The inviting combination of a sizable B2B equipment finance market, a strong US economy and digital innovation are increasingly attracting fintechs to the equipment finance industry.
In this Perspectives interview, managing director Cameron Krueger shares insights on how equipment finance incumbents can pivot to digital to defend market share and compete against new entrants with data-driven business models.
Accenture Banking Perspectives: How serious a threat are fintechs to equipment finance incumbents?
Cameron Krueger: The threat to incumbents may be somewhat masked in the current market. Tax cuts, low unemployment and stable regulations are fueling equipment and software investments, and the industry is thriving across the board. However, incumbents will see their profits and market share decline over time if they don’t pivot to digital and give customers the fast, painless and personalized experiences they want. Alternative lenders, like Fundera, OnDeck, LeaseQ and LiftForward, are drawing in significant business using digital technologies—like cloud and analytics—to deliver efficient, accurate and satisfying levels of customer experience with less time between process steps throughout the loan lifecycle.
ABP: Why is a digital equipment finance process critical now?
CK: Commercial buyers are coming to expect what digital innovation can deliver. They are already accustomed to digital services in other parts of their lives and they increasingly demand similar levels of service in their equipment finance businesses.
ABP: What can traditional equipment finance providers do?
CK: To compete, incumbents will need to embrace digital in ways that make their equipment finance operations relevant and future-ready. It means incorporating capabilities like electronic documents, e-signatures, multi-channel interactions, mobile apps and intelligent automation that supports a more innovative workforce. It means transforming front- and back-office finance activities and operating platforms to improve speed, efficiency, costs, accuracy and customer experience.
ABP: How far off are banks in doing that?
CK: Some banks are what we call digital leaders. They are investing in digital to improve their offerings, to increase the efficiency of their existing lending operations and to rotate to future-ready lending. For example, one wholesale bank transformed its business operations and created a new equipment-finance platform to deliver the right information where and when it’s needed. By doing so, the bank was able to make its underwriting process 35 percent faster and save more than $20 million in operating expenses. Unfortunately, many other incumbent lenders are lagging in their digital transformation and struggling to compete in today’s digital economy.
ABP: Where can traditional equipment lenders start?
CK: In general, incumbent lenders can start by creating an actionable, innovation-led
strategy to integrate digital technology into all areas of the lending process, including originations, core platforms and servicing across multiple channels.