Market-Proofing Your Loan Portfolio

Americans now owe about $257 billion in personal loan debt, the highest figure in nearly two decades of available data. That figure is a 4.5% increase year-over-year, up from $246 billion last summer, according to LendingTree.

One of the clearest signals comes from generational credit patterns. A TransUnion study comparing Gen Z to Millennials at the same age (22–24) found:

• Gen Z shows higher overall credit participation,
• Relies more on credit cards and auto loans, and
• Holds credit cards at a significantly higher rate: 84% of credit-active Gen Z vs. 61% of Millennials at the same age.

Auto lending: large, competitive, and under pressure

Auto lending remains one of the most resilient consumer credit categories, but also one of the most volatile:

• The U.S. auto loan market stands at roughly $676 billion today, and is projected to reach $871 billion by 2030 (Mordor Intelligence).
• New York Fed data shows prime borrowers originated $264 billion in auto loans in 2024, up from $252 billion in 2023, while lower-score segments continue to contract (Liberty Street Economics).
• Subprime delinquency, meanwhile, continues to deteriorate. In October, 6.65% of subprime borrowers were 60+ days delinquent, the highest level since the 1990s (Marketplace).

For banks and credit unions, this environment both creates a strong opportunity to cater to prime borrowers, who show healthy demand, and underscores the need for a large, diversified pipeline of loan applicants.

Growing the loan pipeline

It’s widely understood that lending technology is a step behind its counterpart on the deposit side, which is among the reasons why dissatisfaction with a financial institution’s loan portfolio is generally attributed to a dearth of deposits.

But are banks doing the most they can to convert these deposits into attractive loan offerings? If we’re to shift the paradigm of seeing FI throughput from a “deposit gathering” problem to more of a “deposit optimization” problem, what considerations follow?

Digital is the lowest-hanging fruit: Corporate Insight found that among auto borrowers, 67% say a strong digital application matters; 40% consider it “very important” or “extremely important.”

Auto lending performance, like all other forms of lending, is increasingly tied to digital discoverability and execution. With younger borrowers not only using credit earlier, but making channel preferences like personalization and digital cohesion a part of their decision tree, financial institutions must shift their view on lending performance to not only account for providing the capital for these loans, but growing these pipelines through the high-intent relationships they’re already cultivating.

The cross-sell moment: why the first 90 days matter

One of the most persistent misunderstandings in banking is the idea that weak loan portfolios are first and foremost a deposit problem.

Cornerstone Advisors’ 2025 report found that many FI CEOs still view deposit gathering as the core challenge: 52% list deposit gathering as a top concern, but only 19% of bank executives and 27% of credit union executives list a weak economy/loan demand as a top concern.

Additional data points to a more balanced view: institutions must both successfully gather deposits and convert them into well-designed, well-timed credit relationships by creating demand, not just tweaking their underwriting rules.

This conversion moment is sharper than many realize.

• A Doxim report claimed that 81% of successful cross-selling takes place in the first 90 days of onboarding, with 60% in the first month alone (Doxim).
• McKinsey research shows that many banks now deliberately introduce new-product offers during this window, and that preapproved offers convert at 1.8x the rate of unvetted solicitations (McKinsey).
• A 2022 FDIC-linked study shows that once a household becomes a depositor, it is 20% more likely to take a loan from the same bank over the next 14 years compared to similar non-depositing households (FDIC).

This is the moment when lending can most effectively “attach” to a new depositor. And it’s the moment when digital friction can do the most damage.

UI/UX as a lending strategy: it’s not cosmetic, it’s critical

The lending experience has become a competitive filter. Borrowers, especially younger ones, will not wrestle their way through a 20-minute application, no matter how attractive the rate:

• A Financial Brand article from earlier this year notes that 48% abandon account opening due to digital friction, and 60% abandon loan applications taking more than five minutes (The Financial Brand).
• Forrester analysis cited by SavvyMoney found 97% of online loan applications are ultimately abandoned (SavvyMoney).
• FICO’s 2024 consumer survey found that 88% of customers weigh customer experience as heavily as the bank’s products and services when choosing a financial institution (FICO).

Clean, unified digital design isn’t window dressing. It is the single strongest determinant of whether a borrower completes an application or disappears, and to acknowledge this is to recognize that latent within your digital banking experience is the makings of a true demand generation channel for lending.

For more information on leading digital solutions to increase demand in lending, check out Narmi Lend.