We had the opportunity to connect with so many great industry colleagues and partners at the 2025 Commercial / Multifamily Finance Convention and Expo (CREF) Conference in San Diego.  Through much discussion, and as we move into 2025, the commercial lending and loan servicing industry is poised for significant transformation. Driven by technological advancements, economic shifts, and an evolving regulatory landscape, lenders and servicers will need to keep an eye on the trends that will influence the status quo.

Here are some of the trends we heard a lot about that we expect will shape the year:

1. Increased Adoption of Technology, Particularly AI and Automation

Automation and artificial intelligence (AI) continue to reshape the lending landscape. From credit risk assessment to loan servicing, AI-driven solutions are enhancing efficiency, reducing human errors, and improving decision-making. Expect to see more widespread use of AI in underwriting, predictive analytics for default risks, and chatbots for borrower interactions.

2. Growth of Alternative Lending and Fintech Partnerships

Traditional banks are collaborating more with fintech companies to improve lending processes. Alternative lending models, including revenue-based financing and marketplace lending, are gaining popularity, offering businesses more flexible financing options. These partnerships allow banks to leverage fintech innovation while maintaining regulatory compliance.

3. Stricter Regulatory Compliance and Risk Management

Regulatory oversight is intensifying, particularly in response to economic volatility and market disruptions. Lenders and servicers must invest in compliance technology to ensure adherence to evolving regulations, including fair lending laws, data privacy standards, and anti-money laundering (AML) requirements. Enhanced risk management tools will be crucial for mitigating defaults and ensuring portfolio stability.

4. Personalization in Loan Products and Servicing

The demand for personalized lending experiences is growing. Financial institutions are using data analytics to tailor loan products based on borrower profiles, industry trends, and business needs. Customization in loan terms, repayment schedules, and risk assessments will become a key differentiator for lenders.

5. ESG Considerations in Commercial Lending

Environmental, Social, and Governance (ESG) factors are playing a bigger role in lending decisions. Financial institutions are integrating ESG criteria into credit risk assessments, favoring businesses with sustainable practices. ESG-linked loans, where terms are adjusted based on sustainability performance, will gain popularity.

About Varro:

Varro is a property technology company specializing in the end-to-end management of commercial real estate assets. Their suite of products and services automates and streamlines various aspects of asset management, focusing on enhancing operational efficiency and transparency.