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Deloitte’s global Lomabrd lending benchmarking study – spanning more than 40 banks and over US$450 billion of loans across 22 booking centres – found that the average Lombard penetration rate sits at around 6% of assets under management, with a strikingly wide range of 0% to 25%. Deloitte’s own conclusion: the gap represents untapped organic growth within the banks’ existing client bases, with the potential to double or triple the business. Lombard lending has been among the fastest-growing credit products globally for the best part of a decade, and yet in the UK most institutions sit at the bottom of that penetration range. Put another way: the typical private bank or wealth manager is custodian to billions of pounds of client portfolios that generate management fees, but nothing else. The assets sit on the platform, fully analysed, daily valued, and entirely unmonetised as collateral. We’d call that a dormant balance sheet. For any board asking how to grow the loan book without acquiring new customers, that dormancy is an increasingly expensive habit.   How Lombard lending can achieve organic growth through two levers Strip away the strategy decks, and organic growth in wealth and banking comes down to two levers: grow the assets, and grow the return on those assets. Lombard lending is unusual in that it pulls both at once. It grows the assets A client who borrows against their investment portfolio doesn’t sell it. Liquidity needs ranging from property purchases to tax bills to business opportunities, can all be met whilst the portfolio is preserved. AUM stays invested, fee income stays intact, and the client’s long-term strategy stays on track. Lending against the book protects the book. There’s a second-order effect too: credit deepens relationship. A client with a facility secured on their portfolio consolidates assets with the institution that provides it, and is measurably less likely to move. Additionally, it works at the front of the funnel as well as the back. In our experience, securities-backed lending is a product feature that attracts new clients in the first place – prospective clients increasingly ask whether this feature is available before they place or move assets and if you can’t say “yes, in hours” you risk losing the mandate. It grows the return on assets If you’re asking how banks can generate revenue from existing clients, this is about as straightforward as the answer gets. Lending income is earned on assets the institution already holds, values daily and knows intimately. Lombard loans also act as extraordinarily efficient users of bank capital as they are secured on high-quality, liquid, daily-valued collateral. Under the Basel risk-based banking framework, well-collateralised Lombard exposures attract a fraction of the risk weighting of unsecured or property lending. The same unit of Tier 1 capital supports a multiple of the lending volume – which is precisely why, done well, lending against investment portfolios can be one of the highest products a bank can write. To make that concrete:  Consider a £10 billion wealth book with Lombard penetration of 1%: £100 million of loans. Moving to the global average of 6% means a £600 million book. At a 2% net margin, that’s £12 million of incremental annual income from clients the institution already serves, earned against collateral it already custodies, and, given the favourable capital treatment, consuming remarkably little additional Tier 1 capital in the process. Few organic initiatives offer that combination of revenue upside and capital efficiency.   So why do balance sheets remain dormant? If the economics are this good, why is average penetration 6% rather than 16%? In our conversations with banks and wealth managers, the reality is operational constraints as opposed to a lack of appetite. Traditional Lombard lending is a handcrafted product. Collateral eligibility is assessed manually, position by position. Facility documentation is bespoke. Monitoring runs on spreadsheets refreshed daily at best. Margin calls are a phone call and a prayer. As a result, the cost-to-serve is so high that the product only makes sense for the largest clients and the largest loans. It’s offered reactively, to the top of the book, by a small specialist team. Everyone else’s portfolio stays dormant; no-one else borrows against their investments. Risk appetite compounds the problem. A credit committee’s willingness to lend against volatile collateral is, rightly, a function of its ability to monitor it. If the bank is reliant on manual processes, conservatism is forced into haircuts, advance rates and client eligibility. The constraint isn’t the risk. It’s the infrastructure’s ability to see the risk.   Technology changes the economics and the strategy This is where modern investment-backed lending technology rewrites the equation — and it’s an area where the UK is now producing genuinely world-class infrastructure. Purpose-built platforms automate the entire chain: collateral eligibility and haircut classification at the position level, digital credit journeys that take hours rather than weeks, real-time portfolio monitoring with automated margin call workflows, and regulatory capital calculation embedded at origination. (For why that last point matters more than ever, see our companion piece on preparing for Basel 3.1.) Three strategic consequences follow: We built Firenze’s platform on exactly this thesis: that the barrier between banks and their dormant balance sheets was never demand, and never economics, but infrastructure. Delivered as modern SaaS alongside existing custody and core banking systems, that barrier now takes months, not years, to remove. How banks can deploy a dormant balance sheet The strategic question for heads of lending and their boards is no longer whether the client book could support a Lombard business — Deloitte’s numbers settle that — but how much organic growth is being left dormant while the infrastructure question goes unanswered. The banks that answer it first will grow assets and return on assets simultaneously, on capital they already hold. They will build a loan book without acquiring a single new customer, and a proposition that helps win the next one.   Your clients’ portfolios are already on your platform. Speak to our team about turning them into a growth engine with Lombard lending.