With a huge percentage of the 30,000,000 US-based small businesses expected to apply for the PPP, execution is critical. It happened. A new, particularly strong virus quickly bloomed into a global pandemic. While the Federal Government's response was timely and well-funded, a lot of loose ends were left with regards to execution, specifically regarding the technology needed to execute. Businesses were encouraged to apply for the SBA Payroll Protection Program (PPP) starting last week. More importantly, they were encouraged to apply for the loan through their existing banking relationship.
Unprecedented DemandA loan that becomes a grant and allows a business to cover payroll while shut down? Who wouldn't apply? The SBA estimates there are roughly 30,000,000 small businesses in the United States. According to the Independent Community Bankers of America's President & CEO, Rebecca Romero Rainey, "Community banks make 60 percent of small business loans." While estimates of the SBA's total loan volume processed annually prior to the crisis rest around $20 billion annually, the PPP program authorizes $349 billion, and that money is to be deployed immediately.
Inadequate ToolsWhile no one doubts the program is well-intended, community bankers are in an awkward position. They have been positioned by government and the press as the saviors of small business (through their access to these funds). However, their ability to help is severely hampered using their current tools. Romero continues: "Community bankers have always been there to meet their customers' needs, and to be faced with a situation like they experienced today--in which they were unable to access the SBA programs promised to America's small businesses due to failed technology links and portals--has been beyond stressful and disappointing." While a new portal has been promised, it has not been delivered. Banks with access to E-Tran have reported "significant challenges with user access and latency in application processing."
A Looming ThreatWhile community bankers continue to pressure their contacts at the SBA and Department of Treasury for solutions, rumors are swirling that two of the stronger Fintechs, PayPal and Square, may be granted special privileges to provide electronic loan applications for the PPP. With significant user bases on both the consumer and business sides of the market, Square and PayPal both stand to become even more disruptive to community banks.
A Generational OpportunityWhile there are certainly problems to solve, there is also an enormous opportunity to provide assistance to small businesses in their darkest hour. Not only will community banks that successfully deliver PPP funds to their clients attain hero-status indefinitely, they also stand to make significant gains for their shareholders as $349 billion in loans are rapidly deployed to the market. Banks that want to address this crisis head-on should look to Fintech as well, but choose a partner that works collaboratively with financial institutions, always looking to provide additional capabilities while keeping the bank at the center of the business client relationship. FINSYNC is that partner. FINSYNC's electronic loan application is plug and play. Additionally, the application feeds into the bank's connected Lender's Portal, a cloud tool for processing and underwriting loan applications. The best part...a bank can deploy FINSYNC's solution in 24 hours, with no IT integration required. Is your bank ready to start helping businesses in need? Join the FINSYNC Network today.
In order to survive — and thrive — in changing times, banks need to evolve from the limited role of being a business bank to becoming a long-term business partner. Learn how business banks can become business partners here. By FINSYNC Would you rather be seen as a business bank or a business partner? Most banks, if not all, would opt to be a true business partner. But what does that mean, exactly, and how do you get there? Even the most well-intentioned banks often don’t understand what it takes to build a true partnership. The key? Technology that adds real value. Elevate your relationship from a common business bank to a highly valued business partner with tools that can help both you and your customers grow.
The Limitations of Business BanksWhat’s wrong with being a business bank? Nothing, of course, other than its obvious limitations. Business bankers are common, and easy to fire. A partner, on the other hand, adds value and is much less expendable. Traditionally, the interaction between a business bank and its customer ends with a yes or no response. As in “yes, we can help you with financing” or “no, we cannot help you.”. Binary banking represents the old way of doing business and, in our opinion, is on its way out. For a business bank to become a true partner with their client, this dead-end dialogue must be expanded. Business partners can do much more for their clients than simply finance a loan. When harnessing the power of technology, deepening these relationships to partnership status requires banks to invest minimal effort and resources.
What it Means to be a Business PartnerAccording to a recent FDIC report, anywhere from 77 to 89 percent of business banks don’t offer their customers the ability to apply for financing online. Beyond the convenience and ease of connecting with clients via the web. Access to financial information online can help banks build a mutually beneficial partnership that can grow with the client. A business partner is an advisor that can help steer a small business along the path to success. Sound complicated? It’s not when you have access to your client’s financial information through a platform like FINSYNC. If your client doesn’t qualify for a loan, for example, the conversation doesn’t have to close with a “no” that does nothing to continue the conversation. Instead, FINSYNC lenders can tap into historical financial data to analyze their client’s cash flow in order to show the business exactly where they need to be in order to qualify for a loan in the future. Armed with this valuable information, a business is given an actionable goal that comes with the assurance of qualifying for financing, should that goal be met. And therein lies the value of a partnership.
Partners for the Long TermThis type of guidance from a business partner lays the foundation for a long-term relationship as opposed to a one-off interaction that often ends with a discouraging “no, we can’t help you.” When the conversation continues with, “Here’s where your business needs to go to qualify for financing,” the applicant not only has a roadmap to follow. They know exactly where to go for funding when they’re ready. Better yet, for both the bank and their customer, when you’re connected through a lending network like FINSYNC, there’s no need for the business to re-apply for the loan. When they hit the numbers laid out for them, qualifying for a loan is as simple as one click. The same goes for a business that has secured a loan previously through the FINSYNC Lending Network. When the applicant needs additional access to funding, they can secure a loan with a few quick clicks in a matter of minutes, significantly reducing the effort required by both the bank and their client. There’s no new application for the bank to review, as the relationship has already been established and the online financial information speaks on behalf of the business. These types of streamlined transactions save time, resources and frustration on both sides, and make for the kind of partner relationship that businesses expect in today’s digital world.
FINSYNC is rapidly building a network of banks that use our technology to connect with customers in search of financing online. As a “fintech” company, we are often asked about other technology companies and their potential impact on the banking industry. Should they elect to throw their hat (or weight) into the ring. Most commonly — Amazon. Uniquely enough, I love the question because it teases out something I am very passionate about. That’s the desire to be in the relationship business (as opposed to transactional). If banks want to build a defensible competitive advantage over Amazon banking, they too will need to move to the mindset of being in the relationship business. This may sound obvious, but it’s not. I meet with bankers all the time that speak of a desire to innovate, then describe the box their idea needs to fit within and the areas where it cannot overlap. If only I could walk into my next bank board meeting with Clay Christensen, who authored The Innovator’s Dilemma. He has a message in that book that everyone in the banking industry should stop and read, if they haven’t done so already. If I had to summarize it in one sentence: Innovating in fear of staying within a box, or a previous product, process or price — isn’t innovating.
Willingness to adopt new technologyFor a bank to truly be in the relationship business, they, like Amazon, have to innovate and always iterate in an effort to earn the customer’s business and loyalty long term. For most banks, this requires a change in mindset and a willingness to adopt new technology and processes. All of this can be overwhelming for a bank. I recently attended a bank conference where the bankers were outnumbered almost three to two. That is, there were three vendors for every two bankers at the conference. In this kind of environment, how does a bank decide with whom to innovate? Or, to partner or to build? Building is very expensive and risky and should only be considered by very large, well-capitalized banks. For the other 4,000-plus banks and 6,000-plus credit unions, I can help make your job easy. Think about your customer first. Look for and then adopt the solutions on the market that are proving to create the most value for your customers while also helping your financial institution to increase revenue, reduce risk and improve the overall relationship you have with your customers. If your customers win, you will win irrespective of who enters the market.
Benefits of using FINSYNCFINSYNC makes it easy for you to connect with your customers online in order to strengthen these all-important relationships, and ultimately fund more loans. Joining FINSYNC’s Lending Network allows you to offer your customers an online financing option that goes beyond traditional lending. It requires no IT investment or implementation on your end. When you’re not ready to approve a loan, FINSYNC helps you continue the relationship by presenting the business with actionable steps they can take to secure financing with you in the future. We also help businesses with advanced cash flow analytics and projections. Allowing them to show you exactly where their business is going. It’s a value-add for both you and your customers, and it all begins with your relationship.
|Cash Flow Management|