If the advantages of a modern, agile lending and leasing platform weren’t obvious before, they certainly are now.
Change is hard—and as a species, we’re hard-wired to resist it. But as recent world events have shown us, change is inevitable. Financial services players of all sizes and specialties are choosing to be proactive in the face of change, by transforming their digital capabilities.
Lenders and lessors, in particular, are modernizing their lending and leasing software platforms. Think of your platform as the engine of your business. Is it modern, flexible and nimble enough to help your organization take off on the open road? Or do you find yourself sputtering in the slow lane?
Modern, decentralized platforms can help auto and equipment financing players attract new kinds of customers and remain competitive in a rapidly evolving industry. They can also help you design new ways of working, support the adaptive workforce of the future and augment human capabilities with technologies like artificial intelligence.
That said, there’s much more to platform modernization than choosing the right software to support customers and the business. We see four keys to successful digital transformation.
1. Get the data right
When it comes to data migration, the old adage holds: garbage in, garbage out. Yes, that means your organization’s internal data. But it also includes data from consumers and channel partners that can be monetized, as I discuss in my earlier blog post.
So how can you convert data with minimal—or no—disruption?
A few key steps can help your organization get the data right. Start with a full audit of data sources and understand the unique complexities of your organization’s data. For example, an equipment financer will need to deal with contract data and variable lease terms and rates. Next, consider how to retool legacy data structures for modernized, decentralized platforms. Finally, have an effective change-management approach that includes resource training and QA/QC capabilities.
That said, some organizations struggle with data cleanliness. If this describes your business, try starting with a smaller scope. This can help you troubleshoot issues before scaling up. It also makes it easier to engage stakeholders and builds confidence for continued momentum.
2. Create processes that create value
Modernizing a platform is an opportunity to start afresh. It’s a chance to make sure that processes aren’t just working for your organization, but creating value. In general, these processes fall into three groups:
- Standard processes are universally accepted best practices that require minimal customization. They make up about 80 percent of all processes.
- Differentiating processes differ from the industry standard but don’t provide a key strategic advantage. They make up about 15 percent of an organization.
- Innovative processes are unique to a business and provide a strategic advantage. These are typically five percent of an organization’s processes.
A thorough audit can help uncover opportunities to standardize as much as possible—and free up your organization’s creativity to develop innovative processes that can help your business get into the fast lane.
3. Solve the technology equation
Gone are the days of cumbersome, custom legacy platforms. Instead, a decentralized finance approach balances off-the-shelf options with custom development. A simple rule of thumb? Take the 80/20 approach: Get 80 percent of your organization’s capabilities through off-the-shelf software and invest the remaining 20 percent in customized development.
This approach can help your organization reduce IT costs and focus on developing capabilities that can create a competitive advantage.
4. Manage change for the better
Last but not least, lenders and lessors need a robust change-management strategy. This means planning and executing a journey that makes change happen with the organization, not to it.
People are the heart and soul of any business, and success relies on strong alliances with change leaders at the top, as well as empathy and understanding of how employees are feeling. In addition, consider how changes will affect different stakeholder groups and plan accordingly. Finally, manage the change with a bias for proactive dialogue and early intervention—your strategy is only as good as its capacity to detect and adapt to the unexpected.
Here’s to your digital transformation success
The journey to a successful platform launch can be long and complex, but by taking these four steps, auto and equipment finance players can transform their digital capabilities and become more nimble, responsive and profitable.
Modernizing your lending and leasing software platform can also help you better adapt to what’s on the horizon—in an agile, predictable and sustainable way. To learn more, download our report on platform modernization for auto and equipment financing, which includes detailed case studies showing this four-step process in action.
Finally, on a personal note, I hope that in these unusual times you and your family stay healthy and safe.