Randy Haug,
EVP, Chairman & Co-Founder,
LTi Technology Solutions

Kristie Kosobuski,
Senior Director, Product Management & Product Marketing,
Solifi

John Sokol,
Founder & CEO,
LeadX

The world of technology and innovation is moving extremely fast. Many have expressed their concerns with keeping up, especially in an industry that’s far behind others in terms of innovation. In our continued exploration of innovation and technology solutions, the Monitor sat down with three leaders of technology companies that deal in equipment finance to gather their perspectives on what’s out there, technology our industry should be focusing on and the steps to take for effective implementation.

How do you personally stay up-to-date with the latest advancements and trends in technology?

RANDY HAUG: We stay current by engaging regularly with our industry and product leadership teams, leveraging over 35 years of industry experience and leadership. We prioritize understanding and consulting our clients on the nuances of the industry sectors they serve. Our leadership is highly engaged in the largest industry associations, serving on boards, committees and industry foundations. We are extensively involved with various media publications such as Monitor and participate in industry-specific events, conferences and workshops attended by our client partners.

KRISTIE KOSOBUSKI: Working as part of a software solution provider, being on top of the latest trends in technology is vital. One of the key ways I stay up-to-date is participating in events, both in-person and virtually. I am very active within the equipment finance industry, regularly attending events to give myself the opportunity to connect with others in the industry. This helps me to understand both what technology they are utilizing and what business needs they have going forward that could be addressed with technology.

JOHN SOKOL: I read engaging, concise, bite-sized content and network with a diverse group of professional colleagues as my go to way of staying in the know. The macro, industry agnostic business content on the X platform (formerly Twitter) has surprisingly provoked critical thinking and challenged status quo notions in a productive way, and it doesn’t take up too much time to read since posts are on the shorter side. LinkedIn is great to stay up-to-date with equipment finance-related posts from colleagues and hear about what they’re doing and thinking. Monitor is fantastic resource for in-depth content with aggregated data points to understand the direction of the industry and provoke new ideas. For networking with a diverse group of professional colleagues, I implore interacting with people outside of the industry often, as they may run an out-of-the-box idea by you that may bring significant value-add to your team.

In your perspective, how has technology evolved in equipment finance?

HAUG: Today, everything is more streamlined and efficient. Small ticket or vendor-type financing can be completed in hours or even minutes thanks to automated process and concise workflows, along with credit scoring models and eSign documents. Electronic vault storage and ACH-type processes for billing are now the norm. Sophisticated funding and syndication models have set new benchmarks for speed and efficiency in the industry. The emphasis now is on providing a frictionless environment where great service is a given.

Equipment finance companies need to offer sleek, fast and frictionless solutions while maintaining high levels of service and convenience at competitive pricing. The combination of automation and the human side of technology is essential for maintaining profitable margins in these flow business deals. Different industry sectors deal with technological advancements in their unique ways. Everyone uses technology, but they also leverage their depth of industry and equipment segment knowledge to offer specific skill sets that make a substantial business difference for their client partners. The goal is to provide the right financial structure quickly and correctly, creating long-term deals that offer the best possible sustained outcomes for clients.

KOSOBUSKI: The use of technology has become an integral part of equipment finance processes. Now, with tools such as system to system integrations, lenders can make credit decisions much quicker with reduced human error. It also streamlines analytics and data processing, empowering lenders with better insights that support them in their business decisions. The Internet of Things is also a great advancement in equipment finance. Now, assets can be monitored and, as a result, maintained for better performance. For equipment finance providers, this means opportunities for additional revenue (through monitoring and management products), different models such as pay-per-use and the access to the data can inform future business decisions.

SOKOL: Technology has been slower to evolve in equipment finance compared to the pace of other industries, but since the pandemic, I’ve seen a significant uptick in technology interest and how it can solve problems in our industry — in particular machine learning and artificial intelligence. I’ve seen more equipment finance leadership embrace data science, as they realize they can gain a competitive advantage with leveraging the right data.

Which concerns from equipment finance leaders do you believe can be solved with technology solutions?

HAUG: There are two key concerns we hear consistently from equipment finance leaders that have technology solutions: talent acquisition and development and data, data analytics and reporting. A major concern is finding quality operations, credit and administrative talent. The key to a great operational team is top-tier talent well-versed in current technology, with strong operational, finance and technology backgrounds and proven problem-solving skills. Companies should invest in their talent, ensuring continuous learning and advancement, creating a culture that fosters growth and retains valuable employees. This focus on the human side of technology leads to a great company culture, low turnover and the ability to create value-added relationships with client partners.

The power of data analytics and reporting to make better business decisions is a green field for most companies in the equipment finance space. Utilizing tools to extract data from internal systems and third-party sources can greatly enhance decision-making. Artificial intelligence is a promising tool in this area, but success depends on exceptional human resources, analytics tools and targeted business reporting. Companies need to hire talent in these areas and work with solution providers to make their systems open to data extraction.

KOSOBUSKI: As an equipment finance lender, you want your loan process to be as streamlined as possible. It can be a concern for lenders if the process is too long or resource-heavy, as both can lead to a bad customer journey and business inefficiency. Technology solutions that use artificial intelligence (AI) and automation are a great way to ensure efficiency, reducing the time it takes to onboard your clients and make decisions, while also making those decisions more accurate. Many lenders also have concerns over risk management and ensuring compliance. Using a technology solution, you can take advantage of data analytics and reporting tools to identify any trends and make better informed decisions.

SOKOL: I think most of the industry has embraced new technology innovations well, and I also think the industry has done well with addressing technology holistically, weighing the pros and the cons. Concerns have been raised about the prospect of losing the relationship-centric ethos that is the heartbeat of equipment finance to technology automations. I’m a strong believer that we can’t let this happen to our industry as a side effect of technology adoption. However, I believe technology, when implemented in a thoughtful and strategically successful way, can allow customer-centric roles to be more engaged and better serve the customer’s needs on a larger scale without sacrificing the personal touch. Think of leveraging hundreds of data points about a single customer to know more about what their business needs more than themselves, or intelligently streamlining the credit underwriting and collections process. These innovations can help better serve your customers — and more of them in a 24-hour timespan too.

What do you believe is the best approach for implementing new technologies, and what should companies be considering when committing to this type of change?

HAUG: Successful equipment finance companies today are forward-thinking and are often on their second or third solution selection processes. The best approaches in the marketplace today include: understanding the problem and gaining a commitment to change. Identify the most important problems to solve with new technology solutions, involving executive-level members, managers and staff who handle the daily operations. This ensures a comprehensive understanding of the issues and a commitment to change from all levels of the organization.

KOSOBUSKI: The best approach is to work with a software provider who can configure a solution that suits the needs of your business. Solutions that can integrate seamlessly with APIs offer a better experience, meaning you can work off one platform, leaving much less room for error. One important thing to consider is scalability. Growth is always a key objective for equipment finance lenders; can your technology support this? Flexible solutions that grow with you are key to long-term business strategy.

SOKOL: I implore equipment finance leaders to continue to invest in high quality support staff and engage with third-party companies that can help successfully implement new technology. A sound implementation will save significant time and resources down the road, whereas an implementation with deficiencies will be a huge bottleneck that can affect downstream processes and even impact the most critical of business operations.

What emerging technologies do you believe will have the biggest impact on the equipment finance industry, and how do you believe companies can begin preparing for them?

HAUG: Several emerging technologies are poised to have a significant impact on the equipment finance industry, which include:

1. Standardization in Funding and Syndication. This trend is driven by the need to limit on-balance-sheet exposure and leverage equity effectively. Companies should watch this space closely, as standardization will make funding transactions more popular and cost-effective.

2. Broker Relationships. Consolidation in the origination space will lead to larger broker shops pooling and selling off larger tranches of transactions. Sophisticated front-end technology and skilled human capital will be essential
for success. Brokers will need to have a unique industry or equipment focus and add real value to the financial marketplace.

3. Vendor-Oriented Originators. Banks and other financial institutions will continue to expand into this segment, using the best available technology and hiring the best teams. They will provide unique value to client partners by offering high levels of service and technology, creating true win-win relationships. Banks that vacate this market will leave opportunities for independent equipment finance companies and captive finance companies to grow and fill the gaps.

4. AI and Automation. AI will play a role in making back-office operations more efficient and enabling compliance and regulatory work with precision. However, human expertise will remain crucial for handling complex customer interactions. Companies should view AI as a toolset for specific situations rather than a comprehensive solution. Ethical standards and guardrails around AI use are necessary.

KOSOBUSKI: Artificial intelligence and machine learning are some of the most critical emerging technologies in the equipment finance industry. With the ability to utilize virtual assistants, for example, equipment finance businesses will be able to enhance customer service by resolving issues around the clock. Through machine learning, software systems are becoming smarter, detecting worrying trends and unusual patterns much more quickly. Companies can begin preparing for these by moving away from manual processes and implementing a software solution that takes advantage of the latest technologies. By building solid foundations, equipment finance businesses are in a better position to take advantage.

SOKOL: Equipment finance companies, especially companies with a time in business greater than five years, are sitting on a treasure trove of their own data. Yet, most of this data is untapped due to a lack of strategy on how to best leverage it. Technologies that enable equipment finance companies to leverage their performance data so leadership has an intimate understanding of what’s working and what’s not working with nearly every aspect of the business will have a huge impact in the years to come.

In your opinion, what are the most exciting opportunities for innovation, and what advice would you give to equipment finance leaders looking to be more innovative?

HAUG: The most exciting opportunities for technological innovation in the equipment finance industry lie in the effective use of technology and data management tools that focus on potential clients and convert leads into funded deals. To maximize the opportunities for driving innovation, key areas of focus should include: a client-focused approach, streamlining processes, technology and data management and continuous learning. With a focus on these key principles, equipment finance leaders can foster innovation, create value for clients and drive sustained business growth.

KOSOBUSKI: My biggest piece of advice for equipment finance leaders is to take the plunge! Now is the time to be implementing technology solutions to stay ahead of the curve.

SOKOL: We’re at the forefront of a significant technological push with respect to technology adoption in the equipment finance industry. The most exciting opportunities are the ones that have a direct impact on making employees more efficient and bringing in more revenue organically. For the equipment finance leaders who want to be more innovative, I implore you to consider hiring people from outside our industry to invite fresh, new ideas that will give your company a competitive edge.•