What does the future hold for equipment finance?

With so many day-to-day responsibilities, it can be difficult for professionals in our industry to extract themselves from the present and take time to shift into long-term thinking.

Long-term thinking takes focus; it takes an intentional shift in mindset, and often requires purposely breaking away from the daily business environment.

I have developed a workshop methodology that resonates with equipment finance companies to help them build a model showing where they are now and assess the big picture to help drive the whole business in the same direction.

With the growing use of technology, business leaders need immersing in an environment that helps them understand the technology and its potential uses.

Last year, I conducted a Future Lab during the Equipment Leasing & Finance Association’s (ELFA) Operations and Technology Conference, during which we had thought experiments and group discussions designed to prompt long-term thinking and imagine possible futures for the equipment financing customer experience in 2025.

We discussed the impact that five key forces of change (societal, technological, regulatory, economical and political) could have on the industry. We explored the possibilities with the convergence of new business models and technological advances in artificial intelligence, blockchain, connected devices, augmented reality, virtual reality, and more.

Discussion revolved particularly around the importance of the question ‘what if?’.

For example, what if physical assets trigger specific types of transactions rather than people? What if we challenge our assumptions about asset replacement scenarios?

What if we leverage sensors, big data, machine learning, wearables, augmented reality, and the Internet of Things to create a frictionless asset replacement experience for the end-user?

In 2025, we envision that assets, not people, will trigger certain origination transactions. What if the asset reminds you rather than you having to remember? The transaction is processed through systems employing machine learning, advanced algorithms, proactive credit assessment, and notifying the end-user that their asset replacement is ready.

With new technology, many new business models become possible and challenge the status quo.

As assets become increasingly connected, their life can be extended with software updates, a model already being used by Tesla with its over-the-air software upgrades for its cars.

Companies such as Fleet Advantage highlight that technology and information provide insights for strategic growth opportunities.

What if we leverage technology innovation to create a new business model to enable financing of transportation outcomes?

With a data-centric model, a supplier can manage vehicle assets, but can also engage with the customer to offer insights that they would not have had access to before.

This can lead advances in vehicle utilization, cost-efficient operating cycles and timely replacement before running costs start to rise.

What if we leverage biometric identification for an instant financing experience? What if we reimagine the origination experience from the decision to execution, enabled by future technology?

In 2025, could biometric identification and data aggregation bypass the traditional notion of a financing credit application?

With contract execution completed by thumbprint, or some other biometric method, signatures would disappear, enabling the entire process to be instantaneous for the customer at the point of sale.

What if the traditional role of the sales rep goes away? What if commercial equipment acquisition were more like consumer purchases on Amazon.com?

What if, from sales through credit decision-making, we leverage proactive analytics data to transform the customer experience?

In 2025, the sales process as we currently know it could be replaced by artificial intelligence.

Acquiring commercial assets will be similar to what Amazon does today for consumers. People and systems drive Amazon’s business.

There are no salespeople that you are purchasing from, yet you love the experience, whether it’s frictionless payment and purchasing, the speed of delivery, ease of finding the right products, or the low cost involved.

Algorithms suggest the content and products you need commercially.

The existing relationship model for selling will become very transparent and system driven, with everything custom tailored, while machine learning helps systems to structure deals in flexible ways.

Machine learning and systems will also impact the credit function, providing better insights and predictive analytics to make great instant credit decisions.

What if we apply sharing business models to commercial equipment finance? What if we leveraged technology to connect commercial asset needs with excess asset capacity?

This is already becoming a growing sector of the market, with companies including YardClub, purchased by Caterpillar last year, and Equipment Share.

In 2025, we see asset sharing as common. Leveraging sensors, IoT, data, and advanced analytics, we see the creation of commercial customer profiles containing attributes of different customer needs as well as the capture of asset profile data and real-time metrics to create an ecosystem for commercial sharing of asset capacity.

What if we leverage blockchain to enable per-use financing with intelligent assets and blockchain-based smart contracts?

In 2025, we see smart assets with blockchain-based contracts governing the use of the asset. For example, a ‘smart copier’ connected via the cloud, would not be available for use if there were a violation of ‘smart contract’ managed terms (rules).

Good questions can be like portals to future discoveries. Forward-thinking leaders build on these questions, continue to explore future scenarios, and discover actions to take today.

• Deborah Reuben, CLFP, is founder and president of Reuben Creative, a consulting firm specializing in strategic process and technology consulting. She is an equipment finance industry veteran, with a broad professional background in both financial services (Wells Fargo and TCF) and the software industry (HCL and Linedata Capitalstream). She has served as ELFA operations and technology committee chairman and is a founding member of the ELFA Women’s Council.