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Beyond Fintech: Looking at the Bigger Picture for Asset Finance
Once viewed as a disruptor by asset finance groups, today's fintech solutions are increasingly being welcomed as rescuers thanks to their ability to jump-start the automation process and move asset finance closer to a complete digital transformation. With the leasing landscape radically transformed over the past months, it’s clear that adaptability in the face of change is emerging as a critical capability to remaining competitive.
A digital transformation for asset finance
Collectively, how will these fintech solutions contribute toward transforming asset finance into a completely digital process?
According to Mukul Mittal, vice president of industry solutions with Q2’s lending group, the COVID-19 pandemic has forced asset finance companies to employ fintech solutions to take four crucial steps toward digital transformation.
- Adoption of an agile approach to asset finance solutions so they can be configured without programming to meet each lessor’s unique business needs.
- Work to enhance customer intelligence so lessors can better understand their lessees’ needs.
- Maintain financial data in the cloud, as the enhanced security and accessibility of cloud-based platforms becomes the preferred norm in personal and business realms alike.
- Facilitate new, innovative ways to evaluate credit that allows for a much faster and more thorough credit-scoring process.
By employing these four steps, a digitally transformed process emerges that can directly meet the pandemic's challenges to asset finance. Here’s how.
- A digital transformation facilitates the ability to operate offsite and for staff to work from locations outside the office.
- A digital transformation creates the capability for asset finance groups to modify their processes and programs to cater to today’s rapidly changing leasing needs and goals.
- A digitally transformed system for asset finance allows for modifying credit algorithms to weed out unsuitably risky credits – and does so automatically, with minimal or no manual intervention.
“This would be a more systemic solution that would allow lessors to automatically bring back lessees as their creditworthiness improves – doing so invisibly, effectively, and easily,” Mittal explained.
“The holy grail,” Mittal added, “is to speed up the time and lower the cost of lease processing.” With this dynamic, an asset finance company would be able to provide self-service capabilities so that customers can do their work on their own and not be dependent on a customer service agent. These are all parts of an effective digital strategy.
As well as weakening companies financially, the pandemic has also made it harder for them to prepare for the end of the transition period as resources have been diverted and management focused on shorter-term risks. Even where that is not the case, uncertainty over the final outcome of negotiations has limited the steps that smaller companies in particular can take to fully prepare. These companies may have become less willing or able to make investments that could prove unnecessary. This is likely to remain the case until there is clarity on the future relationship, or until they see a WTO Brexit as inevitable.
A unified, seamless asset finance process
All of the advantages that fintech can bring to the process of moving asset finance companies that embrace their solutions closer to a unified, seamless, digital strategy – from marketing through origination to portfolio management to asset liquidation – are continuing to gain recognition today.
Asset finance doesn’t have to be hard, and fintech can make it easier. The ability to access automated origination, underwriting, and servicing information – within a single system of record – empowers lessors to serve their customers better. Creating new asset finance products quickly to meet market and regulatory needs immediately, offering configurable solutions, and approving and funding customers’ needs immediately – without sacrificing compliance or creating credit risk—are all within the realm of possibility. (And the demand for such solutions is particularly high.)
“With the pandemic, the fintech strategy has come front and center for everyone,” Mittal said. “Other initiatives are being forced to the wayside, and the investment into the digital transformation through fintech is becoming critical for leasing companies to survive.”