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Possibilities during a Pandemic – Fintech’s Positive Impact in 2020

Host Dara Tarkowski is joined by representatives from Abe.ai, Cross River and Envestnet Yodlee to discuss the fintech community’s innovation during COVID-19.

  • The fintech community has undertaken groundbreaking work to serve consumers and small businesses during the COVID-19 pandemic.
  • Despite the challenges of lockdowns and financial uncertainty, fintech has risen to meet the needs of consumers and businesses through efforts to help secure PPP loans, reach banking customers via AI chat and empower consumers to better manage their personal finance.
  • Keep reading to learn how leading fintech companies are innovating for maximum impact, what motivates their teams and what’s ahead in our dynamic industry. 

In business, thriving in a global crisis is about finding opportunities amidst obstacles. 

The financial services sector saw legacy banks struggle with pivoting to meet customers’ new needs and demands. But some companies flourished by differentiating themselves through innovation, both in technology and in the ways they rose to the challenge of serving consumers.

“There have been some companies that have been literally working day and night trying to help the American people and small businesses,” says Christine Loredo, Vice President at Envestnet | Yodlee, a data aggregation and data analytics platform.

Their work isn’t just ingenious –– it’s vitally important. The fintech community’s efforts to help small businesses secure PPP loans, for example, has had a meaningful impact on our economy. The issue of timely access to those funds was a front-page headline in April, as the money disappeared day by day –– hour by hour, actually. 

“Folks across the bank, from operations to the entirety of our banking platform, really leaned into this,” says Jesse Honigberg, Technology Chief of Staff at Cross River, which originated hundreds of thousands of SBA loans under the CARES Act. 

“The reward is that we’re able to help a lot of people.”

That mindset is what inspired Christine’s company to highlight the work of organizations like Cross River that have made a lasting impact during a time of unprecedented change. The Benzinga Global Fintech Awards, powered by Envestnet | Yodlee, took place November 10. The virtual event included a special “Innovation During COVID-19” category. 

On an episode of Tech on Reg, I was joined by Christine and Jesse, as well as Juan Romera from Abe.ai, to discuss how fintech is meeting the moment. 

Abe.ai: Fintech for what’s next

For years, we’ve known virtual financial assistants are the next, must-have user interface in banking. But in 2020, they went from a “roadmap” item to a priority project.

“We had a lot of projects underway that people were thinking of rolling out in 2021,” says Juan Romera. He’s a product evangelist at Abe.ai, a conversational artificial intelligence company that builds virtual assistant products and infrastructure specifically for the finance industry. 

When COVID-19 hit, financial institutions experienced an “incredible spike” in the volume of traffic to their call centers, Juan explains. Customers had questions about skipping loan payments. Many were under lockdown orders and unable to visit their local branch. Some were using digital banking for the first time. They were scared and uncertain –– who wasn’t? 

Meeting the challenge of servicing them was especially crucial for credit unions, whose “whole business model is that personal touch,” he adds. “Being on hold for 20 minutes is not acceptable.” 

That was the case for a medium-sized credit union faced with a  huge influx of calls and web traffic but unprepared to scale its service center. It looked to Abe.ai to fast-track a virtual financial assistant to answer a set of 40 commonly asked consumer questions. Those included queries about how to make and defer payments, as well as information about applying for loans, says Juan, noting that users can “ask them 1,000 different ways.” 

And “all of a sudden, budgeting technology became very popular,” he says. 

Abe.ai client FIs are seeing an increased need for personal financial management (PFM), he explains. In the midst of a recession and near-record unemployment, “folks need to keep track of every dollar.” 

Tally: A consumer-centric app shines during the COVID crisis 

Christine from Envestnet | Yodlee is proud to talk about one of its customers, which is also a nominee for the “Innovation during COVID-19” award: credit card consolidation app Tally

Users sign up, register their cards and the app does the rest: monitor balances, APRs and due dates. It helps them never miss a payment. Even better, it calculates the smartest way to save on interest.

“What I like about Tally is they looked at their customers and said, we’ve been helping people manage their debt, but if there ever was a time where they need us to do something [even more] helpful, it’s now.”

Tally developed a program that enables its customers to postpone their monthly payment and stay in good standing and gives them an option to create a custom payment plan. Everyone who has been a Tally customer for at least 30 days and has been affected by the COVID crisis is eligible.

As the pandemic wears on, the program, and its impact on the consumers who need it most, continues.

“Over the years as we’ve worked with Tally, I’ve admired its mission, which is about making people better off financially,” says Christine. “It really is a company that cares. I’ve seen it in the work they’ve done and the way they speak to their customers.”

Cross River: Tech empowers SBA PPP loans

“We’re a unique community bank,” says Jesse Honigberg, Technology Chief Of Staff at Cross River. “We think of community as something that’s getting redefined in the 21st century.”

Cross River not only provides traditional financial services like CDs and SBA loans, it builds proprietary technologies like an API-driven banking platform for fintechs and other enterprises.

When the pandemic hit, “our leadership team challenged the technology group and the broader organization to do everything we could,” Jesse says. “Because of the technology we have, and the unique position we’re in, everything we could meant a lot.”

With fewer than 400 employees, “the entire organization rallied around the idea that we have to do more than anybody else,” he adds.

The CARES Act put them on a tight timeline. Over the course of just a few weeks, Cross River repurposed a host of existing systems to enable the origination of about 270,000 PPP loans.

It’s an impressive feat, given that many larger institutions fell short in the COVID-relief loan process, prioritizing clients with financial heft. Meanwhile, small businesses (with small accounts) weren’t getting the attention they needed. 

In fact, Cross River was the third largest participant FI for PPP loans –– more than legacy lender Wells Fargo.

“More importantly, we had the smallest average loan size and the smallest median loan size, which was below $20,000,” Jesse notes. “We used technology and partnerships to enable true small businesses to access funds.”

Doing that level of lending at scale is only possible with those two pieces in place, he adds. But what kept Cross River’s teams motivated was the people –– “the stories humanizing their challenges.”

The bank increased our balance sheet 500% in the process, Jesse says. 

“But we’ll do it again with another round. We’re ready, willing and able to do whatever we can to help small businesses impacted by COVID, both directly and through fintech partnerships.”

This is based on an episode of Tech on Reg, a podcast that explores all things at the intersection of law, technology and highly regulated industries. Be sure to subscribe for future episodes. 

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Dara Tarkowski
I'm Dara Tarkowski. Innovator, entrepreneur, attorney and podcast host. I am FinTech and RegTech enthusiast passionate about responsible innovation and exploring the intersection of law, technology and highly regulated industry. I'm the Managing Partner at Actuate Law, Chief Innovation Strategist at quointec, and the Host of the Tech on Reg podcast, recently named one of the top 10 RegTech podcasts. I was also named to the 2019 Women in FinTech powerlist by Innovate Finance.

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