Agile technology considerations for equipment finance

Technology is designed to be disruptive – in a good way. It helps make life and work easier, faster, more agile. However, it can be a little overwhelming when you look at the endless technology solutions available in the equipment finance world. So, this post will provide some expert advice on technology considerations, opportunities, and recommendations that will best position equipment finance companies for agility and growth.

In partnership with Monitor Daily, a leading source of equipment finance news and resources, Solifi (formerly IDS) sponsored, moderated and participated in a special two-part equipment finance Monitor Daily Live+ event. This regular series provides educational and learning opportunities for equipment and leasing industry professionals.

Eldon Richards, Chief Technology Officer with Solifi, moderated the second session with two equipment finance industry experts, where they discussed technology considerations as we move forward from the pandemic. Panelists included Steven Fricano, chief information officer of Santander Bank, N.A., and Matt Bednar, chief technology officer of DLL.

Top Disruptive Technologies in Equipment Finance Industry: Cloud and Machine Learning

Industry experts predict cloud and machine learning (ML) will be most impactful when it comes to the most significant disruptive technologies in equipment finance. But they also say you must start with good data and strong data security as foundational capabilities.

“I think disruption can begin happening as we are ready to exploit and leverage cloud-based solutions – that’s where most machine-learning capabilities come into play,” says Fricano. “However, if you don’t have good data, then you can’t leverage machine learning. If you don’t have strong security, you can’t leverage cloud.”

He adds that when looking at the cloud, you’re plugging into an existing architecture where you don’t have to make a large investment to pilot a solution. “Now, all of a sudden, trying something becomes feasible. I think this is going to lay the foundation for true disruption as we go forward.”

And from a machine-learning perspective, he envisions disruption coming from the ability to institutionalize and share the knowledge with more employees. “Instead of somebody processing a handful or a couple of handfuls of variables, now you can feed a hundred different variables into a model to make more sophisticated decisions than we’ve been able to make in the past.”

Top Technologies to Create Greatest Opportunities in Equipment Finance

The top technologies for Equipment Finance professionals to watch are:

  • Cloud technologies
  • Machine learning
  • Mobile
  • APIs
  • Integration
  • Automation

All of these technologies provide great opportunities in equipment finance because they help create a true end-to-end ecosystem reaching out to both customers and suppliers. “And we have the ability to work anywhere at any time,” Fricano says. “So, the idea is when there’s an opportunity to take advantage of a purchase, can I get to a point where I can make a decision on the spot and close the transaction? How quickly can that happen?”

Fricano adds that these technologies create efficiencies that could save 90% or more in the decision-making process. “Looking at IT processes today, if you’re at weeks, you’re doing well. And, in many cases, it can be months,” he says. “I think 90% or more in improvement is possible if you have the foundational capabilities of data and security in place.”

A large number of companies exist where their entire business prop is just integration. “All they’re doing is selling you integration at the product level – either helping you integrate internally or providing you APIs,” Bednar says. “It could be an API to help you do some nonstandard origination and decisioning. APIs are an interesting disruptor, and I think a lot of us want to get to that model and create our own ecosystems [with end-to-end automation].”

When it comes to cloud technologies, both Fricano and Bednar agree that the barrier to what equipment finance organizations need for return-on-investment has become very small. Cloud democratized IT solutions where smaller companies can now provide similar services as larger firms. “There are things that you might not have tried before because the potential for success could be relatively low, and it may have taken you five months to procure a server,” Bednar says. “Now if it only takes me five minutes to compute, I may as well try it.”

Three-legged Stool of Agility

When asked how agility fits into the equipment finance industry, Fricano described it as a three-legged stool.

  • Product
  • Architecture
  • Engineering

“The first thing we focus on is strengthening the conceptual product model and the product organization,” Fricano says. “They are the fuel to this engine, and it’s critical to have that strong product organization as you start down this journey.”

He adds that there is an architecture element to agility. “You can be culturally agile and not be able to execute on that. And that’s only done through loosely coupled inflexible architectures,”

Fricano says. “Try to make yourself as fast and as flexible as possible while still managing cost and risk.”

The concept of engineering in agility is that it’s focused on bottom-up empowerment. The engineering teams take pride in ownership, they’re closer to the business than ever before, and they see the fruits of their labor much faster.

Top Benefits of an Agile Organization

Equipment finance companies that embrace agility enjoy these top benefits.

  • Faster alignment with stakeholder expectations
  • Quicker time to value
  • More collaborative teams
  • Business engagement and ownership
  • Pivot much faster when a new discovery emerges
  • Respond to business needs
  • Realize benefits along the way

Progress over perfection is the mindset in a true agile organization. “It used to be that we had to get it perfect, and we never did,” says Fricano. “So now we have a discussion around good, better, best, and let’s get something out there quickly, and then we can make it better. Getting your business to buy into the fact that good is a great place to start is a challenge. But once you change the mindset, the whole dynamic can be different.”

How the Cloud and SaaS Align with Equipment Finance Agility Plans

The cloud and SaaS, like IDScloud, align perfectly with equipment finance agility plans. Fricano says SaaS is foundational to his company’s strategy and that he prefers to buy versus build, so he doesn’t have to focus on redoing something that already exists. “I’m a big fan of SaaS solutions [like IDScloud] because I believe you’ll do a better job of managing your platform and your technology stack than I would manage it,” he says, “I can focus on commercializing your R&D.”

Bednar believes that cloud allows you to build things where you want to differentiate. “Think about your business capability model. Where do you want to be innovative? Where do you want to be a commodity? Where do you think you want to disrupt the market?”

He adds that your cloud implementation will be more secure than what you have on-prem. That’s because security frameworks like Amazon Web Services (AWS) feature ready-build security services that are click-of-a-button implementable.

“You can sell cloud to leadership as here’s how we’re going to manage compliance; here’s how we’re going to manage our security posture; and it’s better than what we have on-prem,” Bednar says.

Impact of Artificial Intelligence (AI) Technologies and Data Analytics in the Equipment Finance Industry

It’s an exciting time to be in technology – predictive analytics, AI, machine learning, deep learning – are becoming not only available to the world but also very rapidly accessible to organizations of all sizes.

For Bednar, the most interesting aspect of these types of technologies is that the data tells a story about the customer’s journey. “With this data, you can look at how customers are actually using your products,” he says. And with data analytics, you can determine how to cross-market, drive adoption, increase usage, and increase revenue. This is when data becomes powerful and where you can make your business and the customer experience better.

He adds that these technologies also create self-service capabilities, which allows even non-technical people to develop solutions.

Fricano used a real-world scenario where they tapped into technology to compensate for imperfect requirements. An existing set of technologies with rudimentary exception-based portfolio management capabilities didn’t feature any feedback mechanism. This obsolete platform needed to be replaced, but the business said these are the rules that we have.

Rather than scrapping the technology, they decided to insert some machine learning into the platform. Instead of only a dozen rules, the team could fire off 100 different data points. This technology proves that you can refine models over time by leveraging the data in the technology.

Equipment Finance Experts Recommend How to Best Navigate the Current Market Conditions and Come Out on the Winning Side of Disruption

Both equipment finance experts on the panel provided four recommendations on how best to come out on the winning side of disruption.

Bednar said the following four strategic elements are what he considers the most important.

  1. How do I rationalize my systems, reduce the complexity of my environment, and reduce cost and risk?
  2. How do I increase my capabilities in cloud?
  3. How do I modernize my data strategy in that environment?
  4. And how do I use all of those things together to build a loosely coupled architecture that either hides some of the complexity and ugliness while I’m fixing it or allows me to change my environment and be way more flexible than I could have been before?

Fricano also listed four strategic elements that he believes will help his equipment finance business come out on the winning side of disruption.

  1. Data
  2. Security frameworks
  3. SaaS
  4. Agile

“If you have those right, it gives you a lot of flexibility and means you can take advantage of cloud and you can take advantage of machine learning,” he says. “And those are truly then the disruptors.”

Related agile technology considerations for equipment finance post

  • Part 1: How the Pandemic Accelerated Agile Business Solutions in Equipment Finance. Read more
  • Part 2: Polling Results: How the Pandemic Accelerated Agile Business Solutions. Read more

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