Zions digital PPP lending app pays off for pandemic-ridden small businesses
The COVID-19 pandemic has proven detrimental to most businesses, but the mom-and-pop shops that dot the country’s shopping landscape have suffered badly, missing the larger coffers that have helped businesses stay afloat during the outbreak. .
Utah’s Zions Bancorporation, a bank holding company that operates affiliate banks in 11 western U.S. states, cushioned the blow by quickly digitizing the process by which small businesses could apply for federal loans offered in response to the pandemic. Through 2020, the Paycheck Protection Program (PPP) has helped process nearly 48,000 loans totaling $6.9 billion, according to Ken Collins, executive director of portfolio management, who oversaw the program. for Zions, which manages nearly $82 billion in assets.
“It was extremely critical that we offered a simple, digitized solution that allowed small businesses to apply and get their funds quickly,” says Collins of PPP, which won a 2021 CIO 100 award for innovation.
Zions’ PPP service came in response to the passage of the Coronavirus Aid, Relief, and Economic Security Act (CARES), a $2.2 trillion economic stimulus bill passed in March 2020. The draft The law included the $349 billion emergency PPP loan program, in which the Small Business Administration (SBA) issued repayable loans of up to $10 million to provide relief to financially distressed small businesses. Banks and credit unions were made responsible for administering the funds at the local level.
Reinventing loan distribution with digital workflows and bots
Implementing the loan origination software and processes tested the mettle of the Zions technology and operations team as the SBA shared its process for submitting PPP loan applications with advanced notice. one day and Zions had to completely rethink the way it handled loans, says Collins.
Typically, small businesses file paperwork to apply for loans with Zions, which then goes through several manual processes to process the loans and release the funds. PPP required an all-digital application, Collins says. Pressed for time, Zions initially released an online PDF form as a stopgap so it could accept loans while it built a PPP application and online portal, as well as business process workflows.
When the PPP application was completed a week later, small businesses began filing requests for funds, with Zions staff answering questions via routing calls to the IVR software. The robotic process automation (RPA) software grabbed the relevant data and filled out the form for the SBA website, Collins says.
For about six weeks, the bots worked well, too well. At that time, so many financial institutions were using bots to speed up the application process that they crippled SBA systems. This latency issue forced the SBA to create an API to allow finserves to connect directly to the government portal, but that largely solved the problem, Collins says.
Zions’ PPP application was typical of these process repositories, triggering exception handling when, for example, a candidate filled out something that needed fixing. Once a loan was approved, the bots automated the electronic transfer process, allowing applicants to get their funds within hours. Previously, loans took up to a week to be approved before funds were released, Collins says.
The stats paint a picture of Zions’ success, with the API and automation technologies driving PPP loan volumes from 500 a day to 10,000 a day in weeks, with 70% of funds going to small businesses of 10 employees or less. Through 2020, Zions ranked 9th in the nation for PPP approvals, helping to preserve more than half a million jobs nationwide.
Zions’ rapid digital work is part of a trend fueled by COVID-19, with 82% of CIOs implementing new technologies and new IT strategies and/or methodologies in response to the pandemic, according to the 2021 survey from IDG on the State of CIOs, which surveyed 812 IT managers.
Business agility and change management are key
Bureaucracy has posed the biggest challenge to Zions PPP enforcement, with the SBA frequently changing procedures and policies and ordering technical adjustments to keep up with rapidly changing federal guidelines, Collins said. For example, when the SBA first released its API, it metered access to avoid crashing the system, which caused some loans to “dribble” through the system.
This forced Zions to modify its PPP application code. “We had to constantly change and rework things, which required many team members to work exceptional hours to help us stay compliant,” says Collins.
Collins attributes the success of the company’s PPP application to the high commitment of senior executives, who supported a cross-functional team of more than 2,000 employees, from bankers to project managers and technology and operations teams. . These staff members worked closely with the legal, risk management and compliance departments under a strict change management program.
Also noteworthy is Zions’ migration to more modern core banking systems to integrate lending, as well as the adoption of agile methodologies and a new product operating model. The improvements to people, technology and processes are part of a digital transformation, led by CIO Jennifer Smith, in which the company is investing hundreds of millions of dollars over several years.
“The investments we made in all the technologies we used were critical to our strategy,” Collins says.