The tone and nature of our conversations here at Numerated with community and regional bank executives changed quickly and dramatically over the last two weeks as the coronavirus pandemic began to unfold in the United States.
With customers, regularly scheduled meeting agendas shifted to the tools and features available on our platform to help them navigate and execute their coronavirus strategies. With prospective customers, conversations shifted to either requests to reschedule meetings or requests to accelerate projects.
While the true impact of the coronavirus to the banking sector is still unknown, it is clear that face-to-face interactions will be discouraged for weeks, if not months, and many businesses will need financial products to weather this storm.
We’re beginning to see regional banks, community banks, and credit unions take actions to best position their financial institutions and business customers for success throughout the fallout and recovery. To that end, here are five digital lending strategies emerging in business banking to address the coronavirus crisis:
1. Utilize the SBA guarantee
To support economic recovery, the Congress passed a $2 trillion Coronavirus Aid, Relief, and Economic Security Act, or CARES Act. Within this drafted legislation, upwards of $349 billion will be appropriated through the Small Business Administration (SBA) to lend to businesses, with the loans being forgiven entirely when used as outlined, such as for payroll.Banks with digital lending solutions to streamline SBA processes have a competitive advantage as demand for these paperwork-heavy loans increases. For example, some of the top SBA lender banks in the country use Numerated to extend SBA Express program loans to customers in the same day, completely digitally, and will be promoting this fast and convenient offering to businesses moving forward.
For banks that have not streamlined their SBA application and lending processes, our team has launched a CARES Act Lending Automation solution that can be implemented in days, with discounted pricing, to help these institutions meet the coming surge in demand (contact us today to learn more).
2. Be proactive with top customers
With many businesses temporarily forced to close their brick-and-mortars, business owners are likely to see financial hardship and will look to their bank or credit union for help weathering the storm..We are seeing banks working to identify their best customers and proactively reach out to them in order to understand their situation, discuss impending financial needs, and ensure they are aware of the bank’s digital application and digital lending capabilities that do not require a branch visit. We are seeing banks doing this on a one-to-one basis through their bankers and also through broader email campaigns.
Numerated customers can leverage the platform’s sales and marketing tools to quickly identify quality customers and run targeted email campaigns to them. Banks are creating lists of top customers in the platform by time in business, industry, tenure with the bank, location, loan eligibility, and more.
3. Audit digital credit policies.
Many banks are beginning to tighten their credit policies for high-risk businesses while ensuring that quality credits and existing customers are not turned away during a temporary time in need. Banks with digital lending technology that offers transparent and flexible credit decisioning automation can quickly adjust and scale new policies with consistency across markets and banker teams.
While every bank has a different risk profile, we see banks auditing approval requirements for specific industries and other high-risk segments like sole proprietors, young businesses, and prospective customers with no bank history. For some of these segments banks are considering reducing loan sizes, tightening exposure limits, applying risk-based pricing, or increasing the floor for FICO or business credit scores.
Most banks have experience lending to businesses through good and bad credit cycles, and Numerated is committed to providing them control by expediting credit policy change requests for customers at a discounted rate during the crisis.
4. Add temporary risk mitigation steps.
In addition to credit policy audits, we are seeing some banks add temporary risk mitigation steps into their digital lending processes to manage interim uncertainty.
For example, banks can add a manual review step before loans are closed with minimal impact to the customer experience. This way an underwriter or administrator can review all loans prior to closing. Another option banks have available to them is to temporarily limit self-service channels to ensure bankers are involved. Many other risk mitigation options are available on Numerated’s platform, and we welcome the opportunity to partner with banks and credit unions as they devise and execute strategies.
5. Re-evaluate digital priorities.
Digital transformation in business banking has taken on new meaning during the coronavirus crisis with social distancing becoming a normal part of our lives. Most banks are being forced to actively re-evaluate their 2020 budgets, projects, and resources to ensure they are prudently managing their balance sheets while digitally meeting their customers’ financial needs.We see banks with more mature digital lending and account opening offerings flexing these capabilities and building strategies around them. This includes making digital application and lending experience available on more bank products and even creating loan products with features specific to the current environment.
Financial institutions just beginning to pull digital application, digital lending, and digital account opening strategies together seem to fall in one of two camps at this time: retrenching and waiting for the market to stabilize, or aggressively accelerating timelines to stand up digital buying presences.
Wherever your bank or credit union stands in navigating your strategy, we plan to continue to share the emerging best practices we see from the market and to work overtime to stand up more digital application, digital account opening, and digital lending presences.
Reach out to us to explore how Numerated can play a role in your Coronavirus strategy.
