Blog Banner - Excess Deposits

Written by Jeff Keltner, SVP Business Development


Many lending institutions are flooded with cash right now. Offering personal loans is a great way for deposit-rich banks and credit unions to put that excess liquidity to use.

Not sure how to connect with credit-worthy loan applicants? Upstart identifies consumers interested in a personal loan and then allocates those applications to lending partners. This allows banks and credit unions to put their excess deposits to use right away, while leveraging Upstart’s robust marketing and outreach programs.

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Many lending institutions are flooded with cash right now. Offering personal loans is a great way for deposit-rich banks and credit unions to put that excess liquidity to use.

Why Should Lending Institutions Offer Personal Loans?

1. High Demand

Personal loans are currently the fastest-growing category of consumer lending. For the past few years, Americans have dramatically increased their use of unsecured personal loans.

Additionally, consumers are increasingly seeking loans through online platforms rather than going directly  banks or credit unions, due to the speed and agility many fintech lenders can offer. Consumers are finding that the approval process is both quicker and less burdensome when they work with an online lender.

With a growing appetite for personal loans right now, banks and credit unions are missing out on a valuable opportunity by failing to offer unsecured loans.

2. A Boost to Consumers’ Financial Standing

Financial institutions want to help people achieve better consumer credit, and personal loans are a great way to achieve that goal because the vast majority of personal loans are used to refinance high-interest debt. 

Helping people pay off their credit card debt puts them in a more stable financial position. If they can replace those high-interest monthly payments with a low-interest loan payment, they’re on their way to fiscal discipline and a rosier future.

Not only is this a great thing for the consumer, but it also benefits banks and credit unions in the long run. Building a fiscally sound consumer base is a win-win situation for everyone involved.

3. An Attractive Asset Class

Personal loans are an attractive asset class to put on a lender’s balance sheet. They’re unsecured debt, so they cost the customer slightly more. This means they yield higher than more commonly offered consumer assets like mortgages and auto lending. By adding personal loans to its portfolio, a lender can get a bit of extra margin.

Personal loans come at a higher interest rate than other instruments because they carry more risk in the event of default.  Lenders who offer these products need to carefully assess that risk on a case-by-case basis, weighing it against their own acceptable levels. Not only is this a way to put excess deposits to work, but also an opportunity to augment your current loan portfolio strategy and diversify your risk.

The more successfully lenders can assess loan applicants, the better they’ll be positioned to manage risk and achieve the best possible outcomes.AI Lending

AI-Powered Lending

The Upstart Referral Network is a unique AI-driven system that matches borrowers with the banks and credit unions best suited to meet their borrowing needs. This automated system benefits both sides: banks and credit unions can build more inclusive and profitable loan portfolios that match their risk profile, and consumers get better access to more affordable credit.

Today, banks and credit unions are experiencing record levels of cash deposits and reduced demand for loans. The Upstart Referral Network offers an easy way to put this cash to work. Qualified personal loan applicants on upstart.com who meet a lending partner's credit policies receive tailored offers as they seamlessly transition into a bank-branded experience to complete the process.