"Commercial banks are confronting a rapidly shifting landscape as private credit markets grow toward $3.5 trillion and fintech competitors accelerate their offerings with AI-powered tools. Rather than retreating, traditional institutions are doubling down on technology investments and reimagining their commercial lending strategies to compete in this new environment. "Banks are not short-term thinkers," says Héctor Pagés, SVP and Head of Global Commercial Lending at FIS."
"The response from banks has been multifaceted, according to Pagés. Some retail-focused institutions are shifting resources toward commercial lending, while smaller commercial banks are expanding into more complex lending products. Others are adopting an "originate to distribute" model, partnering with private credit firms to spread risk while generating fee income. This strategic evolution is happening against a backdrop of regulatory uncertainty, tariff fluctuations, and the continued expansion of non-bank lenders into territory traditionally dominated by banks."
Commercial banks face growing competition from private credit, projected to expand from roughly $1.5 trillion toward $3–3.5 trillion by 2028–2029, and from fintechs deploying AI-driven tools. Banks are increasing technology investments, adopting unified platforms, AI-driven underwriting, and cloud infrastructure to scale globally. Institutions are reallocating retail resources to commercial lending, smaller banks are offering more complex products, and some are adopting originate-to-distribute models to partner with private credit firms, spreading risk and earning fees. Regulatory uncertainty, tariff fluctuations, and non-bank expansion are driving strategic shifts in commercial lending operations and partnership strategies.
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