Strengthening Your Digital Strategy for Sustained Recession Recovery
The COVID-19 pandemic has caused dramatic shifts in the way many equipment finance companies do business, making digital strategy more important than ever. Vladimir Kovacevic discusses how to identify your company’s areas of need, merge antiquated systems, strengthen digital solutions and plan for recovery.
The COVID-19 pandemic has forced many lenders in the equipment finance 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equipment finance industry has been traditionally slow to embrace new technologies, relying on legacy philosophies and outdated systems.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. Lenders that remain ahead of the curve are utilizing digital transformation to enhance their overall performance to streamline their processes.
The key to consistent growth and stability of any powerful company or organization is a strong foundation. This remains true for equipment finance lenders. In theory, 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 additions to be built from simple foundations.
Identifying Areas of Need
Lenders are affected differently depending on their market segment and their loan origination process. Considering the recent shift in business spending habits, now would be an ideal time for lenders to reevaluate their lending strategy. When the market is down, lenders experience even more competition and uncertainty. To remain competitive themselves, lenders need to connect with potential buyers across all shopping channels, including online, mobile and equipment manufacturers. Making quick lending decisions can be the difference between a borrower choosing one lender over another.
Engaging your borrowers at different levels through the various channels that they utilize most should be a top priority. For example, shoppers today spend much of their time utilizing mobile and online channels to shop various equipment manufacturers and options. They will research through non-traditional methods, and many will look to secure financing online — a process that will continue as we all practice social distancing.
Merging Antiquated Systems
Today’s loan origination platforms and solutions can support all market channels to access borrowers from businesses of all sizes. They also can be integrated with manufacturer software so borrowers can initiate loan applications at any time from the convenience of their mobile phones, opening new lending opportunities that may otherwise be missed. What’s more, built-in AI technology also will help ensure lenders are offering the right terms for each individual customer or business.
In the wake of COVID-19, lenders should expect that transactions will be moved to the online marketplace not only in the near term, but in the post-pandemic future. The transactions will not simply be handled the way they were in years past, when a lender requested information such as business financials from a customer. Instead, the entire process from application to delivery of equipment will be handled online. Lenders utilizing technology to approach the market in a more direct way will have a competitive edge and be ready to take advantage of new business buying patterns and behaviors.
Strengthening Digital Solutions
Now more than ever, businesses 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 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 a business is a long-term customer with a specific bank, yet their equipment is financed through another vendor, that bank would be smart to contact the customer regarding the refinance of their loan. If the bank can offer incentives such as no short-term payments, the customer is likely to take advantage of the offer, which only further solidifies their loyalty to the bank. With interest rates seemingly low, anything the bank refinances now will be a better deal than what the business could finance two or three years ago.
Planning for Recovery
The sudden shift in working environments has amplified the need for equipment finance lenders to update their tools and processes. It is critical to include digital and cloud-based options for customers who are now forced into remote working situations. The industry 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.