Under the Hood of the PPP: How the Payment Protection Program Changes Commercial Banking Forever | Straight Talk

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This article is by Featured Blogger Jason Bloomberg from his blog page. Republished with the author’s permission. 

The Coronavirus Aid, Relief, and Economic Security (CARES) Act became law on March 27th, 2020, creating the Paycheck Protection Program (PPP), a novel lending program targeting small businesses in the US. As of early June, Congress had updated the law twice. 

By any metric, the PPP was unprecedented – the number of businesses who applied, the amount of money lenders disbursed, and perhaps most striking: how little time lenders had to implement the program. 

Typically, new commercial loan products can take up to two years to roll out. For the PPP, lenders had two weeks. “The PPP hit a lot of hot buttons for us. We recognized the level of urgency. The law was passed, and the program started two weeks later,” explained Michael Heffner, VP of global industry leads at low-code automation vendor Appian. “The typical timeframe for launching a commercial lending product was 18 months to two years.” 

The story of how lenders across the country – banks of all sizes as well as non-bank lenders including credit unions and online lenders – rose to this challenge is truly remarkable. Here’s an inside look. 

Breaking Down the PPP Technology Challenge 

Applications for PPP loans quickly besieged lenders upon passage of the CARES Act – in many cases, thousands within the first 24 hours. Clearly, manual approaches for processing such loans would be a draconian effort. For most lenders, a digital approach was mandatory. 

Digital PPP apps consist of three parts: the user interface (UI) where applicants can complete the application form and submit necessary documentation; back-office processing, including reviews, underwriting, and approvals; and a mechanism for submitting applications to the Small Business Administration (SBA), which the law tasked with guaranteeing the loans. 

ServiceNow partner INRY implemented a Small Business Loan Management app running on the ServiceNow platform. Bridgewater Bank in Minnesota is one lender running this app. “The capabilities of the app, including a consistent and user-friendly dashboard with real-time data, will help our leadership focus attention where it is most needed – on providing the fastest, highest quality of service for our clients,” said Mark Hokanson, Bridgewater CTO. 

Bridgewater’s PPP app was up and running in one week, dramatically reducing the processing time for small business commercial loans. INRY built a front-to-back solution consisting of a customer-facing portal where customers could track applications in real-time and a back-office application that provided a single source of truth for loan officers to handle loan processing. 

Low-Code was Essential 

The only way a company could build such an app so quickly was by leveraging low-code functionality in the underlying platform. For example, Lucro Commercial Solutions, a credit union services organization 

(CUSO), leveraged the low-code OutSystems platform to implement both the UI and the back-office processing elements of the PPP app. 

In 2019, Lucro brought in OutSystems partner TrueWind to build a new Digital Business Lending Center (DBLC) on OutSystems. Implementing the DBLC on a low-code platform gave Lucro the flexibility it would need to implement the PPP program for its credit union clients the following year. 

“They can configure the DBLC for each credit union,” according to Nuno Teles, chief customer officer at TrueWind. “Now that they have the OutSystems platform, it’s easy to build a new product like the PPP application in one week.” 

Using the still-new DBLC proved essential for delivering value to customers. “We were jamming Paycheck Protection Program loans into our conventional workflows, and we were falling behind,” said Cori SchmidtZdrazil, Chief Operating Officer at Lucro. “Creating an automated system on the fly, while the program was rolling out, gave us the ability to keep pace and help an underserved set of customers at a time when they need support.” 

Content services platform vendor Hyland Software also leveraged its low-code capabilities to roll out a PPP app, predictably centered on automating the document management portion of the PPP app process. “Our newly launched SBA PPP Loan solution provides a contact-free way to quickly process applications, with a configurable and secure way to gather, access, route, review and approve the necessary documentation,” said Steve Comer, Director of financial services and insurance sales at Hyland Software. “Our application is more of an accelerator, 80% ready to go. The remaining 20% is configuration by the customer.” 

Deloitte and low-code startup Unqork teamed up to deliver PPP applications as well. “Deloitte offers an all-inclusive managed services solution based on Unqork. The bank simply handles approvals,” said Rabih Ramadi, head of financial services at Unqork. “We built and launched the PPP application in one week.” 

PPP at Atlantic Union Bank 

Atlantic Union Bank (AUB) is a regional bank headquartered in Richmond, VA, with branches across three states. AUB had purchased Avoka, a customer onboarding system, prior to banking software provider Temenos’s acquisition of Avoka in 2018. 

Avoka didn’t provide everything the PPP app required, but it was a good start, and Temenos was up to the task of leveraging it to build out the entire app. “I reached out to Temenos on Monday (March 30) and said we had changed direction and wanted their help on a loan application workflow,” explained Kelly Dakin, chief digital and customer experience officer at AUB. “They grabbed their best developers and solution architects and went to work.” 

The Temenos team leveraged its low-code capabilities to create a digital app with a responsive UI design. “A three-person team at Temenos did the configuration,” said Derek Corcoran, chief experience officer at Temenos. “AUB processed 2,500 applications for a total of $6 million on the first day, from 4:00 PM to midnight.” 

However, the app didn’t automate decision making activities on the back end, as that would have been too difficult to test in the given timeframe. As a result, the bank combined automated and manual activities – a choice that the CEO is comfortable with, even in the work from home era. “I am aware of one major financial institution that tried to automate and even now has not been able to stand up the system,” said John Asbury, CEO of AUB. “That’s the brilliance of this semi-automated system and all these people working from home.” 

AUB also called upon low-code automation platform vendor Newgen Software to help it with its submissions to the SBA’s E-Tran system. “E-Tran integration is one of the significant features of Newgen Loan Origination Software for SBA Paycheck Protection Program,” explained an article by Newgen Software. “The software facilitates an end-to-end lending lifecycle, from providing borrowers the ability to fill their applications online, performing eligibility checks, integrating with the SBA’s E-Tran system, through to originating and disbursing loans.” 

The results were dramatic. “Manual submission of applications to the SBA would take 20 to 30 minutes per application,” said Ankur Rawat, associate director of products and solutions at Newgen Software. “With the AUB tool, it would take less than a minute to complete the data entry and file upload for each application.” 

SBA E-Tran: No End of Headaches 

Newgen created an integration with the SBA E-Tran application programming interface (API). While API integration is standard today, the E-Tran API pre-dated the PPP, and the SBA hadn’t designed it to support the new requirements that the PPP brought to the table. 

In fact, this API had numerous issues. It could only handle a modest number of submissions at one time, and Individual loan officers at each lender had to log into the system with their own credentials. 

Because E-Tran predated the PPP, it supported traditional small business loans that required more data than the PPP application called for. “The old API interface was meant for a small business loan that required more information than a PPP loan,” explained Unqork’s Ramadi. 

Another limitation: internal processes at the SBA. “The SBA had APIs, but you needed a software API key for each lender,” explained Bruce Mazza, VP of technology alliances at robotic process automation (RPA) vendor Blue Prism. “There was one person at the SBA responsible for issuing the API keys.” 

Given the difficulties integrating to the API, many PPP app vendors decided to leverage RPA to submit the applications. With RPA, an automated script or ‘bot’ interacts with the E-Tran UI, mimicking the actions of a human user. 

One RPA vendor that implemented this approach was process automation vendor Nintex. “Many lenders leveraged automation from start to finish,” explained Karen Reichle, VP of customer success engagement at Nintex. “[Including] robotic process automation (RPA) software for uploading loan applications to SBA E-Tran, and then, boarding loans to the core banking application.” 

Just one problem: when phase two of the PPP launched in mid-April, lenders using RPA to complete applications on E-Tran quickly swamped the app. As a result, the SBA forbade the use of RPA for this purpose. 

The SBA actually had to slow down submissions of applications to E-Tran overall. “A number of measures are being taken to ensure the Paycheck Protection Program loans are processed in an expeditious manner and with a pacing mechanism in place so all lenders are able to submit at the same rate per hour,” said Brooke DeCubellis, an SBA spokeswoman. “If a lender goes above the pacing limit, they will get timed out.” 

Beyond simply keeping E-Tran up and running, the underlying goal was fairness. “Without RPAs, the loan processing system will be more reliable, accessible, and equitable for all small businesses,” according to the SBA. 

Blue Prism quickly changed its approach to the PPP app. “SBA blamed E-Tran problems on the RPA vendors,” Mazza explained. “Within 24 hours, we had pivoted so that the Blue Prism part that scripted the user interface switched to an XML interface.” 

The SBA did indeed accept applications for PPP loans in the aging XML format. Yet, even by 2017 the SBA’s XML support was problematic, and it didn’t provide a schema that would tell lenders what data fields the application required. On the plus side: lenders could submit batches of XML files, via the even older secure file transfer protocol (FTP). 

One vendor that implemented XML batch uploads was process automation vendor Pegasystems (aka Pega). Pega begins with the business processes at the center of the PPP app. “Our approach to design is from the center out,” explained Marc Andrews, VP of financial services and insurance industry market leader at Pega. “The challenges were tracking work and SLAs, and handling escalation. It was a black hole. With Pega, lenders can track cases that provide visibility. They build directly into customer communications. With Pega, lenders were able to get it done in a week or two.” 

Lessons Learned 

Implementing the PPP program required entirely new approaches to scale, speed, and agility. Not only did lenders have no more than two weeks to implement a working app, but the SBA changed its rules three times in the first month. “The PPP is a massive and unprecedented federal program,” Appian’s Heffner pointed out. “It is evolving on a day-to-day basis.” 

Furthermore, there was really no way that lenders could have prepared ahead of time for the onslaught – pandemic or no. “Banks had business continuity plans that helped transition to work from home,” Temenos’s Corcoran added. “But nobody was prepared for the PPP.” 

The sheer scale of the operation broke all records – and also set the bar for future lending programs. “The SBA processed 14 years’ worth of applications in 14 days,” Blue Prism’s Mazza quipped. “It was a heroic effort, actually.” 

Today, lenders are busy implementing phase three of the PPP: loan forbearance. The conditions for forgiving the small business loans have predictably evolved over the last few months, and everyone predicts that forbearance will be a lightning rod for fraud as well. 

Fortunately, by leveraging modern low-code, process automation, and RPA technologies, banks and other lenders can roll out new products and services in days, where before it would have taken months. “It’s a wakeup call for the whole commercial banking industry,” Unqork’s Ramadi emphasizes. “Banks will expect more digitization, faster and deeper. This business will be quadrupling overnight.” 

Even with loan forbearance, the PPP is only the beginning. If banks can accomplish such feats, then so too can any enterprise. With all the talk about the post-pandemic new normal, here’s one more part of the story: the days of multi-month enterprise app development projects are over, and low-code technologies are leading the transformation. 

OutSystems is an Intellyx customer, and Appian, Newgen Software, and ServiceNow are former Intellyx customers. None of the other organizations mentioned in this article is an Intellyx customer.