The equipment finance industry is experimenting with a variety of technologies to improve efficiency and customer experience.
2019 promises to be the most eventful year banks and manufacturer captive finance businesses will have seen in decades. Here are five trends incumbents should be prepared to respond to in the year ahead.
- Equipment contracts will go digital
The reign of the paper contract is coming to an end. Consider that consumers can now renew their mortgages, buy insurance and even get married without touching a single piece of paper. Even so, physical paper contracts are still the norm in equipment finance. We are beginning to see this change, thanks in part to all-digital startups entering the market. 2019 will be the tipping point, as we can expect to see big growth in end-to-end digital equipment lease transactions.
- Direct-to-customer sales will delight and disrupt
The direct-to-customer model has long been a goal for many equipment finance players. A few industry leaders have achieved success as a go-to resource for customers. Now, with unprecedented access to rich consumer data generated through third-party platforms, bypassing traditional intermediaries will become easier than ever, which will leave those players in the middle with critical business model choices to make.
- AI will create smart sales channels
The “pay-per-use” model has been common in accessing equipment like CAT scanners and electrical generators for years. Pay-per-use is now being applied to smaller goods thanks to IoT technologies, less expensive sensors and connected devices. Industry incumbents must consider how they might capitalize on a pay-per-use model by creating value and owning the customer relationship. Does it make more sense to compete with start-ups in this space or to partner with them? There are many theoretical answers and far fewer proven ones. 2019 will be the year in which pay-per-use expands from a niche model to an industry growth strategy.
- Advanced pricing capability will become table stakes
Equipment finance players are heading into a more competitive market thanks to predictive pricing analytics, which mine customer and market data to connect the dots and curate customer-centric offers. Using advanced analytics to see what competitors do not see was once a market-leading strategy to attract price-sensitive customers and build incremental value. In 2019, it will become a competitive imperative and require building pricing analytics infrastructure and capabilities.
- Big data will show you your next big buyer
Intelligent signals and AI are blurring traditional boundaries in equipment finance by allowing lenders and lessors to tap new sources of consumer data. These data- and analytics-driven systems can help predict the kinds of equipment a customer is likely to need with surprising accuracy. Meanwhile, sensors provide more insight into equipment use—and the equipment user—than ever before. The potential to open new revenue channels is immense, and success will depend on assessing the value and veracity of the vast data being generated.
Our innovative capabilities can help your equipment finance business respond to disruptive changes in the market. Connect with our team to talk about how you want to grow your business.