Legacy technology systems failed to serve SMEs during the pandemic, and especially throughout the origination process of the Paycheck Protection Program. This revelation has presented fintech lenders with a unique opportunity to fill the SME lending customer service gap left by banks — and the best way forward may be an acceleration of bank and fintech partnerships, according to SME lending executives during a virtual webinar Wednesday.

“What we hear a lot about small business owners is that it’s very relational,” said Josh Rodgers, vice president of customer service and operations at OnDeck. “How does an environment where an institution that [an SME] thought they had a relationship with, that they relied on, didn’t meet the need and what does that do from a consumer behavior perspective?” OnDeck is a publicly traded New York-based company that offers loans and lines of credit to small businesses, and has disbursed $13 billion in loans since its founding in 2006.

Once they were permitted to participate in the second tranche of the PPP, fintechs saw they could fill the needs of SMEs unable to apply or receive funding through big banks as part of the government’s economic relief package.

As a result, the Redwood City, Calif.-based BlueVine has seen a shift in customer expectations, which has resulted in the opportunity for increased business outside of the PPP. “We are getting dozens of our new PPP customers reaching out to us saying ‘I’ve had it with my bank, I love the experience that you guys gave us … I want to do business checking accounts with you, I want to move and quit my bank.’ So definitely there is a desire, and I think the business owners got used to much better service” said Ido Lustig, chief risk officer of BlueVine, which has provided more than $3 billion in funding to 25,000 small business customers.

That opportunity could allow an acceleration of bank and fintech partnerships for small business lending as banks look to bolster their online offerings to SMEs in a streamlined fashion. The panelists, who also included executives at Enova, a nonprime SMB lender, and Ocrolus, a fintech that builds APIs to automate manual work, all agreed that there will likely be a rise in fintech-bank partnerships in the second half of the year.

Also read: SMB banking startups pivot platforms for PPP

“We have transformed certain aspects of the lending experience but there is still a whole host of financial institutions out there that have next to zero digital presence when it comes to origination,” Rodgers added. That shift in experience could “force an environment for partnerships because I don’t think the dollars are going to be there from an investment perspective for everyone to go out and build this on their own,” he noted.

That said, fintechs typically work quickly, and some banks may lose out on partnership opportunities as a result of their slower internal processes.

“Banks are still struggling, large banks for sure, with their internal processes and even though this is the time for them to be working with fintech companies to my experience, and from what we’ve seen, it’s much easier for us to work with the Cross River Banks and Celtic Banks of the world than working with the larger ones because they’re simply too slow,” Lustig said. OnDeck partnered with Celtic Bank and BlueVine partnered with Cross River to deliver PPP loans. “Either larger banks will adopt and shift gears and they will see more cooperation in next year or they will start struggling and I look forward to seeing how that evolves.”