fintech disruption in leasing - the alta group€¦ · fintech disruption in leasing september 21,...

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© 2016 The Alta Group, LLC

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FINTECH DISRUPTION IN LEASING

SEPTEMBER 21, 2016

Proprietary and Confidential: The Alta Group prepared this information solely for our client: 3rd party use is permitted only with explicit advance permission of The Alta Group

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The Alta Group

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Cloud Lending Solutions

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Today’s SpeakersJohn RizziManaging Director Digital Business Advisory Practice, The Alta Group

Rizzi’s 30+ years industry experience includes executive positions at De Lage Laden, GE Capital and Heller Financial. Having led sales, operations and risk organizations, he brings a unique perspective to increasing customer service levels and maximising operational effectiveness through the use of technology

Patricia VoorheesDirector, The Alta Group

Patricia M. Voorhees, a director at The Alta Group, has over 25 years of experience in commercial finance. Her expertise focuses on forming captive financing companies, establishing vendor finance programs, and facilitating mergers and acquisitions within the commercial finance industry.

Mukul MittalEVP Product Development

Mukul has over 20 years of experience in software product development, project management and systems implementation, and has deep understanding of financial services industry, especially equipment leasing. Mukul has held senior positions for companies like Oracle, ITC Classic Finance and Bell Controls, where he successfully assisted clients across the world define the strategic and tactical roadmap, and effectively implement solutions under tight timelines. With his vast experience, Mukul is passionate about financial services applications that enable clients to simplify their processes and improve customer experience.

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Rise of Fintech 1

Fintech in Leasing 2

Implementing Fintech 3

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Rise of Fintech

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Fintech Market Drivers

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Post Recession Bank LendingPost-recession, banks significantly pulled back lending in the SMB market

in response to increased regulatory costs, capital requirements and tightened credit standards

Bank Qualified Small Businesses

Void created by bank pull back in SMB lending is key in creating Fintech entry opportunity

16% Reduction in Number of Loans and 43% Reduction in Total Dollars Lent

Vast Majority (76.2%) of SMBs Do Not Qualify For Bank Loan Underwriting Criteria

Category

Number of Businesses(Millions)

Potential DollarLoan Value(Billions)

Percent of Businesses

Percent of Value

Qualifying 3.7 $544 10.2% 23.8%

Non-Qualifying 32.4 $1,745 89.8% 76.2%

Total 36.1 $2,289 100% 100%

Total $ Lent to Small Businesses

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U.S. Equipment Finance Market Size and Origination Channel

8.3%

7.0%

6.5%

$1,600

$1,083

56%

▶ Combined origination through Vendor/Captive channels grew from 44% to 56% (‘04-’14)

▶ Financing decision made nearer time of equipment selection

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Winning Fintech Equipment Leasing Elements

➢ Few pure play equipment leasing Fintechs

➢ Efficiency in origination strategy key to driving down acquisition cost

➢ Mastering both ends of “Fintech” key to prolonged success

➢ Financing decisions increasingly made at POS

➢ Increasing market concerns about Fintech performance highlight the importance of diverse funding sources

Financial Metrics

Balance Sheet

Diversity

POS/Vendor

Technology

Integra

tion

Originatio

n Strate

gy

Key Elements to Winning Equipment Leasing Fintech Strategy

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Fintech Threats to Traditional Banks and Finance Companies

What are the threats related to the rise of Fintech for organizations? Opportunities?

Source: BI Intelligence report, sourced from PwC Global Fintech Survey 2016

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Strategy to Address Fintech Competitive Threats

Source: BI Intelligence report, sourced from PwC Global FinTech Survey 2016

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Fintech in Leasing

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Fintech Market Drivers

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Legacy System Complexity

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5 Fintech Innovations Disrupting The Leasing Industry

5. Agile Approach

4. Customer Intelligence

Modern lease solutions need an open architecture supporting user interface

toolkits so they can be configured without programming to meet each lessor’s

unique business needs. Users should be able to easily create new fields, custom

business rules, complex workflows, multi-step approvals, unique APIs, and user

interface portals. It should be easy to instantly configure new lease products.

Electronic registers of commercial activities provide greater levels of

transparency to customer behavior and buying preferences

Analytical software predicts customer behavior driving sales outreach activities

before customers begin their search for new equipment

The equipment itself will suggest maintenance, repair and replacement

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4) Customer Intelligence

3. Peer-To-Peer Leasing

Unique financing terms within a closed group of users

Matching lessors and end users at the asset class level


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2. Maintaining Financial Data In The CloudIn a 2014 CIT Equipment Finance survey, it was found that many middle-market companies were investigating the

potential of cloud technology.

In fact, 82% of the respondents said their company utilized a public or private cloud in some way. With the

cost-saving benefits that cloud-based solutions offer, it is easy to see why adoption has been so widespread among

mid-sized companies that might not have robust IT budgets or departments.


● Key driver of the multi-funder Fintech business model

● Lowered the cost of entry bar for innovative entrants

https://www.google.com/url?q=http://www.monitordaily.com/article-posts/financing-cloud-solutions/&sa=D&ust=1474991807455000&usg=AFQjCNEIP-yJCDHsu4iyjVTdWkXmu0hqwA

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Auto Decisioning systems collecting >700 data pointsCash flow, payments, personal records, banking records, automated spreads


1. New Innovative Ways To Evaluate Credit

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Large Amount Of Dissatisfaction With Existing Leasing Systems

Business Technology Performance Index 2015-16, CapGemini in collaboration with ELFA

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Implementing Fintech

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Spectrum of Fintech

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View of Customer

Problem to be Solved by Fintech

Delinquency Management

Proactively work with delinquent accounts to

minimize collection risk

Asset ManagementTrack and manage

equipment within lease and after lease

maturity

Automate OperationsAutomated billing,

payments and application of fees – Manage

exceptions

Effective OriginationOriginate and record

contracts

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Get on the Road Faster with Cloud Technology

➢ Leases pre-owned Harley-Davidson motorcycles, and new

Indian and Victory motorcycles

➢ Limited by their previous simple servicing solution, Chrome

Capital wanted to automate the entire lease lifecycle to

promote faster and more consistent application approvals

“With 750 dealerships across the country processing tens of thousands of lease applications annually, we need a system that enables us to service our customers at the speed of their ride.”

Peter Wasmer, President and CEO

https://www.google.com/url?q=http://powersportsfinance.com/tag/harley-davidson/&sa=D&ust=1474991809850000&usg=AFQjCNEpGSAIve3kimThHFUs0XY_KLOAqg

https://www.google.com/url?q=http://powersportsfinance.com/tag/indian/&sa=D&ust=1474991809850000&usg=AFQjCNElVE08TTZ1OIPmrfO0GFZ9gkA-Tg

https://www.google.com/url?q=http://powersportsfinance.com/tag/victory/&sa=D&ust=1474991809850000&usg=AFQjCNEXZQ_x-FBoYQ85yXU8OxP2Dmdvxw

https://www.google.com/url?q=http://powersportsfinance.com/tag/indian/&sa=D&ust=1474991809850000&usg=AFQjCNElVE08TTZ1OIPmrfO0GFZ9gkA-Tg

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Strategy

Operations

Technology

Advisors for your Fintech Journey

▪ In Depth Leasing Expertise and Market Knowledge

▪ Corporate Planning and Development of Plans

▪ Leasing Operations Models

▪ Change Management▪ Evaluation of Options

▪ Technology Platform ▪ Domain Knowledge▪ Enable and Support

Initiatives

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Fintech 2.0

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Questions ?

If you have a question, enter your questions into the “Questions” pane of the gotowebinar console and click “Send”

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Thank you

fintech disruption in leasing - the alta group€¦ · fintech disruption in leasing september 21,...

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