The future of equipment financing reminds me quite a bit of college — biking in college, to be specific. Let me explain.

Many college students work summer jobs in the weeks leading up to freshman year, saving money to meet the financial demands of student life. Campus travel is one such demand; many campuses in the U.S. stretch across thousands of acres, with administrative buildings, classrooms and living facilities sprinkled throughout. With a packed schedule and limited budget, many students acquire bikes as a means of transportation. However, bikes require a decent cash investment and are often stolen or broken on college campuses, creating a financial liability for students. Given the exorbitant cost of tuition, many students can’t afford any element of financial risk when faced with the books, supplies and costs associated with higher education. In this example, as in many other industries and verticals, outright ownership of hardware becomes a financial burden — a risk many people don’t want to take on, but still need to achieve success.

Recently, while observing the implementation of a new bike sharing service at a university, I realized the changing consumption model, in this case a usage-based bike service, drastically improved the customer experience for students. It effectively eliminated financial risk while driving positive cultural change on campus through an ecological and budget-friendly alternative.

The bike service reduces the financial investment and subsequent risk students face through bike ownership with a service-based consumption model. Students can use bikes when they need them without worrying about maintenance, replacement or other costs associated with outright ownership. At the same time, this subscription and pay-as-you-go model provides more students who previously couldn’t afford a bike with access to one, making campus much more accessible.

This type of changing consumption model provides a thought-provoking glimpse into the future of captive finance, and it’s only the beginning. Captive finance organizations will find future success by driving improvements within the customer experience, becoming a catalyst for paradigm shifts and ultimately, cultural change.

Creating Success by Focusing on Customer Experience

In a certain sense, nothing has changed — the end-user customer and his experience is still the most important part of any business model. And while the importance of the customer hasn’t changed, the ways in which we satisfy customer needs changes at an increasing pace alongside rapidly accelerating technological innovation and evolving consumption behavior.

New technologies like artificial intelligence and machine learning will ultimately benefit the customer — but it’s easy to get carried away with sci-fi forecasts looking far into the future. While these imaginative predictions are exciting, as financing captives, we must walk before we can run and instead look toward the practical applications of new technologies and how they help our customers. For example, at Cisco we look at these technologies in the context of how predictive analytics can help our customers replace time-consuming activities related to data analysis, service management and consumption.

For example, with predictive analytics, we can see usage patterns in certain technologies. And based on those usage patterns, we can make suggestions about how our customers can cut costs and drive efficiencies in their operations before they even need to worry about it.

In this sense, captive finance organizations will soon grow beyond financing, transforming into a new role of increasing importance where they will be responsible for proactively finding innovative financial solutions for customers. This role, unlike previous decades of transactional finance, will become a true partnership between the captive financier and the customer to find unique, tailored solutions.

The New Role of Captive Finance

Soon, captive finance organizations may become a catalyst for cultural change. Like the biking example, as captives become partners to companies, they will enable new consumption models that will make inaccessible technologies more accessible than ever to industries and organizations.

Furthermore, as the hardware lifecycle decreases, the pressure to innovate only accelerates. Financial strategy will become a conduit for driving this acceleration, enabling organizations to acquire new tools, systems and technological infrastructures as needed, at a moment’s notice.

Like the bikes on the student campus, an organization will no longer need to purchase an expensive enterprise hardware solution. Instead it can pay by usage, through cost-saving bundled packages and subscriptions. The need for hardware won’t change, but the methods of hardware acquisition will, and that’s where captives come into play.

With these consumption-based solutions, captives provide value by sharing financial risk. This ability to reduce financial liability for customers will be crucial for captives as they enter the next decade. No company can stay competitive and meet the challenges of digital transformation alone. That’s why working with an innovative financial partner is more important than ever.

Finding Success in Uncertainty

C-suite executives know the rate of technological innovation will present many unforeseen challenges. Many CTOs, CFOs and financial decision-makers looking to successfully navigate digital transformation will need to look toward improving the end-customer experience as a means of driving shareholder value and operational efficiency. The best way to do that is through financial partners.

CFOs will need to consistently explore new ways to drive operational efficiency, remove unnecessary costs and make investments to increase value for customers, partners and shareholders. On the other side of the same table, CTOs will need to find ways to use technology to drive transformation to maintain pace with the rate of technological innovation.

Whether it’s embracing early technological adoption or aligning costs and cash outlay to revenue, financial and technology decision-makers will need to re-think their operational strategies to embrace change and the opportunities created by it. Captive financing organizations will provide the consumption-based models crucial for this alignment, and together they will be able to partner with organizations to help CTOs and CFOs navigate the challenges of the digital transformation.

We’re facing an incredibly exciting time, and we’re only scratching the surface of the implications of many technologies. In the next few years, we’ll start to see incredible progress in how technologies like blockchain, AI, and machine learning create new opportunities in all aspects of society, ranging from individuals going about their daily life to massive industry trends.

Ultimately, organizations and executives should feel a sense of reassurance knowing that they can find success by focusing on the customer experience. An increased, unwavering focus on the customer will only prove to help an organization prosper as new technologies shift and redefine industries.

Learning how to innovate through finance and adapting to change isn’t easy. But just like we see with biking services on college campuses, many organizations will find financial innovation, while challenging at first, becomes easier with time. One might even say that it’s a little bit like learning to ride a bike.