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How COVID-19 Set A New Standard for Digital Lending: Remote, Contactless and Purpose-Built

The early months of 2020 have been a whirlwind for many industries. We saw businesses of all kinds – restaurants, car selling, etc. – have to reshape their models and processes, in very quick time, if they wanted to survive during the COVID-19 pandemic state shutdowns.
The virus has changed many aspects of how we interact, and how consumers borrow money from lenders, such as credit unions, is no exception. Many lenders found themselves unprepared for handling complete digital loan transactions,
from signature to eVaulting. While some states are starting to reopen, there is no telling when or if things will fully go back to normal or if people will ever feel comfortable about being in a room with several individuals in close proximity ever again.
Prior to COVID-19, paper-based lending processes were common, typically taking place in a bank, a lawyer’s office, or a title company’s office where people would be in close proximity, sharing documents and often sharing the same pen: an environment ripe for virus transmission.
Social distancing and the slow road to normalcy means that credit unions need to start thinking about ways to increase their digital lending capabilities, because we are likely not going back.
At the onset of the year, only 23 states had legalized RON (remote online notarization). With the arrival of COVID-19, more than 15 additional states passed emergency legislation making RON partially or fully available; some will remain permanent while others are just temporary.
The virus greatly impacted the auto industry, as most buying is done in person, as well. Approximately 86 percent of car shoppers conduct online research before deciding to visit a local dealership, but most buyers still visit a dealership and the F&I office to test drive and purchase a car. As digitization becomes the new industry standard for auto finance, moving away from paper processes is no longer a can that can be kicked down the road. For dealerships to come out on top after the pandemic, it is imperative for the industry to take full advantage of digital transformation in auto finance.
This pandemic has really brought to light the need to accelerate digital lending adoption. Digital lending enables the entire lending process to take place remotely, offering greater conveniences, security and protective health measures.
A New Stage Has Been Set for Digital Lending
Over the past few months, small businesses across the nation have been scrambling to find financial help during this difficult time. It’s been  reported  that as of early May, over 4.1 million Paycheck Protection Program (PPP) loans have been issued by the Small Business Administration (SBA) to struggling businesses trying to stay afloat during the pandemic.
For PPP loans specifically, the SBA has issued requirements that go beyond the traditional loan requirements for digital transactions. SBA PPP loans must be electronically signed and stored according to strict guidance in order for them to be legally guaranteed.
The SBA’s PPP loans have set a new standard for all digital lending moving forward. eSignature alone is not enough and very few digital storage platforms are capable of proving the authenticity of a digital loan including tamper-proofing and an auditable digital chain of custody and evidence.

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