As we begin 2021, you’d probably be forgiven for feeling at least a little relieved. 2020 was probably the toughest year most of us experienced, but as vaccines slowly roll out it really does appear that there is indeed a light at the end of the pandemic tunnel.
Light isn’t just a sign of an end to challenging times, though – it also illuminates.
The COVID-19 pandemic revealed several problem areas in the lending world. These areas include:
- A slow response to the Small Business Administration’s Paycheck Protection Program (PPP) loans
- Outdated technology
- Inefficiencies within digital banking and lending
Sound like more bad news? Trust us, it isn’t!
Not only are these areas perfectly fixable, they’re also areas lending organizations can find serious advantages as the outbreak begins to wind down. Good as surviving hardship is, coming out of it stronger is even better. “Challenges are gifts, opportunities to learn,” says bestselling author and motivational speaker Andy Andrews.
Let’s take a look at those areas.
Area #1: A Slow Response to SBA PPP Loans
In 2020, the government enacted the Paycheck Protection Program (PPP) which offered qualifying small businesses loans in order to keep their workforce employed.
Lockdowns and other safety measures generated a massive spike in demand. The PPP’s original budget ran out in days, spurring a second round of PPP funding. In late December, a third round of PPP funding was signed into law.
Those lenders who were not (or still aren’t) prepared put their members and customers at a disadvantage when it came to applying for PPP loans. Those without SBA PPP digital lending capabilities likely lost members and customers who went to a more modern lender … or simply frustrated them by providing a long wait time in order to apply.
Having ready-to-go SBA PPP software in place is a genuine advantage.
Area #2: Outdated Technology Holds Lenders Back
The implementation of CDC guidelines for social distancing and indoor capacities especially highlighted the cumbersome and manual processes imposed by outdated technology. You don’t realize how much of a time sink face-to-face meetings can be until you have to intentionally keep a distance from your coworkers. Moreover, thanks to awkward processes, outdated loan and account origination systems have shown themselves an even bigger issue and frustration for staff.
So, what’s the solution? A modern loan origination system that includes automated tasks lists ensuring that staff is prompted by the system for every step of the lending process, reducing the need for face-to-face interaction, and complicated processes.
Plus, a modern account opening system allows for better integration with the loan origination system, automated tasks resulting in significant process improvement, and most important of all, an improved consumer experience.
Area #3: Even Digital Banking & Lending Can Be Inefficient
Although COVID-19 has opened the eyes of many lenders to the value and urgency of digital lending capabilities, there’s two specific areas of digital lending and digital banking that can be inefficient.
First, financial institutions who either hesitated or didn’t recognize the importance of digital lending and digital banking left their customers and employees at a significant disadvantage. Example? Many union construction workers (who are considered essential) receive physical checks and due to union regulations do not have direct deposit options.
Secondly, let’s talk about lenders who had (or have) only partial online loan applications on their website. Sorry, but that’s the lazy way out – these forms simply thank the consumer for their interest and ask them to call or find a local branch. This is a bad experience and in our eyes, doesn’t qualify as digital lending at all.
So, what’s the lesson? For those institutions that want to grow and expand their organization, an investment in true digital lending technology is critical. This technology should seamlessly integrate with the loan origination system and the account origination system, as well as allowing customers to apply for a loan online, receive an acceptance or be declined, and fund the loan without any human interaction.
This is a true digital lending experience and one that every financial institution should provide to their members and customers.
The proper digital banking tools can help significantly reduce foot traffic and create a better experience for the consumer.
Digital Lending Isn’t an Option Anymore in a Post-COVID World
The last few months have catapulted the world further into the digital age. A McKinsey & Company report stated “we have covered a ‘decade in days’ when it comes to digital”. For example:
- Within 15 days the use of telemedicine increased 10 times
- Video conferencing traffic increased by 20 times in three months
- Streaming service DisneyPlus achieved the same subscription rate in two months that Netflix achieved in seven years
Organizations that had already set up a digital aspect for their business have fared significantly better than those who did not have a remote or digital process set in place. Luxury retailers Nordstrom launched curbside pick-up service in 2015. When the pandemic hit, Nordstrom already had a very convenient and safe way for their customers to shop. Additionally, their staff fully understood the process. This is also the case for many workforces who had a large number of employees working remotely.
COVID’s likely going to permanently change the ways we work. That’s why digitalizing your processes is more important than ever. MeridianLink’s SBA PPP Fast Track loan system is easy to learn and use, can be implemented within 48 hours in most cases and doesn’t require other MeridianLink products to work.
Don’t shine a light on your problems – we’ll help you show your strengths.