction and proactively addressing client needs, banks can increase customer lifetime value.
8. Drive Operational Efficiency
From data collection to underwriting and servicing, automation reduces the manual lift for staff. This allows institutions to reallocate human capital toward higher-value tasks such as relationship management and strategic advisory.
The Competitive Advantage of Digital Lending
A 2025 Deloitte report found that while 70% of banks have digital lending ambitions, only 35% have implemented fully integrated platforms. That gap presents a major opportunity for forward-thinking institutions.
By digitizing and modernizing commercial loan processes now, banks and credit unions can position themselves not only for higher loan revenue—but for long-term market leadership.
