Susan Carol,
CEO,
Susan Carol Creative
Embedded finance with shared predictive data and machine learning is leading to greater transparency among partners in transactions with customers. It is transforming modern equipment financing and creating more access to capital with minimal processing for everyone involved. This is bringing new and friendlier equipment financing models into focus.
The tech evolution of innovation in our industry may have started in any number of places.
Denis Stypulkoski made a name for himself as CIO at the independent, US Express Leasing, with an IT solution and mindset that made equipment leasing more transparent back in 2004. The company messaging highlighted “real people, fast answers.” It was about enabling people on the front line with shared technology that provided “a single view of the truth” and a faster, more personal response to customers, he explains. “Everyone had portals. It wasn’t about being faster. It was about being human.”
Now, he leads Reimagine Advisors and collaborates with executive leadership teams to help companies embrace and implement agile business models designed with the future in mind.
In industry consulting and mentoring, Stypulkoski emphasizes once again that the key to innovation is cultivating leaders who remove obstacles and ask their teams what they need to succeed.
Then, in 2018, Innovation Finance created QuickFi, a self-serve mobile equipment financing platform that enables secure financing of equipment lease and loan transactions up to $5 million each, without salesperson involvement, from the borrower’s mobile phone. It was founded by Bill Verhelle, previously the founder and CEO of First American Equipment Finance before that company was sold.
“In the past, innovation was all about optimization and changes were incremental. But we started with a blank piece of paper,” Verhelle says, referring to when he and Mark Tomaselli (now the company’s president) began considering what would be a convenient financing process from their customers’ perspective.
QuickFi enables creditworthy individuals to start and finish their own application independently in approximately six minutes if they are a new customer or three minutes if returning. This is available 24/7 and transaction terms are fully disclosed upfront.
“We’re not really a lender, we’re a tech platform,” Verhelle says, whose company partners with technology, office and construction equipment vendors and is now introducing QuickFi to banks.
Verhelle was interviewed recently in a podcast produced by FinTech Futures and spoke about the role that application program interfaces (APIs) will play in digital banking following a new Cornerstone Advisors report which found roughly 40% of banks do not have an API strategy. And those that do use them internally rather than for customer interaction. That low percentage could be due to regulations and complexity, but Verhelle says organizational design could be another reason.
“The focus needs to be more on transforming the business model. Too much digital investment has been simply adding to existing processes, and that just digs the company deeper into old models,” Verhelle adds.
Fintech Expansion
In the mid-2000s, fintechs were upending consumer finance markets and signaling changes that threatened the status quo for some in financial services, especially those with intense regulatory pressure or complex transactions.
In 2021, the fintech APPROVE Payments emerged when Robert Preville, founder of KWIPPED, an online equipment rental marketplace, realized that many businesses in the marketplace could benefit from equipment financing if it was easier to obtain. APPROVE’s SaaS solution is an ecommerce plug-in that uses algorithms and machine learning to match vendor finance to buyers in just minutes. A buyer can click on a link on a website product page, in a sales quote, in a mobile app or using a QR code and complete an application in about 60 seconds from anywhere at any time.
Lenders in APPROVE’s network are expanding business and creating passive income. The equipment sellers that use APPROVE can enable their customers to acquire more equipment since the process is easy and financing enables them to spread out payments. New vertical sectors now realize the benefits of equipment financing. The team at APPROVE helps equipment manufacturers, OEMs and dealers appreciate the value of offering financing first to expand sales, not to think of financing as a secondary idea.
Finova Capital launched in the past year, as well. Led by President and CEO Bob Neagle, the Finova team has provided financing to about one million merchants in the U.S. While the core offering has historically been equipment leases, Neagle’s company is now more firmly positioned in the payments industry with a more comprehensive product offering that includes working capital loans, leases and merchant cash advances through a digital workflow. The product offering can be embedded in the tools of referral partners to include websites, dashboard, CRMs and even payment devices.
Embedded Finance
When financing solutions are embedded in a vendor’s website or other relationship tool, the vendor’s existing user data can be shared, including receivables information. That means a small business can be preapproved and its relationship acknowledged at the time of application. That acknowledgment clears the way for immediate and assured decisions for the end user’s working capital or cash advances. Buyers get approval faster than ever and do not have to leave the vendor’s website, Neagle says, as both he and the vendor dedicate themselves to making the customer journey swift and painless and the overall experience a positive one.
Finova emphasizes the ease of transactions at the point of sale. APPROVE’s marketing message suggests a touchpoint even earlier: at the point of influence. The point that both are making is that financing no longer needs to be complex or burdensome and it is now easily embedded in the sales process wherever that is initiated.
Embedded finance gives vendors a way to offer customer journeys that are swift and painless.
Consultant Deborah Reuben, founder and CEO of TomorrowZone, looks at this and says, “it is all about ‘reframing who you are.’ It’s a new mindset more than anything. When you look at the industry through another lens, it opens up a whole new opportunity to rethink the value you bring, why and how.”
When you deepen relationships with customers, they become embedded, too, “not just for the life of a transaction but for life,” Reuben says. So why end the relationship at the lease?
The CEOs of APPROVE and Finova both have one foot in the equipment leasing and finance industry and one in the broader payments industry. Why? Because the focus is simply on making the acquisition a quick reality. It is about approving the funds. From the customer lens, it’s a payment but for the seller, it’s a sale.
Innovative companies in equipment finance reveal dynamic teams, cultures of learning and transparency. That seems to be the spirit that sparks continuous innovation.
For example, APPROVE delivered an “all-tech” solution, then realized a major differentiator for the company was the human responsiveness to clients. Now APPROVE is expanding that human connection and clients are responding with much appreciation. (See sidebar)
What company leaders continuously ask themselves, according to APPROVE marketing leader, Robin Salter, is “What else can we automate?” And more importantly: “What more can we do to make this even easier for our customer?”
Embracing Intrapraneurs
Even banks, with their greater level of regulatory oversight, can embrace the value of more entrepreneurial cultures that can spark innovation. RJ Grimshaw, president of UniFi Equipment Finance, part of the Bank of Ann Arbor in Michigan, has been writing and speaking about the value of cultivating intrapreneurs. He reports the business world has seen an explosion of intrapreneurs in recent years and there are many reasons for this.
Grimshaw says it can help organizations achieve such goals as:
“The simple fact is a small group of intrapreneurs can do what scores of managers, executives and ideas-people so often fail to: innovate,” Grimshaw says. “Part of the attraction when I joined the company was the entrepreneurial spirit of the bank and the board of directors. Our culture is an extension of this culture.”
UniFi’s intrapreneurship operating model also helps with employee attraction and retention, Grimshaw says. “High-performing people are attracted to opportunities to have their voices heard.”
One of the obstacles to advancement earlier in the technology boom was simply having an established mindset in the holdover management suites of established corporations that avoided the risks of changing from the known and proven systems and operations. It seemed too much was invested in these old systems. Then came the pandemic and a slew of next-generation executives and industry software executives, as well as advisors to help pave the way for more adoption.
Reuben, in collaboration with the Equipment Leasing and Finance Association, ramped up education and awareness about what was possible in innovation by showing the industry what was happening outside of equipment finance.
She entered the industry in 1995 at Norwest Equipment Finance Division, building the bank lessor’s first web applications. She later was employed at other finance firms and a software provider before starting her consultancy in 2013. At that time, cloud computing was entering conversations, as were the “internet of things” and virtual reality.
Reuben studied human-to-human interactions that made technology difficult and started reverse-mentoring executives on the power of cloud collaboration applications and then getting started with social media, fintech and virtual reality.
She has helped individual executives make mind-shifts and spoke to corporate groups and at industry conferences throughout the last decade, then began leading ELFA’s innovation workgroup in 2018, of which Stypulkoski and Preville are members.
“We have made a lot of progress. The level of conversation has radically evolved,” Reuben says. “Everyone knows we need to embrace digital, but we must not be so tech-focused we lose sight of the human side.”
Reuben continuously researches what industries outside of equipment are doing, including the medical, insurance and consumer sectors.
“It’s not about your tech tools … You can still fail if you don’t get the human side right,” Reuben says.
In every single innovation discussion, mindset and culture come up, Reuben adds.
Stypulkoski agrees. Now on the faculty of the STRIPES Leadership Program, in partnership with Monitor, he says, “It begins with leadership, enabled through culture, fueled by curiosity. When you think about the pivot we need to make, and leaders need to make, we need to stop lagging and get to the forefront of innovation.”
A Case in Point:
The fiber laser cutters sold by Hytek range in price from $65,000 to $500,000, and customers range in size from smaller fabrication shops and signmakers to large organizations such as Lockheed Martin and NASA. One challenge to finding a successful financing solution was figuring out a way to cater to so many different ticket sizes and purchaser profiles.
Hytek’s leaders found APPROVE Payments. Their SaaS solution allows equipment sellers to give their customers access to a curated network of lenders, with tech-based tools that make it easy to display monthly financing costs and allow for a fast and easy application process.
“We were struggling … We weren’t getting many applications, and that was hurting our sales,” Jason Jones says. “The digital quote with the finance payment was a selling point for APPROVE. Compared to what we were doing before, it’s just night and day.”
There is seamless integration with Hytek’s website, Jones says, and a graphic interface with buttons to make it clear to customers how to apply for financing and help move people through the process — with measurable results.
“We got applications right away, after three to four months without a single application through [a previous lender],” Jones says.
Jones likes the ease of the application process for customers while keeping them on Hytek’s own website.
“I have been telling customers, ‘You could be 60 seconds away from the biggest piece of machinery your company will ever buy,’” Jones says.
This is particularly helpful to some of the metal fabricators served by Hytek as the industry transitions from older plasma cutters to fiber laser cutters, which are more expensive but achieve higher-precision cuts.
Fabricators that can’t afford to buy a cutter may spend as much as $200,000 a year outsourcing cutting work, according to Jones. By seeing a monthly financing cost instead of a single equipment price, he says many of them may realize that they can afford this investment that has the potential to grow their business revenue.
“You do the numbers, and they could be putting that money in their pocket,” Jones says.
As Hytek’s competition grows in the fiber laser cutter market, Jones is hopeful that the company’s ability to offer transparent pricing with clear, user-friendly financing options will continue to set it apart from others in the industry.
Susan Carol is CEO of Susan Carol Creative, a public relations and marketing communications firm specializing in the equipment finance industry since 1989
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