As lawmakers debate a new stimulus package, including the possibility of a new tranche of Paycheck Protection Program (PPP) funding, the banks that have provided large volumes of PPP loans this year could be better prepared for a third deployment.

For many of these institutions, including Bank of America, success depended not only on how they reacted to the crisis, but also on how well they were able to build on the foundations they already had. in place. For the country’s second-largest bank, this represented a new iteration of its digital and human approach to business banking services.

“The work we have done over the past five years and the investments we have made in digital capabilities have really helped us stand out from the rest as we have been able to get up and running quickly,” Sharon Miller, Head of Small Bank of America companies, told Banking Dive. “We’re digital first, but we still have that human element, the combination of high tech and high tech. “

With $ 51.3 billion in terms of total small business loans outstanding, Bank of America was the top small business lender in the United States in the second quarter of 2020, the bank said in a press release. The bank also provided the highest number of PPP loans approved – over 343,000 – and the second highest dollar amount, $ 25.6 billion, according to Small business management (SBA).

The bank attributes its PPP success to two catalysts: the reassignment of thousands of staff and the operation of a digital and human support infrastructure it had built before the pandemic. Bank spends $ 3 billion annually on tech initiatives, recent report finds presentation to shareholders.

“In 45 days, we processed 18 years of loans, so it was a really big business,” Miller said of the bank’s 10,000-strong PPP support team. “All of our teammates have come together whether you’re in a mortgage, Merrill Lynch, or a small business. [teams] – we all supported small business clients.

“The work we’ve done over the past five years and the investments we’ve made in digital capabilities have really helped us,” she said.

“Digital more human”

Bank of America’s personal approach with small business customers, combined with a digital platform it has shaped in recent years, has helped support delivery throughout the PPP, the bank said. It has also fueled increased digital adoption among Bank of America customers. About 51% of the bank’s small business customers deposit checks through a mobile device, the bank said.

“It hasn’t just happened through COVID, but it’s been a journey since 2015, and it’s about educating our customers on more efficient ways to file transactions,” Miller said. “Zelle’s transactions explode, [and] we have seen a huge increase in the movement of money electronically. “

This year, 28% of Bank of America’s small business customers sent payment through Zelle, the bank said in an email. Customers have sent 20.7 million payments, valued at $ 12.8 billion, since Zelle for Business launched in 2019, the bank said.

Additionally, to help business owners manage their cash flow needs, the bank last year launched Business Advantage 360, a suite of business banking products that includes Cash Flow Monitor, a digital financial dashboard available through desktop and mobile interfaces that offer real-time cash flow updates. and projections. The bank began allowing customers to integrate third-party business application data into Business Advantage 360 ​​through a feature called Connected Apps in February.

Bank of America’s customer-centric approach, supported by its digital infrastructure, has allowed it to focus on the weak spots of businesses that have faced challenges this year.

“We have 40% of all dental practices in the United States, and when the American Dental Association [dental practices] close, you can’t have income, ”Miller said. “We went there before [coronavirus] crisis, we were there throughout the offer to defer their loans, and we are helping them as they reopen. “

Bank of America’s customer focus, supported by strong digital capabilities, puts it in a good position to remain competitive in the small business market after the pandemic, said Christine Barry, research director at Aite Group.

“Pre-pandemic banks that made the right investments in technology, had flexible infrastructure, and had strong customer relationships fared much better than those that for some reason delayed much of their investments. in digital transformation, “she said.

Lessons from the pandemic

One area where Miller said PPP has pushed Bank of America to improve is underwriting.

“With PPP, and the investments we’ve made in that underwriting capabilities, we’re going to be able to use a lot of it as we move forward to support our clients and be more efficient in decision-making and lending. “she said. .

Michael Crumpler, managing director at Capco, said Bank of America’s small business toolset can be considered a gold standard for the industry.

But like all major banks that have processed a high volume of PPP loans, new complexities around the forgiveness process need to be addressed, he said.

“It’s not just for Bank of America, but for every bank – they have a whole new set of issues that they’re going to have to face that they’ve never seen before. [with the forgiveness process]”he said.” They’re going to have the equivalent of a loan level review to make sure they have proof that the Federal Reserve or the [Office of the Comptroller of the Currency] will demand. “

If a new stimulus plan includes a series of PPP loans, estimated at up to $ 300 billion, the big banks, including Bank of America, may want to reconsider their approach, said David O’Connell, senior analyst in the Aite group’s wholesale banking team.

“The first time, [banks] were too selective and opportunistic to decide which companies they would help access PPPs, ”he said. “I have spoken with dozens of small lenders who have taken clients from large banks under these circumstances. “

As the economic recovery takes shape, Miller said the bank is closely monitoring economic conditions for a range of scenarios, and plans to continue working with small business clients on challenges and opportunities. as they evolve.

“We were here, going through the crisis, offering deferrals, helping clients with PPP bridge the gap as they come out of it,” she said. “The focus now is on how we help business owners continue to think through their model, be agile, and be able to pivot when needed, because any crisis will bring opportunities, and we want to be there to have this discussion and be a partner. “