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Forced to move quickly by the pandemic and the need to process a crush of Paycheck Protection Program applications, lenders are becoming more willing to move quickly on some technology upgrades.
Once a slow, even multi-year process, the speed at which financial institutions adopt new technology could be changing thanks to the tumultuous events of the last six months.
The COVID-19 pandemic and its associated economic fallout forced lenders to quickly adopt new software, both services like Zoom that were already available and PPP platforms built in–house or by technology companies.
With staff as well as customers now accustomed to this changed environment, technology companies say they see more opportunities to get their digital banking and lending tools adopted at more banks and credit unions – and at a faster pace than before the pandemic.
“Banks are used to moving quickly to protect their balance sheet,” said Dan O’Malley, CEO of the Boston-based financial technology firm Numerated. “What I think banks just learned is that the same ability to move quickly – and manage the risk around moving quickly – can be applied to technological change, too.”
WFH a Key Catalyst
James Dunphy, president and CEO of Weymouth-based South Shore Bank, said the pandemic has accelerated the bank’s move toward digital processes and communications by about five years. Customers and bank personnel have become more comfortable with operating in a digital environment, he said.
Before the pandemic, banks and credit unions had been notoriously slow to embrace work-at-home arrangements, said Richard Leone, CEO of COCC, a Connecticut-based provider of core technology services to nearly 200 banks and credit unions in the Northeast.
“I give them credit for being able to adopt work at home technologies very quickly,” Leone said. “They did that out of necessity, but I think the unintended benefit of that is they were able to turn those technologies over to their clients.”
Once banks figured out that they could operate without teller lines, Leone said, customers benefited from digital lending processes and virtual banking opportunities.
In addition to building a PPP platform for its customers, COCC has seen more banks and credit unions install interactive teller machines during the pandemic and upgrade call center technology. And banks that in the past had resisted rolling out online banking to older adults have seen this demographic now use online tools more than younger customers, Leone said.
“This COVID environment has accelerated the adoption of technologies at warp speed,” Leone said. “It was incredible how quickly banks were able to adopt these new technologies.”
Before the pandemic, COCC had expected more banks and credit unions to adopt digital tools this year. One unexpected area of growth for COCC was in marketing. Even during the pandemic, customers have used COCC’s marketing services to run targeted digital campaigns to promote their products and services.
Looking ahead, Leone said banks will look at digital banking and lending tools that had started to gain momentum before the pandemic, including using artificial intelligence to anticipate customers’ needs and using more sophisticated technology to service customers remotely.
PPP Opened Eyes
Numerated, which offers a business lending platform, built a PPP tool and added nearly 70 banks and credit unions to its platform during the second quarter, growing its customer base fivefold.
Before the pandemic, the industry was still five years away from the widespread adoption of digital lending platforms, O’Malley said. Now, the past few months have validated the need for this type of platform at all financial institutions, he said.
Hudson-based Avidia Bank, known for building fintech partnerships, was already working on improving and streamlining its digital processes, said Rita Janeiro, senior vice president for community banking. She said the PPP has now propelled those initiatives forward.
While the PPP was a difficult process for banks and fintechs, O’Malley said it has shifted the industry’s perspective on change.
“I just think it’s a collective shot of confidence in our ability to make technological change – at a time when the industry is going through unprecedented amount of technological change – that we can do it, we can get through it,” O’Malley said.
Faster Launches
This boost of confidence could change how lenders launch new platforms. Bringing on new customers and implementing the platform would typically take several months to a year, O’Malley said. In the future, he expects launches to take five days or less. Rather than fully adopting and customizing the platform, banks add and finalize features later.
Diane McLauglin
“I think the sequence has changed,” O’Malley said. “I think the sequence is now: launch first, customize after.”
The lack of clarity and ongoing changes throughout the PPP led to another change at Numerated. The firm started holding daily webinars for customers to address their questions and share the latest guidance. Those webinars still continue a few times a week to enable more candid conversations about a variety of industry topics, including opportunities to share best practices.
“One of the most exciting things to come from PPP for us is this much deepened conversation between us and our customers,” O’Malley said. “I feel like it’s pulling us forward, pulling us to deliver features even faster that could really help right now, and I think it’s pulling our banks forward and helping them think about the future and change much more aggressively.”
