In brief

In brief

  • Our new report describes practical considerations and steps for financiers making the shift from financing assets to a servitization model.
  • Customer expectations, and operational and financial constraints, are driving auto and equipment lenders toward new financing models.
  • Four new servitization models—All-In Finance, Outcome Finance, Managed Services and Subscription/Utility—are the future of financing.
  • Servitization has wide implications across all areas of the business. Successful lenders follow three key steps on their journey.

It’s time to move beyond traditional financing

Many bank-owned auto and equipment finance providers and manufacturers’ captives today still rely exclusively on traditional financing. They finance an asset, and the customer commits to paying a fixed amount for a fixed term. However, customers now prefer more flexible full-service solutions—making traditional finance offerings less relevant in today’s market.

Servitization of auto and equipment financing is a more responsive approach to a dynamic marketplace. It represents a fundamental shift from a ‘build it and sell it’ mindset. Instead, it seeks to optimize the customer’s experience with the asset.

Customers can appreciate benefits such as:

  • Flexibility and variability
  • Convenience and one-stop shopping
  • Multi-channel engagement
  • Cohesive end-of-lease experiences

Meanwhile, auto and equipment financiers can propel their businesses forward and gain:

  • Increased cash flow and the release of working capital for other business initiatives
  • Enhanced competitiveness and productivity, and faster time-to-market
  • Improved infrastructure and innovation
  • Less harm to the environment and more responsible economic growth

Making the shift has wide implications

The shift to a servitization model of financing goes well beyond having the right infrastructure in place. Our experience indicates you should also consider the following key aspects:

  • Customer financing and accounting. Shift your focus to solution financing that includes assets, software, services and subscriptions.
  • Pricing. Whether prices are variable or fixed, you’ll need access to consumption data to ensure accurate and appropriate pricing that is transparent and competitive.
  • Sales and channels. Servitization presents an opportunity to increase direct sales and work with new ecosystem partners.
  • Marketing. Experiences are key and should be designed to respond to customer needs over the entire lifecycle.
  • Customer success, service and support. People holding new ‘customer success’ roles see service as a core offering; they can help to drive adoption and usage.
  • Product engineering. You’ll need to embrace continuous agile delivery, testing, customer engagement and data-driven feature development.
  • Technology. Servitization models require real-time data collection and analytics at scale.

Take your first steps on the path to servitization today

We have developed a set of key steps to guide your servitization journey:

1. Create a diagnostic blueprint

Define a ‘to be’ blueprint of improvement initiatives with redefined business capabilities and processes.

2. Develop a detailed implementation plan

Cover the approach, team, work plan, impacts and governance. A training plan and a culture of support are also key.

3. Execute and extend the plan

Leverage automation and analytics to streamline error handling, contract management and collections. Elevate the plan with continuous design.

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If your organization wants to move beyond a traditional financing model toward one of the four servitization models of the future, the good news is that you don’t have to go it alone. We’re here to help. To find out more, get in touch with one of our specialty finance experts.

Cameron Krueger

Managing Director, Specialty Finance Lead

Joseph Pulicano

Managing Director – Specialty Finance


Keys to lending and leasing platform modernization
Making the pivot to as-a-service experiences

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