Equipment and auto finance organizations have been slower than many other lenders to adopt cloud—the average bank today has more than half of its workload in the cloud, according to Accenture’s report, “The Cloud Imperative for Banking”. Now that customers essentially expect lenders and lessors to offer seamless, digital services, because of market changes driven by the COVID-19 pandemic, many are trying to catch up.
COVID-19 exposed critical gaps in business tools, systems and processes. In what the World Economic Forum has called “The Great Reset”, auto and equipment finance organizations have a unique opportunity to question business as usual and rethink how they serve customers who are unlikely to give up their preference for more convenient, digital services post-pandemic. Would you?
Why do auto and equipment finance organizations balk at the cloud when it offers something better for less money? In October, I was part of a panel discussing whether emerging technologies such as artificial intelligence and the Internet of Things were hype or reality for equipment finance. Cloud could easily have been part of that discussion. When it comes to cloud, there is still some skepticism around security, regulatory ambiguity, potential competitive issues with the largest cloud service providers and, of course, the cost.
A multi-cloud strategy may be the best approach
Cloud providers have made changes that enable auto and equipment finance organizations to tailor cloud solutions to their business needs. A multi-cloud strategy sets you up with more than one provider, allowing you the flexibility, agility and peace of mind where needed. This could involve a mix of cloud options:
Public Cloud offers lower, more variable costs, near-unlimited scalability and high reliability. There is no need to purchase hardware or software and you pay only for the services you use.
Private Cloud gives you full control over your resources, as well as regulatory simplicity and more flexibility for your organization to customize its cloud environment.
Hybrid Cloud offers the ease of use and flexibility of the public cloud and the enhanced control of the private cloud, enabling your organization to maintain a private infrastructure for private assets.
For example, you could leverage Salesforce (public cloud) as a customer relationship management application while using Microsoft Azure ML services (hybrid cloud) for intelligent business.
Convenience at scale
Cloud is not the end goal, but the foundation on which you can build an exceptional customer experience. It allows you to adopt a nimble, platform-based approach to your technology stack and improve components of it as your business and the market shift. It’s key to unlocking technologies, such as artificial intelligence and connected devices, which allow you to create always-on digital services. With a potential credit crisis on the way, cloud could be essential to enabling self-service capabilities and online transactions at scale.
While costs may seem like a barrier, migrating to the cloud can be self-funded by increasing an organization’s competitiveness with a superior customer experience. Accenture has helped many banks and other organizations move their applications to the cloud, and we have found that it typically cuts operational costs by 10 to 20 percent, reduces time to market by 30 to 50 percent and increases provisioning speed by 40 to 50 percent.
Whether we like it or not, things have changed; many of the changes are good and are here for good. Auto and equipment finance organizations must focus on their customers and seize this opportunity to find new and better ways to serve them. Cloud makes that possible.
Do you have questions or comments about cloud for auto and equipment finance? Get in touch.