Retooling auto and equipment finance
By Shereen Walia, Senior Sales Consultant, and Martin Cowie, Director of Application Design, Auto and Equipment Finance, FIS
Auto and equipment finance operations are on overload. In a year like no other, the world has needed technology as never before – and asset finance firms are no exception. With offices and branches shutting down and staff switching to working from home, digitalisation has played a critical role in easing the pressure and keeping services up and running throughout the Covid-19 pandemic.
In some cases, the crisis has helped accelerate the pace of digitalisation. As customers jammed the phone lines and a greater proportion of business moved online, more asset finance providers rushed to automate their processes.
However, the pandemic has also highlighted a digital divide. Overall, firms with more advanced digital capabilities have been in a stronger position than firms with legacy systems to adapt to the challenges of 2020 and maintain business continuity.
So, across the asset finance industry, it has becoming clearer than ever that aging technology is no longer a viable option. But with more immediate operational problems to resolve, is this really the time for a full-scale digital transformation?
Digitalisation strategies need a new approach. It’s a dilemma. You need digital technology to survive the crisis and manage the reduction in face-to-face contact with customers, a sharp rise in call centre volumes and a growing demand for payment holidays. But thanks to the crisis, you don’t have the capacity to drive wholesale operational change.
Traditionally, digital transformation projects have resulted in huge, unpredictable spikes in costs for asset finance firms. As well as breaking the budget, these major implementations tend to overrun, causing significant risk, downtime and disruption.
And in the current climate especially, who wouldn’t be daunted by the prospect?
But the question remains, can you afford to stick with old technology that holds you back? With limited ability to take advantage of the latest digital developments, from self-service portals and mobile services to open banking, aging systems will fail to deliver the modern, flexible and on-demand services that customers increasingly demand.
The good news is that approaches to deploying technology are changing. Now, you can re-equip your business to drive digital transformation at your own pace, in the areas you need it most urgently.
The right asset finance technology for right now. With a new, more agile approach to digitalisation, auto and equipment finance firms can reverse many of the IT trends of the past.
Typically, the technology that supports asset finance has created a culture of dependency on the technology vendor.
With long and complex contracts that can be difficult to get out of and ultimately increase risk, firms can wait years for a vendor to deliver a technology development process that meets their – and their customers’ – requirements. And they can pay as much for a major upgrade as the original implementation.
Most importantly, longstanding technology models can also limit your options.
New, best-of-breed solutions are emerging all the time to bring advanced capabilities to different functional areas, whether they support online ID verification or back credit decisioning with artificial intelligence. But the traditional asset finance system might well struggle to integrate with these disruptive innovations.
The modern asset finance platform turns this tired, restrictive approach to delivering software on its head. Rather than trying to do it all, all at once, it gives you both the freedom and the capabilities to react more quickly and cost-effectively to your immediate priorities.
Put the power back in your hands. Think of the modern asset finance platform as less of an all-encompassing solution and more of a toolkit that opens your business to new opportunities. With those tools, firms can seize back control of their software and make it bend to their own specific requirements.
IT, after all, should be an enabler not a dictator. To help you break free of age-old shackles, technology must meet your mission-critical operational requirements without a restrictive contract – while allowing you to explore further digital partnerships, apps and user experiences.
But first, you need exactly the right set of modern tools – and skills – in place.
Four steps to re-stocking and resourcing your asset finance toolkit. Getting the best from new asset finance technology means taking an equally modern approach to purchasing, developing, running and maintaining software. Consider a four-point plan that helps you:
Provide a strong but flexible framework. Start from a firm foundation of technology, but don’t let it box you in.
With a powerful core engine driving key processes, pricing and documentation, you can gain the single, consolidated source of data that is so critical to serving customers efficiently and building a lasting relationship. But make sure that engine can take you further than your provider’s proprietary software.
No core asset finance platform should be an island – there are simply too many exciting new technologies out there to access and explore. Instead, see your solution as a framework that lets you not only orchestrate an end-to-end process but also integrate with other digital partners, solutions, capabilities and services.
Cloud-enabled, web-based access and a componentised architecture should be a given, along with integrated workflow and document management, supporting automated downstream notifications and email confirmations. But today, an application programming interface (API) layer is becoming equally prerequisite for a thriving asset finance business.
Through APIs, firms can develop their own customer-facing, self-service digital channels that connect seamlessly with the core platform and use its pricing engine for valuations.
APIs also act as a gateway to innovative new third-party functionality, allowing you, for example, to automate credit checks and screening processes, join new distribution networks – and even directly access accounting systems and open banking frameworks, to automate the delivery of financing and banking data.
Foundations are there to be built on. APIs equip you to keep extending your solution and exceeding your default capabilities.
Support incremental change fast. To continuously improve your services, you may regularly need to make small changes to your systems and processes. But technology firms can blind you with science and make you wait days or months for them to rewrite the code and test and deploy new functionality.
Now, the new generation of asset finance platforms is making it easier for clients to configure and customise applications themselves, with user-friendly tools that help them visualise and build new business logic rules on-site.
Again, you can plug these tools straight into your solution via flexible APIs. Using an intuitive visual programming library such as Google’s Blockly, you can then rapidly build, test and deploy new calculations, say, or validation messages within the core platform. No change requests, no extra charges, no waiting around for technical resources – and more flexibility to control your own solution.
Take time-consuming processes off your hands. While customising your software can make a big, positive difference to your services, running the platform from day to day won’t add value but will eat into your precious time. And that is where managed services for software come into their own.
The starting point for most managed services is to host the software in a public or private cloud. Additionally, services can take care of all the infrastructure’s governance, control, security and compliance requirements.
But from here, the managed service model has now evolved much further. Through application management services, for instance, technology providers have assumed responsibility for managing, monitoring and deploying their software.
And with software as a service (SaaS), vendors offer a web-based version of their technology, which users can access immediately online – without a drawn-out setup process – and pay for on a subscription basis.
Critically, though, the most advanced software services are now moving beyond the provision and management of IT infrastructure and even applications – and crossing over from technical tasks into business processes.
For asset finance firms, that means constantly making sure that your software works exactly as it’s supposed to as users carry out their daily duties, from signing into the system and performing credit checks to entering contracts. As a result, you can win back even more time to focus on your core business, not its underlying technology.
Drive continuous innovation. Managed services can also help asset finance firms more rapidly introduce change, through a strategy of “continuous deployment.”
Just like SaaS, continuous deployment is supported by technology vendors for a recurring monthly fee. But unlike SaaS, it does not tie you down to a single version of the vendor’s software – or uniformly deliver the same upgrades to all users at the same time.
Instead, continuous deployment works at your own pace to develop and deliver new functions and processes when you need them, and quickly add and support new products. Consequently, you can differentiate your services without lengthy implementation periods, associated risks or unexpected spikes in costs.
As well as giving you ultimate flexibility, the continuous deployment model minimises the impact of upgrades and bespoke development on your operations. It does so by running and testing the processes first from end to end at the technology vendor’s own development centre, in a real-time environment that closely mirrors your own.
That way, you can be sure the underlying processes will run smoothly and work as they should, before they go live for your customers. So, you can continually and quickly incorporate changes into your production environment with minimal disruption to business as usual – and much less pressure on your internal resources.
And for a regular, totally predictable cost, you’ll constantly get more from your investment in asset finance software, while clearly setting your business apart from the competition.
At important times for technology, you need technology of its time. As the modern toolkit shows, software has come a long way – not just in what it delivers but how it is delivered itself. But in an era of continuous innovation, are you sure your asset finance platform is equipped to keep up?
So far in 2020, digital technology has risen admirably to the operational challenges of a global pandemic. But when firms get that technology wrong, by sticking to either legacy systems or traditional delivery models, they are missing opportunities to not only address today’s challenges but also adapt for the future quickly and cost-effectively, with minimal implementation risk.
The fact is that you cannot solve new demands with old technology. But with a modern toolkit of software and services, auto and equipment finance firms can gain a stronger handle on their operation to withstand both the short-term shocks of 2020 and the long-term changes ahead.
Shereen Walia, Senior Sales Consultant
Martin Cowie, Director of Application Design
Auto and Equipment Finance
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