Fenergo has launched a cloud-based Remote Account Opening solution ahead of its planned release date. The purpose of this new solution is to aid small businesses in accessing Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the US Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The solution helps to automate the client onboarding process for US Businesses and Commercial banks. Remote Account Opening includes functionality that meets the requirements of Know Your Customer (KYC), Anti-Money Laundering (AML) and Bank Secrecy Act (BSA). In doing so it reduces the onboarding time and enables the organisation to process new PPP loan applications. In turn, giving the small business recipient the liquidity that they need to survive during the pandemic crisis.
Why financial institutions need this
Governments cannot afford to let small businesses go under. In the US they represent 43% of the US American economy and 48% of the working population. Those companies need to access the $349 billion set aside to help with their survival. The challenge is to ensure that the money goes to valid recipients. US regulators levied $4.3 billion in fines between October 2018 and December 2019. This amount was up 186% from the previous period. This demonstrates the risks that institutions will take if they do not ensure adequate compliance in delivering these loans. Consequently, financial institutions need to ensure that they still follow their compliance procedures. However, with social distancing and the lockdown in place at the moment many processes cannot complete. The Fenergo solution aims to address these.
James Follette, Global Head Commercial, Business and Retail Banking, Fenergo (New York) commented: “Now is not the time for small businesses across the United States to be struggling to access desperately needed funding. Building on our KYC, AML and BSA heritage and expertise, we were able to rapidly extend our system to accommodate the KYC, AML and screening challenges presented by the PPP loan application process.
“In these unprecedented times when physical branches are mostly closed, this new digital-only proposition helps US business and commercial banks with their ability to rapidly onboard new customers and open accounts remotely, and deliver much needed SBA-approved funding”.
What is Remote Account Opening
The solution consists of five key steps.
- The Loan application allows the small business owner to apply online. Once completed the system does checks to ensure the application is valid and meets the criteria.
- AML, KYC and BSA checks are carried out by Leveraging the Fenergo Rules as a service platform.
- The Remote Account opening then enables applicants to upload digital copies of the documents required. It includes Identity & Verification technologies that allow for instantaneous verification of new customers.
- Applications are then processed and can either integrate with existing bank processes or be flagged for checking for higher risk applications.
- The required documentation is then presented to all parties for electronic signature, eliminating and physical presence requirements.
The Remote Account opening solution can leverage the Fenergo portal or embedded within the banks own portal as required. It facilitates interaction between four parties:
- The loan applicant
- Fenergo Remote Account opening automation
- Financial Institution analyst
The flexible rules-based system allows institutions the flexibility to meet their requirements, whether federal, state or local.
Rachel Woolley, Global AML Manager, Fenergo said: “Many US banks are unable to offer services to new small business customers in a timely manner due to the complex and challenging nature of BSA rules and obligations. The Financial Crimes Enforcement Network (FinCEN) has published PPP FAQs, clarifying the obligations when providing loans to new versus existing customers.
“Whilst lenders are not required to re-verify existing customers, they must obtain beneficial ownership information and satisfy BSA requirements for new clients. As a result, many small businesses may be disproportionately impacted as the onboarding process may slow down their access to critical funding. Fenergo’s proposition provides banks with the ability to remotely onboard new business clients and still meet those essential compliance requirements”.
Enterprise Times: What does this mean
In producing this solution quickly, Fenergo aims to alleviate the pain felt by small businesses. What it will need to do is convince those institutions to implement its solution. What isn’t clear is the cost of this new offering and what other components that institutions will need the leverage it and pay for. That is both the case for existing customers and new ones. Regardless, it is a solution, that if adopted will help to deliver services quickly and efficiently. In doing so it will help institutions protect their clients from insolvency as well as the livelihoods of their employees. This should improve customer satisfaction at least when compared to those institutions unable to quickly service loan applications.
This solution also seems focused on the US. There is also an opportunity for Fenergo to extend this to other countries around the world as many are offering similar schemes. It seems like an opportunity it should not miss. It is not the solution that is looking to meet the demand. Pega recently launched a similar solution to help with loan applications, importantly it already has a live customer in Germany.