Customers Bank

Willingness to be a first mover created a competitive advantage

 

Many banks still operate with antiquated systems, hindered by legacy technology and outdated processes. Customers Bank, however, has been able to successfully compete with some of the largest and most established lenders, growing assets from $250M to $18B over the last decade, by taking a “high tech, high touch” approach.

Challenge

 
At the onset of the COVID-19 pandemic, Customers Bank rose to the challenge of helping American small business preserve employment by quickly and effectively launching a nationwide SBA Paycheck Protection Program (“PPP”) lending program. However, as Jay Sidhu, Customers' chairman and CEO, noted “banks rely on historical information at least a quarter old, if not more”. In an unprecedented situation such as the pandemic, past correlations do not hold. Jay was therefore drawn to OakNorth’s forward-looking approach, noting that OakNorth would be helpful in showing Customers Bank which industries in its portfolio are more stressed than others and which metrics it should be looking at to determine risk profiles.

Gaining a Competitive Advantage

 
"By combining agility with best-in-class technology products such as OakNorth’s software, we are meeting the aspiration of our name and supporting our customers through good times and bad."
- Sam Sidhu
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"OakNorth is helping to enhance our portfolio management capabilities with new market insights, further strengthening our customer engagement and credit quality while helping to speed up our underwriting and loan processes."

JAY SIDHU
CHAIRMAN AND CEO OF CUSTOMERS BANCORP

Opportunity and outcomes

 

There were two ways OakNorth ultimately helped: standing up Paycheck Protection Program (PPP) loans and portfolio management. On PPP, OakNorth extended the ON Credit Intelligence Suite to develop an end-to-end solution to support lenders. The process design ensured Customers Bank retained complete control of key decision-making and risk-management processes.

OakNorth was able to get the solution up and running within 72 hours, which enabled Customers Bank to become one of the first community banks offering PPP loans. Through embracing partnership with fintechs such as OakNorth, and willingness to be a first mover for solutions such as its PPP product, Customers Bank was able to provide over 100,000 loans and become the sixth most active PPP lender in the US – a substantial feat for a bank of its size. 


The other way OakNorth supported was with portfolio monitoring – OakNorth enabled Customers Bank to take a granular, bottoms-up approach, with a companywide view of credit quality and industry exposure. As a result, Customers Bank identified the most vulnerable businesses and took proactive measures to support them.

It encouraged borrowers to top off their interest reserves, fund additional escrow accounts to cover interest shortfalls, offer niche stimulus or government assistance programs such as the PPP, or extend extra credit even if the borrower doesn’t need it immediately. This automated loan-by-loan review has not only enabled Customers Bank to be nimbler and manage risk better, but has also meant it can have more consultative discussions with borrowers.