The global economy has been hit hard by the coronavirus pandemic, with SMEs and entrepreneurs struggling to access the funds needed to maintain their cashflow. The CBILS initiative has been set up in the UK to help small businesses but it has been beset with problems and has created a spike of new applications that are overwhelming lenders. It’s time for banks and other lenders to look to the benefits of the latest in lending technology.
Against a backdrop of huge economic uncertainty, the Coronavirus Business Interruption Loan Scheme (CBILS) has been introduced. Delivered by the British Business Bank via multiple accredited lenders, the scheme has been created to help UK businesses with a turnover of up to £45 million access government-backed finance.
However, it has suffered from severe teething problems. A report by City AM last week highlighted that just 2,022 loans have been made to the UK’s SMEs through the initiative. Given there have been around 300,000 applications so far, this means that only 0.65% of enquiries have resulted in coronavirus business loans. The banks are clearly struggling to process this avalanche of applications.
The right partner is needed
The nascent Lending-as-a-Service (LaaS) sector is on hand to help. By replacing legacy software with natively digital LaaS platforms, loan approvals are completed inside a working day rather than weeks, with funds disbursed the same day.
Here are five ways lending technology can help banks navigate COVID-19:
- Smarter onboarding. Smarter, automated onboarding application assessment is the key to helping lenders unlock funds for SMEs. ezbob’s Smart Onboarding solution cuts loan servicing costs for clients by up to 80%, whilst allowing their SME customers to receive a lending decision in just 7 minutes, with funds transferred on the same day. We have recently launched a new, packaged Smart Onboarding product that will allow banks and other financial institutions to rapidly transform their front-end processes to better deal with CBILS demand.
- Lower acquisition costs. With no branches, no salespeople and limited fixed asset servicing costs, LaaS helps to contribute to boosting profitability for banks and other financial institutions whilst limiting human contact in these times of social distancing and lockdowns.
- Faster decisions. The ability to perform straight-through-processing (STP) and make decisions very quickly means that borrowers can access funds when they need them, adding much-needed working capital and liquidity to their businesses in this difficult time. The innovative technology involved in LaaS, including biometrics and data capture using facial ID, means no more cumbersome identity document uploads.
- Accurate view on affordability. LaaS has enabled a significant reduction in manual decisions by underwriters. ezbob’s platform accesses the multiple data sources, including Open Banking and non-traditional sources such as PayPal and Amazon, automating affordability calculations.
- Better customer journeys. The more advanced LaaS solutions leverage the latest user interface (UI) trends, including responsive design, minimal clicks and an intuitive user journey. Asking applicants fewer questions, whilst enabling them to give their informed consent to data collection, results in faster onboarding journeys for business owners seeking finance.
Get in touch today to find out more about how we can help you to transform your lending operations and meet the increasing needs of customers.