The COVID-19 pandemic proved bad for most businesses, but mom-and-pop shops that dot the country’s commercial landscape suffered mightily, lacking the larger coffers that helped enterprises stay afloat during the outbreak.
Utah’s Zions Bancorporation, a bank holding company that operates affiliate banks across 11 states in the western US, softened 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) 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 close to $82 billion in assets.
“It was extremely critical that we offer a simple, digitized solution that allows small business customers to apply and quickly get their funds,” says Collins of the PPP, which earned 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 bill included the $349 billion emergency PPP loan program, in which the Small Business Administration (SBA) issued forgivable loans up to $10 million to relieve small businesses thrust into financial distress. Banks and credit unions were tasked with administering the funds at the local level.
Reimagining loan distribution with digital workflows and bots
Implementing the software and processes to issue the loans tested the mettle of Zions’ technology and operations team, as the SBA shared its process for submitting PPP loan applications with one day’s notice and Zions had to completely rethink the way it processed loans, Collins says.
Typically, small businesses file paperwork to apply for loans with Zions, which then executes several manual processes to process the loans and release funds. The PPP required a fully digital application, says Collins. Pressed for time, Zions initially published a PDF form online as a stop-gap so it could accept loans while it built a PPP application and online portal, as well as business process workflows.
When the PPP app was finished a week later, small businesses began filing fund requests, with Zions staff answering questions via call routing to IVR software. Robotic process automation (RPA) software grabbed the pertinent data and populated the form for the SBA website, Collins says.
For about six weeks, the bots worked well — too well. By then so many financial institutions were using bots to speed up the application process that they ground the SBA’s systems to a halt. This latency issue forced the SBA to build an API to enable finservs to connect directly to the government portal, but it largely solved the problem, Collins says.
Zions’ PPP app was typical of such process filings, triggering exception handling when, for instance, an applicant filled out something that required a correction. Once a loan was approved, bots automated the electronic transfer process, enabling applicants to get their funds within a few hours. Previously, loans would take as much as a week to get approved before funds were released, Collins says.
Statistics paint a picture of Zions’ success, with the API and automation technologies scaling PPP loan volumes from 500 per day to 10,000 per day in a matter of weeks, with 70% of funds going to small businesses with 10 or fewer employees. Through 2020, Zions ranked 9th in the country for PPP approvals, helping to preserve more than half a million jobs nationwide.
Zions’ rapid-fire digital work is part of a COVID-19-fueled trend, with 82% of CIOs implementing new technologies and new IT strategies and/or methodologies in response to the pandemic, according to IDG’s 2021 State of the CIO Survey, which polled 812 IT leaders.
Business agility and change management are key
Bureaucracy posed the greatest challenge to Zions’ PPP app, with the SBA frequently altering procedures and policies and ordering technical tweaks to keep up with fast-changing federal guidance, Collins says. For instance, when the SBA first released its API, it metered access to prevent crashing the system, resulting in some loans “trickling” through the system.
This in turn required Zions to alter code in its PPP app. “We had to constantly shift and rework things, which caused a lot of team members to work exceptional number of hours to help us stay compliant,” Collins says.
Collins credits the success of the company’s PPP app to high engagement from 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 staffers worked closely with legal, risk, and compliance, part of a regimented change management program.
Also due credit is Zions’ migration to more modern core banking systems to onboard the loans, along with the adoption of agile methodologies and a new product operating model. The improvements in 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 of the technology we used were critical for our strategy,” Collins says.