Before I discuss the importance of managing CRE concentrations, I want to emphasize that the proposed CRE guidance relates to "true" CRE loans. It is not directed at commercial loans for which a bank looks to a business's cash flow as the source of repayment and accepts real estate collateral as a secondary source of repayment.
From a bank’s perspective, it’s a classic “make or buy” decision whether to make use of internal development resources or to harness the innovative power of financial technology start-ups. In the digital era, it may appear irrelevant where business partners are located, but even in times of bits and bytes and the ultra-fast exchange of data, proximity is still an advantage.