Peter Haug,
Product Manager,
LTi Technology Solutions

Van Wrenn,
Director of Client Services,
LTi Technology Solutions

Equipment and financing companies have always known that their customers are more than a number. There’s a story, a relationship and a reason customers are in business. During the height of the COVID-19 pandemic, there was a surge of empathy when customers, borrowers and lessees were unable to make payments leading to a shift toward “proactive empathy” or the idea that when a company’s customers are successful, the company is as well. That concept has now shifted even further, as it now applies to the race to meet customers’ digital expectations. To be successful in this pursuit, companies need to blend customer experience with technology to form a combination of speed and service.

CUSTOMER EXPECTATIONS HAVE CHANGED

How much have our day-to-day lives changed over the past few years? Everything is online, at our fingertips and instantaneous. People think of the experience they have with an e-commerce platform or mobile app and want that type of experience in all aspects of their lives, including their businesses.

This evolution in customer experience has led to a tremendous migration in the equipment financing and leasing industry. Expectations for self-service portals and data availability were high on the consumer side, but were less present on the commercial side. That dichotomy has changed. Customers, both on the consumer and commercial side, are busy and they want information at a time and place that’s convenient for them, an attitude that must drive new digital experiences. Companies that can’t meet these expectations face a real opportunity loss. If the aim of the game is “get the loan off the street” with a quick approval, that can only happen with a streamlined workflow and automation.

BALANCING AUTOMATION AND HUMAN INTERACTIONS

When examining self-service technology and automation, companies should ask themselves: “What’s the goal of the interactions? What information is the customer trying to get?”

Automating too much can sacrifice a company’s personal touch. Automating too little loses speed. A company should never adopt “automation for automation’s sake.” Instead, companies need to look at interactions where a customer would expect an instant response. Conversely, companies should identify interactions that would benefit from a human touchpoint.

Reducing the number of touchpoints in the customer journey will also free up resources. Through workforce augmentation, account managers can look for other deals or focus on relationship management rather than spending time on interactions with customers that could be automated.

Take an application that is missing information, for example. In a manual world, a lender would pass the file to a credit analyst, who would realize that information is missing and send it back. The lender would then reach back out to the customer. In this set-up, time is wasted. However, an automated system could collect initial information from the customer and automatically identify if the application is missing data points, saving time on all ends and giving the customer a response to provide additional details more quickly.

Implementing automation requires companies to not only understand what their processes are but also understand where their bottlenecks are. It means looking at each step and identifying where unnecessary time is spent, either via redundant tasks, context switching, or too much back-and-forth communication (both internally and externally).

Additionally, it’s important to note that automating for the current process isn’t the same as automating for an optimal process. In some cases, the process itself needs to be revamped in order to fully realize automation’s capabilities.

Companies need to stay at the forefront of technology and take advantage of what’s available. In the past, firms may have been able to rely on relationship management alone, but now technology is such a critical component of the customer experience that it’s on par with — if not exceeding — the relationship aspect.

WINNING THROUGH STREAMLINED DECISION PROCESSES

Automating customer touchpoints is a good first (and very natural) step, but companies will gain the most speed and efficiency from automated decision-making.

Manually looking at every application and approving or denying the financing is another process that loses too much time. Companies are limited by the volume that employees can handle, so even if a company is fully staffed to handle every application it receives, reviewing the applications will till take a human a set amount of time.

To alleviate this allocation of time, companies can take a gradual approach to automated decisioning. For example, a company can start with a benchmark to reduce the number of deals that are manually reviewed by 10%. Maybe 10% of applications can be auto-denied because they lack creditworthiness. Or maybe 10% can be auto-approved if they meet certain criteria. Automation also should power internal notifications, keeping salespeople and credit analysts informed of auto-approvals, denials or deals that need a manual review.

Automation can also be bolstered by access to third-party data. Huge strides have been made in terms of credit-related data that is available, from business credit reports to Secretary of State documents, UCC filing activity and more. Integrations between third-party data and an underwriting tool can add even more speed and streamline the transaction process further.

Eventually, the criteria for auto-approvals and auto-denials can be tweaked so that credit analysts only look at deals that need a human to make a decision because of their complexity. The question, “Should we do business with this person based on their story?” can never be answered by a machine. In these instances, a human can decide how to structure the deal in a way that fits the company’s credit policy.

Of course, automated decisioning requires companies to have a solid underwriting model. If the model isn’t clearly defined or is incorrect, the tool might let deals through that shouldn’t be approved. Without the right guardrails, companies can open the door to fraud or credit risk that can turn a business upside down very quickly.

The people within an organization need to trust that technology and automated decisioning will be a win. And by focusing on the obvious situations (approvals or denials) with complete credit applications, companies can achieve that trust quickly. These internal wins from automated decisioning also will meet the customers’ business goals, as they will receive a response more quickly.

BUILDING FOR THE FUTURE

When companies achieve a decisioning nirvana, they may ask themselves, “What comes next?”

Technology and data have the ability to tell us a lot. Through automation adoption, companies can begin to look more carefully at portfolio metrics, such as transactional data and trends. They might start to examine historical data like delinquency and charge-off rates and ask themselves if they need to change their credit models overall. They can even dig deeper into existing segments of their customer bases or expand into new markets. These practices create another realm of augmentation, as companies can rely on business intelligence and find commonalities and patterns, using that knowledge to drive larger business decisions.

Many companies are eager to hear about new technology and its benefits. It’s exciting and intriguing, a brave new world of automation and possibilities. But, ultimately, companies still need to determine how automation solves a business need or meets a customer’s expectation. By answering these questions, companies can better understand how to apply technology.

The automation of today won’t look like the automation of tomorrow — we can only begin to imagine what comes next. But companies need to build the foundation today so that they’re ready when tomorrow arrives. •

ABOUT THE AUTHORS: 

Van Wrenn, CLFP, is the director of client services at LTi Technology Solutions. Wrenn is responsible for leading the team that implements all of LTi’s solutions. He has been in the equipment lease finance industry for more than 30 years and with LTi for more than 18 years. Prior to joining the LTi team, he was a controller and manager for a lessor.

Peter Haug is product manager at LTi Technology Solutions. Since joining LTi in 2009, Haug has collaborated with industry thought leaders to understand and solve the critical challenges of today and tomorrow. Recently, Haug has presented on building an innovation culture and empowering employees to improve the customer experience