In the face of increasing market disruption, auto and equipment finance organizations that are contemplating a digital transformation need to strike a balance between reducing operating costs and building resiliency.

Digital transformation is a difficult and complex undertaking for auto and equipment finance organizations. Because they’re conducting business in an evolving, highly competitive market with ever-increasing stakeholder expectations, many lenders and lessors see a transformation journey as an overwhelming challenge—one to be put off for another day. But we believe it’s a critical initiative for any finance organization that wants to streamline processes, reduce operating costs and deliver a better experience to its customers.

What makes a digital transformation so complicated?

Auto and equipment lenders and lessors tell us that their current operations are characterized by costly, manual, one-size-fits-all processing, paper documentation distributed physically and extensive data gathering (for example, credit applications often have more than 100 fields that need to be populated). Consistently, they’re unable to meet customer and stakeholder expectations, and they waste efforts on customers that don’t qualify for credit. Customers that do qualify experience long cycle times from approval to delivery to funding. For lenders and lessors, it means growing pressure from customer attrition and competition with peers.

Furthermore, lenders and lessors work within a strict regulatory environment. They are often hampered by outdated IT systems that result in continuing technical debt, and siloed business functions that are not equipped for internal or ecosystem collaboration. The sector is also likely to face additional disruption in the future. For instance, we expect to see the bundling of assets with insurance and maintenance agreements, the rise of everything-as-a-service, new ecosystems ushered in by autonomous vehicles and equipment, and new partnership models that enable cooperative competition (or what we call “coopetition”).

An enterprise-wide digital transformation requires a fresh end-to-end examination of all the organization’s needs—from high-level business strategy to operating models, IT infrastructure, business processes, applications, skills and more—with data as the new currency. Our clients have told us that part of what makes an effort like this so demanding is that they need to obtain solutions and expertise from numerous sources. They ask us questions like:

  • Which solutions will best meet our requirements?
  • How do we integrate all these different systems without adding further complexity?
  • Can we add automation or artificial intelligence to our processes to free up our human workers for more complex and interesting tasks?
  • How can we manage the transformation journey to minimize risk?

Why we think it’s worth the effort for auto and equipment finance organizations

When it’s done right, a digital transformation harnesses talent, data and technology to create a modern, agile business that is resilient, competitive and able to meet the disruption on the horizon head on. In real terms, that means increased originations, new revenue streams, disruptive business models, operational efficiency and the ability to meet regulatory requirements with confidence.

In our work with auto and equipment finance organizations across the entire lifecycle—credit, servicing, collections and asset management—we’ve seen the results of such a transformation. Some of our clients have achieved:

  • A 75 percent reduction in effort due to automated deployment.
  • A 40 percent drop in incidents and a 25 percent reduction in back-office staffing costs.
  • A faster credit adjudication cycle—from 1.5 days to 15 minutes.
  • A 40 percent increase in revenue.
  • A 6 percent rise in market share.

In each case, they’re also now in a better position to respond to change, whichever direction it comes from.

In the spring of 2020 our Platform Modernization for Auto and Equipment Financing report suggested four keys to digital transformation success and offered insights to help lenders and lessors enable the workforce of the future and build a flexible organization.

This year, we’re excited to continue helping lenders and lessors embrace digital transformation so that they too can reap the benefits of change. That’s why we’ve gathered our global resources together into a new Specialty Finance Center of Excellence (CoE)—a one-of-a-kind central hub for digital transformation, which combines systems integration, application management services and business process management expertise to make digital transformation initiatives less difficult. Check out our Specialty Finance CoE website, or reach out to us directly to discuss the ways we can help you lead the change charge.

Get in touch.