Although the full impact of COVID-19 has yet to be determined, it is clear that business will not be as usual for some time. In response, many financial institutions are taking action now to help businesses get through the fallout and recovery of the COVID-19 pandemic. Here are 5 of the more innovative digital lending strategies they have developed:
- Utilizing government support initiatives – many governments have passed measures to support lending to small businesses, including government-backed loan forgiveness programs in some circumstances.
- Being proactive with top consumers – some financial institutions have begun working with their top business customers to better understand their needs in these extraordinary times so that they can develop appropriate digital solutions that will work for them.
- Auditing their digital credit policies – financial institutions are reexamining their approval requirements for business loans, especially for specific industries and other high-risk segments. At the same time, most are being careful to ensure that quality credit is still available and that existing business borrowers are not turned away during a time of temporary need.
- Adding temporary risk mitigation steps – in addition to the aforementioned credit policy audits, some financial institutions are adding temporary risk mitigation steps into their digital lending processes to better manage interim uncertainty (e.g. a quick manual review step prior to loan approval and disbursal).
Reevaluating digital priorities – the importance of digital transformation has been on full display since the era of social distancing began. Financial institutions with mature digital lending and account opening offerings are highlighting these capabilities and building strategies around them. And those with less-developed digital capabilities are quickly working to reevaluate budgets and project priorities to ensure they are not left behind.