COVID-19 is accelerating commercial loan automation

loan automation illustration

The huge surge in Paycheck Protection Program applications caused many community banks to adopt new technology to speed up their commercial loan processes. Rather than being temporary measures, these solutions may stick around for the long term.

By Susan Springer


The Coronavirus Aid, Relief, and Economic Security, or CARES, Act was a sea change for commercial lenders. Faced with the tall task of expeditiously fulfilling millions of Paycheck Protection Program (PPP) loans, thousands of community banks jumped into action earlier this year to serve existing—and new—business customers.

Indeed, the number of certified Small Business Administration (SBA) lenders in 2020 was 4,600 higher than in 2019, as of June 30.

But the CARES Act didn’t just create a lifeline of loan money for small businesses. It also spurred community banks to adopt and implement new technology en masse. Community banks added capabilities to their existing commercial lending practices or sought vendors to automate or make services more efficient.

Charles Potts, ICBA’s senior vice president and chief innovation officer, says many banks lacked the technology to automate those loans as fast as their business customers needed, so they onboarded new technology, enlisted noncommercial loan employees to meet the spike and produced many times more loans under crisis conditions.

The work paid off, as PPP loans helped businesses keep their workforce employed amid the challenges of COVID-19. The U.S. Department of the Treasury announced that of the almost 5 million PPP loans made through June, the average amount was approximately $100,000, showing that the program primarily served many small businesses.

Meeting challenges with innovation

Potts says meeting the immediate needs of their business customers will have a long-term impact; about two-thirds of community banks accelerated their technology spend to automate commercial lending this year.

Community banks’ high-tech, high-touch customer service model only benefits from technology, such as electronic signature capture, that fast tracks the loan process for both banks and their customers.

Wolters Kluwer has offered its software-as-a-service-based (SaaS) TSoftPlus SBA software program, which interfaces directly with the SBA’s E-Tran system, for 20 years, yet its popularity surged in spring 2020 with bankers seeking efficiencies in commercial loan servicing. The company modified its software to quicken PPP loan processing. Jim Wrbanek, head of U.S. sales for Wolters Kluwer’s Community Bank Compliance Solutions Group, said one community banker said his bank was able to process dozens of loans in one day.

“First, the benefits [of digital loan applications] are for your internal employees and your ability to be as dynamic and flexible as possible in any location and any space,” Wrbanek says. “Two, there’s no doubt your customers are going to appreciate the option to handle things [through a remote application], no matter the size of the loan that they may be working for, or in any scenario.”

Wrbanek says this kind of offering won’t end with the PPP. He expects a generational shift to drive increasingly tech-savvy business owners to demand the efficiency and ease of a digital loan application since many are “not looking to walk into an establishment to execute a loan today.”

Finastra has also had experience with SBA loans due to Fusion CreditQuest, its digital loan origination system. Nelson Flores, director of product management of Finastra’s commercial lending solutions, says while loan automation may be more advanced on the consumer lending side, automation is growing on the commercial side with enhanced machine-learning tools, especially around risk and financials. However, technology isn’t fully automating the relationship aspect of these loans.

“Through the use of a digital loan origination system like Fusion CreditQuest, risk analysts have the ability to centralize all the information within the platform,” Flores says. “This enables the process of gathering information, spreading the financials and, ultimately, decisioning the loan [to go] at a much faster pace than can be enabled via the usage of just emails and spreadsheets. Our platform makes use of our cloud APIs [application programming interfaces], enabling the financial institution to integrate with other systems, reducing the synchronization burden and thus bringing even more speed to the process.”

“There has definitely been an uptick in the number of community banks seeking out ways to add or enhance digital tooling, with automation becoming a more urgent piece of the loan origination strategy.”
—Nelson Flores, Finastra

Reassess pandemic practices

With the continued focus on remote working and social distancing for the foreseeable future, Flores says, “there has definitely been an uptick in the number of community banks seeking out ways to add or enhance digital tooling, with automation becoming a more urgent piece of the loan origination strategy.”

While bankers may not be shaking hands with or sitting across desks from their customers most of the time, they are finding ways to blend technology with relationship-building skills in order to bridge the gap and quickly close commercial loans.

Following the pandemic, Potts recommends bankers assess the new practices and technologies they’ve adopted for the crisis, whether that’s new account, deposit and loan origination; underwriting and doc prep; or packaging and closing. The goal should be to reimagine how technology allows them to be on par with any lender in giving commercial customers an easier, faster and more accurate loan experience.


Susan Springer is a writer in Oregon.

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