Magazine article American Banker

Unconventional Lending Called Survival Tactic

Magazine article American Banker

Unconventional Lending Called Survival Tactic

Article excerpt

WASHINGTON -- Community lending expert Ronald Tigner says bankers should focus more on unconventional lending because American families are becoming less and less conventional.

Mr. Tigner last month was appointed director of the American Bankers Association's community development center. He has worked as a banker, consultant, and staff attorney for the House Small Business Committee.

When the nuclear family was the norm 20 or 25 years ago, Mr. Tigner said, people at most had two addresses all their lives: their parents' and their first house.

Increased Mobility

Now, said Mr. Tigner, bankers need to understand that many people in the marketplace have had as many as four or five addresses and nontraditional credit histories as well. Still, he said, they remain viable customers.

Bankers should learn to accept other forms of credit verification, such as phone bills and rental payments, Mr. Tigner said.

Consumers, on the other hand, he said, need to understand that bankers are in business to make money.

"I am a capitalist at heart," he said.

Mr. Tigner said regulators should be more open to unconventional underwriting. And, he said, it's one thing when the Federal Reserve Board says it will loosen up, and another thing for examiners who have their reputations on the line to go along.

Cultural Diversity

The industry also needs a better understanding of cultural diversity, according to Mr. Tigner. Ten years from now, he said, a room with one black person and two white people will be a room with two minorities.

"Nontraditional customers" like inner-city blacks or single mothers are fast becoming an essential part of tomorrow's marketplace, he said. Banks would be well advised to start trying to attract them today.

One of the most constructive thing bankers can do to reach nontraditional such as single mothers, is to change marketing plans, he said. …

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