Coronavirus Recovery: A PPP Automation Success Story
Integration, Automation, and the Paycheck Protection Program (PPP)
Politics and hiccups aside, the CARES Act and specifically the Paycheck Protection Program (PPP) have helped many of small companies stay afloat during this time of economic shutdown. For Alex Fan, Vice President of the Financial Services, the PPP specifically led to one of the quickest and most intense projects of his career – one that would directly impact the livelihood of thousands of Americans.
The primary challenge that banks faced related to PPP was one of capacity.
“When PPP was passed, suddenly banks were given about two weeks to process loan applications at volumes equal to five times the normal monthly volume,” Fan said. “Adding even more pressure, the program required banks to fund the loans within 10 calendar days.”
In addition to the operational capacity obstacle, technology systems and interfaces presented additional challenges. Systems that accumulated data based on intake, customer relationship manager (CRM), Small Business Administration (SBA) approval, core banking, and others, didn’t always play nice with the bank’s data ecosystem.
“We discovered a lack of integrations between each of those systems,” Fan said. “That leads to poor data quality and incomplete data. Occasionally, clients had to practice what we call ‘swivel chair integration’ – manually copying data from one screen to another.
“In the end, the double whammy of operational and technological difficulties drastically limited what banks were able to do despite their greatest intentions.”
A Client in Need of a Solution
As the legislation that created the PPP was being finalized in Congress, one of our banking clients got out ahead of many of the issues listed above and reached out to Alex and his team.
“This bank usually processed about 1,500 loans per month,” Fan said. “But they knew there would be a huge increase in applications when PPP became a reality.”
With no automation tool in place for aggregating PPP loan data and checking to ensure it is complete and accurate, the client anticipated they wouldn’t have enough staff to process the loans within the 10-day timeframe. What they needed from Saxony was a tool that would aggregate, automate, and ultimately shorten their loan process.
Getting to Work on PPP Automation
There was no time to waste. Immediately, Saxony deployed a team onsite to map out the workflow involved in processing, fulfilling, and closing a loan application. The goal was to quickly identify bottlenecks and develop a solution to avoid them.
“We began building out a system in which data could be aggregated and checked, with the end goal of automating the process of loan creation and funding,” Fan said. “This had to be done in parallel with relationship managers taking applications, loan ops processing, deposit ops validating – all within that 10-day window.”
Typically, a project of this nature takes weeks or months – but this one was going to have to be completed in hours or days. Saxony’s team put in long hours, late nights, and weekends to deliver the solution, which consolidated data from multiple systems, reported inconsistencies and inaccuracies in the data, and automated tedious workflows.
As the first round of PPP funding came to a close, the bank reported funding 4,600 loans over a two week period – nearly three times its typical monthly loan volume. More than 3,300 of them were processed using Saxony’s automation tool.
The data verification element of the tool more than proved its worth, as roughly half of those loan applications had some data discrepancy or missing information. Verifying and correcting those applications manually would have required hundreds of staff hours, but instead took mere moments for the automation tool to identify.
At the end of the day, those thousands of fulfilled PPP loans represented many livelihoods and many company-provided health insurance policies – both critical during a pandemic.
Once the project was completed, Fan was able to take a step back and see the bigger picture reflected therein.
“This was highly indicative of the opportunities we still see within the industry,” Fan said. “We need 360-degree views of our customers, fused from hosts of various systems, each specialized in certain functions of services. We need the tools to do reconciliation and data governance to ensure our customers’ data is secure and correct. We need automation to improve the accuracy and the efficiency of our operations.
“We need to do all this and then do it better, keeping in mind that it is the customer we serve.”
The PPP program is only half complete – as you remember, most of those loans are likely to be forgiven provided they followed the precise rules about how the money was spent. There will be another wave of banks over the summer looking for automation and reporting tools to help smooth the forgiveness process. The stakes will be high, once again, for both banks and their customers. Fan and his team at Saxony are looking forward to that challenge.
“This project served as a reminder of the reason of why I love doing what I do,” Fan said. “We don’t always get to see the fruits of our labor, but this time we were blessed to reap those rewards in a matter of weeks.
“Knowing that this work wasn’t just a technology implementation but had a direct impact to the livelihood of many others in the same boat as I am, was a testament that there is humanity within technology.
“When you peel back the marketing around technology advancement, you really understand that this is all about helping to improve people’s lives. There’s no more important time than now to remember that simple fact.”
Alex Fan is the Vice President of Saxony Partners’ Financial Services practice. Reach out to him via LinkedIn.