Showing you the money – Equipment lenders are turning to digital technology
By Vladimir Kovacevic
Equipment financers can make your life easier during this pandemic.
By Vladimir Kovacevic
The COVID-19 pandemic has forced many lenders in the equipment finance and rental industry to pivot their strategies to the online or digital environment.
This may include payment modifications, self-service capabilities and increased bandwidth for online transactions. The equipment finance industry has been traditionally slow to embrace new technologies, relying on legacy philosophies and outdated systems. For many, COVID-19 has exposed critical technological gaps in lender business tools, systems, and processes. Your business should look for lenders who are getting ahead of the curve, using digital transformation to enhance their overall performance to streamline their processes.
The key to consistent growth and stability of any rental company is a strong foundation, and this is just as true for equipment finance lenders in your space. Lenders should have the capability to build from their existing processes, procedures, and platforms. However, not all of them do. Advanced technology will allow for more sophisticated product offerings built from simple foundations. It is time for strategies to be reshaped and plans to be adjusted.
The need for speed
Lenders are affected differently depending on their market segment and their loan origination process. Considering the recent shift in business spending habits, many are now being forced to reevaluate their lending strategies. When the market is down, lenders experience even more competition and uncertainty. To remain competitive themselves, they need to connect with potential buyers across all shopping channels including online, mobile and through the equipment manufacturers. Making quick lending decisions can be the difference between you choosing one lender over another. Look for agility in your lender – you don’t have to settle for the old pace of play.
Engaging borrowers at different levels through various channels should be a top priority. For example, rental fleet buyers today spend much of their time using mobile and online channels to shop various equipment manufacturers and options. You are researching through non-traditional methods, and are probably looking to secure financing online – a process that will continue as we all practice social distancing.
Some companies are looking to change their financing structures altogether. According to a recent survey from Fleet Advantage, a provider of lease financing for fleets, roughly 50 percent of fleets have trucks older than 2017 and are leveraging equipment lease finance programs as a way to upgrade and save on the bottom line.
Out with the old
Today’s loan origination platforms and solutions can support all market channels to help rental stores of all sizes. They can also be integrated with manufacturer software so you can initiate loan applications at any time from the convenience of your mobile phone, opening new lending opportunities that may otherwise be missed. What’s more, the built-in AI technology will also help ensure the lender is offering the right terms for your individual business.
In the wake of COVID-19, lenders should understand that transactions will be moved to the online marketplace. Not only in the near term, but in the future post-pandemic. Transactions will simply not be handled the way they were in years past, where a lender requests information from a customer such as business financials and paper is shuffled back and forth in a series of face-to-face meetings. Instead, the entire process from application to delivery of equipment will be handled online. Lenders need to use technology to approach the market in a more direct way to gain a competitive advantage by taking advantage of your new business buying patterns and behaviours.
Easier, but also better
Now more than ever, businesses like yours are looking for ways to relieve themselves of payments in the near-term. Strong lending technology partners are offering creative ways for lenders to not only retain your business but win new business during this time. Some lending technology partners are offering their customers curated programs that allow them to contact existing customer businesses to offer them refinancing on their equipment finance loans.
For example, if you are a long-term customer with a specific bank, yet your equipment is financed through another vendor, your bank would be smart to contact you regarding refinancing your loan. If the bank can offer incentives such as no short-term payments, you are likely to take advantage of the offer, which only further solidifies your loyalty to that bank. With interest rates low and being held low, anything the bank refinances now will be a better deal than what you could finance two or three years ago.
Has your bank or lender contacted you about refinancing?
Planning for recovery
The sudden shift in working environments has only amplified the need for equipment finance lenders to update their tools and processes. It is critical for them to include digital and cloud-based options for customers who are now forced into remote-working situations. The finance industry’s need for technological advancement is clearer than ever before. Companies that learn from the current business challenges and adopt agile solutions will remain more flexible and fluid in times of economic recession and can better prepare themselves for recession recovery.
Vladimir Kovacevic is the co-founder and managing partner of Inovatec, a leading software provider of cloud-based lending solutions in the USA and Canada. Inovatec’s products are designed for origination, processing and management of loans and leases across a broad spectrum of credit quality and asset types.