Transforming Customer Experience in Equipment Finance and Leasing

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Improving customer experience has become a top priority for financial services. According to a study by McKinsey, a significant 63% of financial firms have made it their primary focus, aiming to meet the evolving demands of their customers. Lending, particularly in the asset finance and equipment leasing sector, is an area where this emphasis on customer experience is intensifying, often described as the next major battleground.

The Rise of Digital Transformation

The digital transformation in lending offers a substantial opportunity for equipment leasing companies that can enhance the digital experiences for lessors. For instance, a recent collaboration between a lessor and a software company led to the creation of a customer experience platform designed to streamline and personalize each lessee’s journey. This development is part of a broader trend among lessors striving to enhance their customer experiences.

Personalization and Customer Trust

Lessors recognize the push for digitalization to connect better with customers and provide personalized products. This demand has grown in the current financial landscape, where many are concerned about their financial stability. Personalization can significantly strengthen the relationship between a lessor and a lessee. According to a study, 88% of banks and lessors believe that the current era of uncertainty presents the best opportunity to regain customer trust since the 2008 financial crisis.

Automation as a Cornerstone for Customer Experience

To capitalize on this opportunity, banks, captives and independentlessors are streamlining their workflows to allow staff to focus on critical tasks. Automation is a fundamental pillar of this effort. Many financial services executives believe that self-service automation and automated personalized communications that anticipate customer engagements are vital for improved customer experiences. Moreover, 90% of respondents in a recent report emphasized the importance of scaling automated processes to handle increased customer inquiries without raising fixed costs.

The Role of Equipment Leasing Software

In the asset finance and equipment leasing industry, the implementation of modern equipment leasing software and equipment finance software is transforming operations. These tools bring in automation, streamline workflows, and break down information silos, ensuring companies can deliver a superior customer experience. By automating routine tasks and integrating various data points, these software solutions allow companies to provide faster and more accurate services to their clients.

Competing in a Crowded Market

Traditional lessors face growing competition from non-traditional lessors, including FinTech companies and Buy Now, Pay Later (BNPL) services, which offer quick access to appealing fixed-term leases. Additionally, the rise of super apps providing a variety of financial services has further intensified this competition. Mobile-friendly processes have also attracted younger generations who prefer app-based interactions over physical branches. A report highlighted that 75% of customers who switched to FinTech services did so due to convenience, ease of use, and personalized experiences.

The Role of Automation in Enhancing Engagement

Traditional lessors must leverage automation and AI to pinpoint customer needs and capitalize on them to stay competitive. While traditional lessors may seem at a disadvantage due to the constraints of legacy technology, they can overtake new competitors by building innovative, highly personalized digital experiences. Engaging lessees across various channels throughout the lease lifecycle can drive long-term customer satisfaction and customer lifetime value.

Real-Time Engagement and Customer Satisfaction

Customer satisfaction and lease conversion rates are closely tied to real-time engagement during the lease processing, underwriting, and contract signing stages. However, many lessors still rely on traditional print and mail correspondence to provide updates. With the proliferation of communication channels and increasing customer decision touchpoints, it is critical for lessors to have tools that facilitate real-time, anytime conversations with customers.

Importance of Communication

A recent study found that 81% of financial services customers consider communication crucial to the overall customer experience. If expectations are not met, 51% of customers are likely to switch providers. Furthermore, 53% of customers said they were likely to abandon an interaction if the provider’s process to collect information was too difficult.

Capturing the Younger Generations

As generational wealth transfer continues, capturing millennials and Gen Z will become increasingly important for financial services. Poor communication is a significant issue for these generations. The study revealed that 62% of younger generations are likely to switch providers based on poor communications, and 63% would end an interaction with a financial services company if the information collection process was too arduous.

Multi-Channel Approach

One effective way to ensure customers receive the communication they desire is through a multi-channel approach. The more communication channels available, the more likely customers are to use one or more of them. This also means that lessors can serve customers 24/7, gaining insights into and anticipating their future behaviors and activities. By developing products and services that meet these needs, lessors can effectively market to customers and send notifications or updates.

Leveraging Automation

Lessors aresuccessfully leveraging automation in various aspects of their lease processes through modern equipment lease management softwares, particularly around lease origination for easier decisioning and underwriting. Enhancements include data collection, credit risk assessment, document verification tasks, lease applications, disbursement, and repayment collection. However, there are still many untapped opportunities for automation to transform customer experiences.

Digital and Mobile-Centric Approaches

Lessors are focusing on reimagining traditional lease applications and servicing forms through digital and mobile-centric approaches that guide lessees through the process quickly. This technology not only provides customers with a better experience but also reduces inefficiencies and operational risks. A report highlighted that 32% of consumer lessors still manually retype lease application data into a system from a paper application or static digital document, leading to potential errors.

Automating Exception Management

Another area attracting investment is automating processes and communications related to exception management, such as adverse action notifications and declination letters required by regulatory standards. Too many lessors still manually create these communications instead of including document generation in an automated process.

Prefill Data for Improved Experience

From the customer’s perspective, one of the biggest complaints is having to answer the same questions across applications or service request forms. A survey revealed that only 50% of lessors offer prefill for lease applications with known information about the customer, and 52% could auto-fill applications using data from scanned documents, such as a driver’s license. The ability to prefill data significantly improves the customer experience, saving time and reducing the likelihood of dropping off from the process.

Streamlining Lease Servicing

Many lessors are focusing on streamlining processes to improve lease servicing, which is particularly important for default management. Rising interest rates, especially around adjustable mortgages, have led to an increase in customer requests for assistance, from deferrals to lease modifications. The slowdown in origination volumes presents an opportunity for lessors to focus on handling this increased service volume while maintaining flat staffing levels.

AI-Powered Chatbots and Robotics

AI-powered chatbots can provide faster, accurate, and customer-centric services to users, allowing consumers to get quick responses whenever needed. Robotics software can also help lessors reduce inquiry and application processing times at greater scales and minimize processing errors, making the overall lending experience faster and less painful for customers. As open banking and the use of APIs between financial institutions proliferate, the ability to assess, decide, and service via automation and custom solutions becomes increasingly critical.

Conclusion

The equipment leasing industry is undergoing a significant transformation driven by the need to improve customer experience. Digitalization, personalization, and automation are at the forefront of this shift, enabling lessors to better connect with customers and meet their evolving needs. Modern equipment leasing software and equipment finance software play a crucial role in this transformation by automating routine tasks, streamlining workflows, and breaking down information silos. By leveraging these technologies, traditional lessors can not only compete with new entrants but also build long-lasting relationships with their customers, ultimately driving growth and success in the industry.

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