The COVID-19 pandemic has accelerated banks’ embrace of new technology when it comes to lending.

“The pandemic, it turns out, has moderately catalyzed business lenders’ embrace of digitalization technologies,” wrote David O’Connell, Aite Group senior analyst and author of the Aite Group’s report “Business lending under the pandemic: How the sky has been held up.” He added that the “industry responding to the pandemic in general, not by retrenching with delayed or canceled technology investments but rather the opposite.”

During the pandemic, lenders were forced to rapidly launch digital solutions to handle the overwhelming volume of Paycheck Protection Program loan applications. According to the report, 40% of the executives surveyed said their banks are accelerating more than three digitization projects after seeing how digital solutions “achieve scale, delight the customer, and enable customer-facing staff to spend time on more value-added tasks.” 

The study examined 20 SMB or commercial lenders, and respondents were only able to participate if they could shed light on the pandemic’s impact on business lending. Institution size ranged from below $10 billion to more than $250 billion. O’Connell pointed to People’s United Bank, a $61 billion lender based in Bridgeport, Conn., as a case study in embracing digital advancement. The bank created a business transformation office in August and is creating a new role, chief transformation officer.

The report also indicated staff reductions are unlikely, as only 10% of respondents expect layoffs at their institutions. The remainder of the year seems particularly safe, even if 2021 is harder to predict. 

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“Although most respondents cannot readily speak to 2021, conspicuously absent from their responses are candid expressions of concern about the likelihood that their institutions will have layoffs or that they are at risk of losing their jobs,” O’Connell said. “Respondents, in fact, commonly point out that parts of the economy are thriving and that identifying the resulting lending opportunities is not only a priority for senior management, but also a labor-intensive task for lenders.”

According to the report, lenders are finding their SMB clients to be more resilient than initially expected. O’Connell points out that consumers are adjusting their spending and businesses are adjusting their strategies to keep the economy from collapsing. “We have many times been surprised at how many ways businesses have found to both reduce costs and replace some of the revenues they’ve lost to social distancing,” one surveyed executive noted.

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