Market Report
Understanding digital transformation By Aaron Seaton
he world around us is changing at an accelerated pace. Our expectations as consumers, whether personally or in a business context, have evolved with every new advance in technology made over the past decade, but especially since the advent of smartphones and the spread of mobile computing. The conveniences, efficiencies and immediacy we now enjoy in banking, ordering goods, consuming media and ordering transportation are now the high-water marks for delivering experiences to stakeholders, both customers and employees, in virtually every business across all industries. These changes are proliferating rapidly and the coming effects on the way asset-based finance companies operate and interact with customers will be significant. It’s not just a matter of if this wave of technology will disrupt operators in this space, but when, and it is incumbent upon lenders to make the necessary investments into digital transformation or face the risk of getting left behind. To understand the impact of digital transformation in equipment finance, it is first necessary to define exactly what it is. As well, and perhaps most importantly, it is essential to grasp not only how it can lead to future success for lenders, but also how it can lessen the challenges and threats currently faced or are on the horizon.
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What is digital transformation? Simply put, digital transformation is the utilization of digital technologies to modify existing or create new processes within your business to augment culture, drive efficiencies and above all else, enhance the customer experience. In the context of asset-based finance,
this means examining every aspect of the business lifecycle, from direct sales, broker relationships, pricing, credit decisioning, document management, funding, collections and servicing through to remarketing and realization. Then finding ways to digitize processes, information and client interactions. While there may be differences from one segment of the market to another, whether big or small, independent direct lessor or captive finance company, the necessity of digital transformation can be best understood by looking at the benefits it offers and challenges it solves. Productivity, efficiency and consistency. How can operators do more with less, or similarly how can they handle existing demands with less costs? Automation of core back office tasks has been largely implemented over the past decade, but what more can be done to better digitally enable peripheral tasks? In an ever-uncertain economic climate, it will be increasingly necessary to find optimized ways of operating. Digital transformation can enable a paperless environment that ensures the concentration of information in a single recallable place, virtually eliminating the need to search for hard-copy documentation and shortening the duration of all tasks. A good example of this is the digitization of the corporate records searches and PPSA (Personal Property Security Act) registration/deregistration processes, allowing these tasks to be completed from within the core software applications and foregoing external processes and record keeping. Or, imagine improving back office efficiency by having a software assisted workflow that guides users through all required tasks on a product-specific basis? A critical factor in achieving cost savings and allowing a company to remain flexible as it changes over
time is the implementation of digital transformation in the cloud using a Software-as-a-Service (SaaS) solution. With SaaS platforms a company can forgo the traditional costs and restraints associated with the installation, maintenance and business continuity tasks of traditional on-premise software. This means working with a trusted solution partner to outsource these tasks and focusing all energies on core competencies. As well, since SaaS is primarily browser-based, it also translates into higher productivity and information sharing for remote sales or operational team members. Enable enhanced capabilities. Growing the profitability of an assetbased finance company comes from more than just increased origination volumes. Revenues can be increased, or costs reduced if a company can maintain many of the economics of the lending transaction within their operation. Implementing a comprehensive digital transformation strategy could include the usage of affordable and easy to maintain software solutions that provide functionality for loan administration and collections processing. By maintaining the servicing of some or all of an asset portfolio, the originator can earn additional revenues. Many digital platforms offer significant automated functionality to ease the transition to this capability with minimal operational overhead. Additional capabilities also include collateral inventory management with realization and remarketing, as well as third-party investor reporting and settlement management. All of this translates into enhanced control of touchpoints back to the client, thereby ensuring ownership of a profitable and long-term relationship. Data analytics and reporting. Do you know exactly how your finance business
canadianequipmentfinance.com | Winter 2018 | CANADIAN EQUIPMENT FINANCE
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