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Are government-backed Covid-19 lending schemes being hobbled by old tech?

Governments around the world are offering aid businesses in distress but are government-backed Covid-19 lending schemes being hobbled by old tech?

Governments across the world are offering financial aid and loans through different schemes to companies large and small but getting access to the schemes has proven a struggle due to the volume of applications.

In the UK, data from the British Chambers of Commerce (BCC) suggested that in mid-April, only 1.4% of businesses enquiring about the government’s Coronavirus Business Interruption Loan Scheme (CBILS) for SMEs had been successful in receiving a grant while figures from UK Finance suggested that the figure is even lower at 0.65%. The BCC suggested that key reasons include the complexity involved in applying and slow response from the responding body.

Meanwhile, when the financial support package for larger companies (CLBILS) arrived on 20 April, Temenos suggested that outdated technologies have made it hard to process the applications. Max Chuard, CEO of Temenos said: “The launch of the government’s financial support package for medium-sized and large companies impacted by Covid-19 is positive news but, as with the equivalent scheme for smaller businesses, its effectiveness depends heavily on whether applications can be processed and loans issued fast enough.

“One of the main reasons for the slow pace of funds dispersal in the UK with the CBILS programme is lack of the right technology. Call centres are ill-equipped to cope with demand and in many cases the application process is arduous, requiring applicants to download a PDF, print, complete, scan and send it back.”

However, Chuard notes, digital technology exists to enable the rapid processing of loans applications. It took Temenos less than a week to help US banks and credit unions accelerate loan applications to small businesses under the equivalent US scheme, the Small Business Administration Paycheck Protection Program (PPP).

“In this time of disruption, it is vital that banks use the latest technology to speed up the digital onboarding and processing of loans. In doing so, banks are able to save UK businesses from collapse and help to safeguard the economy,” Chuard said.

“Manual intervention significantly slows down the processing of applications, but using Explainable AI (XAI), for example, can expedite and dramatically improve accurate decision making, helping frontline staff to streamline and automate manual processes and process huge volumes of applications faster. Most importantly all XAI automated decisions can be explained in human language as they take place to the bank employees, the customers, and the regulators,” the Temenos CEO added.

Adviser-led funding platform Capitalise.com has launched a centralised CBILS application platform to make it easier for small businesses to apply for government-backed loans together with a centralised support hub for free resources and advice. Paul Surtees, CEO and Co-Founder at Capitalise.com, said: “We’ve built these services with the aim of providing all the necessary support and information SMEs need to help them weather the storm. Coupled with the declining number of physical bank branches, the current situation places the utmost importance on accountants being able to provide the information needed by SMEs.”

Hitachi Capital, a partner in CBILS, has also worked on improving the situation. The provider has turned to Nomidio to keep loan applications flowing. The system, which was used in the firm’s direct channel has now been rolled out across its indirect business where loans are arranged via brokers and introducers.

Funding Xchange and Experian have teamed up to help banks triage CBILS lending enquiries by launching an online service for banks so businesses requiring funding can check if they meet their lending criteria.

Furthermore, Pegasystems launched a small business lending reference app that includes prebuilt templates reflecting new US and UK crisis loan guidelines that may be customised to orchestrate crisis loan programs for other countries. Using the Pega Platform, the Bavarian Ministry of Economic Affairs in Germany was able to develop its own application from scratch in five days, allowing more than 100,000 Bavarian companies to use the system and apply for assistance.

This article originally appeared on IBS Intelligence.

 

This article was published in IBS Intelligence 1st May 2020