Why it’s time for asset finance to break free
By David Woodroffe, Director of Product Management and Pre-sales, and Shereen Walia, Senior Pre-sales Solution Consultant, Auto and Equipment Finance, FIS Global – Ambit Asset Finance
The future is flexible. Standing still has never been an option for a thriving asset finance business. But in an age of rapid technological change, there is more reason than ever to move with the times.
Whether you provide auto or equipment finance, your customers’ behaviour is evolving fast. And at the heart of their requirements is a need for flexibility.
Your customers do not want to be tied down. But to truly set them free, your technology platform must also be flexible and allow you to bend easily to their demands as they continue to evolve.
While technology has the potential to empower your customers and turbo-charge your growth, its vendors can also restrict you. Breaking free could take a whole new approach to the systems and architecture that underpin your business.
Build a foundation for flexibility. Changing customer behaviour is helping reshape the requirements of asset finance technology. But how fast can your technology flex to your customers’ expectations?
Today, millennial customers account for an ever-growing proportion of the retail auto finance market, so firms would be foolish to ignore their buying preferences. Millennials want fast, efficient transactions and convenient services they can access from any device, not only for personal but also business transactions.
Digital services are key to meeting these needs. But technology must also support a shift toward shorter-term or shared use of assets – and away from lengthy contracts with expensive get-out clauses. While the growth of mobility services like Uber and Zipcar is disrupting traditional leasing models, consumers are increasingly drawn to subscription-based or pay-per-use services they can cancel at short notice.
At the same time, the move toward a more circular economy is eschewing waste and encouraging auto and equipment firms to extend the leasable lives of their assets – helping drive more revenue and potentially reach a great range of consumers.
For asset finance business models to accommodate these new trends, firms need a strong but supple framework and foundation of software. Technology, in other words, should empower you to adapt readily to what your customers want.
All too often, however, software platforms can not only fail to deliver flexibility but also actively hold you back.
Who’s in control – you or your technology? The technology that supports asset finance has typically evolved along traditional lines, with a number of trends conspiring to restrict and control rather than enable and empower.
Vendor lock-in. Traditional software platforms and enterprise resource planning (ERP) systems have 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.
Your business model may be straining at the leash to change, but you could have to wait years for your vendor to deliver a technology development process that meets your – and your customers’ – requirements.
High upgrade costs. Without a flexible platform the traditional approach is likely to be a costly charge for the upgrade that may well prove prohibitive. As a result, asset finance clients can feel stuck with software that may be limiting their business.
Detailed analysis needs to be made of the platform’s upgrade path; while software updates or functional enhancements might be released free of charge, you can pay almost as much for a major upgrade as the original implementation. And frequently, that will not be clear in your contract.
A flexible ecosystem. The approach to deployment has undergone change in order to derive business value quickly. While there are clear advantages for a common engine, the modern platform must enable an ecosystem of partners to collaborate and deploy in a flexible manner.
In an era of intense innovation, best-of-breed solutions are emerging all the time to bring advanced capabilities to different functional areas, such as for credit decisioning, anti-money laundering and know your customer processes. A costly one-size-fits-all solution takes a long time to implement and could potentially stop you from exploring innovative options and integrating with the latest digital technologies.
Rather than risking everything on a platform that does it all, you need a solution that will integrate readily with new digital partners and their disruptive software.
Legacy systems. Aging technology will effectively shrink your horizons in the same way as the end-to-end platform. To grow your business faster and adapt rapidly to industry and technology trends, your software must be able to support the new business requirements that are constantly hitting the market.
Again, old, legacy systems will struggle to take advantage of the digital developments that are revolutionising financial services – from self-service portals and paperless transactions to advances in open banking, credit decisioning backed by artificial intelligence (AI) and online ID verification.
How to open your business to new possibilities. In broad terms, as a lessor, you are likely to expect the same from your service providers as your customers expect from you – adaptable, affordable solutions, a choice of service models and the ability to meet your specific requirements head-on while minimising risk. And it all comes down to taking control and breaking free.
Like your customers, you want to call the shots on how you consume services – and the pace at which those services switch to changing needs. You do not want to be tied into costly contracts that drain your budget and halt your progress.
To give your business the best chance against competitors, you should consider technology solutions and services that in turn will help you support:
Digital on-demand services. A digital strategy is increasingly critical to providing the flexibility that modern customers demand.
Through online, self-service portals, digital services offer instant, 24/7 access to new quotations and “in-life” transactions on range of desktop and mobile devices. That means being able to not only view their contracts at any time but also request a change or settlement quote without waiting until office hours.
Anything can happen during the life of a contract, and consumers need you to both respond quickly – and provide round-the-clock transparency into any updates or transactions.
Businesses need flexibility, too, whether by getting digital access to all their finance documents or approving a contract with an e-signature. With a digital strategy, commercial finance firms can give their customers the same satisfying experience as retail consumers.
Fast quotations and credit decisions. Getting quotations and securing credit used to be an arduous process involving lots of paperwork. Digital front-end systems will allow lessors to create a totally paperless customer journey that streamlines the originations process and keeps interactions with the lessor to a minimum.
Automated, AI-powered credit decisioning, e-contracts and e-signatures all help reduce the need for manual intervention – and ensure a much quicker turnaround from proposal to credit decision.
With facial recognition technology to verify ID and use of open banking APIs for credit checks, the whole process can happen online and take minutes rather than days, while still adhering to rate card and credit decisioning rules.
Easy integration. In an environment of constant innovation and disruption, it’s naïve to assume that one technology platform will offer all the latest apps and emerging technologies itself. What’s important is that it can integrate with new fintech solutions as they appear – and supports partnership with multiple third-party providers.
Rental-based products. As the sharing economy and circular economy both gain traction, the asset finance industry must prepare the ground for adopting alternative ownership and payment models.
Few, if any, firms have yet drilled into the details and figured out how, for example, subscription-based billing could support multiple customers on one contract. But with more flexible operations in place, you will be in a stronger position to adapt your products when the time is right.
Constant change. All of the above rely on developing an agile framework of technology that allows for a fast change of direction. And that is where modern ways of delivering software come into their own.
For instance, the managed service model can give you flexible, usage-based access to technology for a monthly fee that delivers the platform and enables you to focus on your business.
At the same time, modular solutions allow you to implement new, specialist functionality a little at a time – getting systems up and running quickly and reducing the costs, risks and sheer disruption of end-to-end implementations.
Your customers are rejecting long-term contractual commitments and demanding fast responses – so why shouldn’t you?
Conclusion – break free with the right partner. Ultimately, advances in technology are giving asset finance companies a greater choice than ever of opportunities to transform their business. However, traditional approaches to providing, consuming and developing software can easily confine your ability to take advantage of innovation and drive digital transformation.
To break free of age-old shackles, you need a platform that meets your mission-critical operational requirements without a restrictive contract – while allowing you to explore other tools, apps and user experiences.
And for all that, you need a technology partner who fits in with you, not the other way around.
Technology, after all, should be an enabler, not a dictator. Isn’t it time to seize back power and find a more flexible solution?
David Woodroffe, Director of Product Management and Pre-sales
Shereen Walia, Senior Pre-sales Solution Consultant
Auto and Equipment Finance
FIS Global – Ambit Asset Finance
25 Canada Square, Floors 38–40
London E14 5LQ
Tel: +44 (0)78 7246 4347
+44 (0)7710 677 483