Once viewed as a disruptor by equipment finance companies, today's fintech solutions are increasingly being welcomed as rescuers thanks to their ability to jump-start the automation process and move leasing companies closer to a complete digital transformation. With the leasing landscape radically transformed over the past months, it’s clear that adaptability in the face of change is emerging as a critical capability to remaining competitive.

A digital transformation for lease management

Collectively, how will these fintech solutions contribute toward transforming lease management into a completely digital process?

According to Mukul Mittal, vice president of industry solutions with Q2’s lending group, the COVID-19 pandemic has forced leasing companies to employ fintech solutions to take four crucial steps toward digital transformation.

  1. Adoption of an agile approach to leasing solutions so they can be configured without programming to meet each lessor’s unique business needs.
  2. Work to enhance customer intelligence so lessors can better understand their lessees’ needs.
  3. Maintain financial data in the cloud, as the enhanced security and accessibility of cloud-based platforms becomes the preferred norm in personal and business realms alike.
  4. Facilitate new, innovative ways to evaluate credit that allows for a much faster and more thorough credit-scoring process. (More discussion of these four steps can be found in the Q2 blog, The Fintech Solutions Driving a Digital Transformation in Lease Management.)

By employing these four steps, a digitally transformed process emerges that can directly meet the pandemic's challenges to leasing companies. Here’s how.

  • A digital transformation facilitates leasing companies’ ability to operate offsite and their staff to work from locations outside the office.
  • A digital transformation creates the capability for leasing companies to modify their processes and programs to cater to today’s rapidly changing leasing needs and goals.
  • A digitally transformed system for lease management allows for modifying credit algorithms to weed out unsuitably risky credits – and does so automatically, with minimal or no manual intervention.

“This would be a more systemic solution that would allow lessors to automatically bring back lessees as their creditworthiness improves – doing so invisibly, effectively, and easily,” Mittal explained.

“The holy grail,” Mittal added, “is to speed up the time and lower the cost of lease processing.” With this dynamic, an equipment finance company would be able to provide self-service capabilities so that customers can do their work on their own and not be dependent on a customer service agent. These are all parts of an effective digital strategy.

A unified, seamless leasing process

All of the advantages that fintech can bring to the process of moving leasing companies that embrace their solutions closer to a unified, seamless, digital strategy – from marketing through origination to portfolio management to asset liquidation – are continuing to gain recognition today.

Leasing doesn’t have to be hard, and fintech can make it easier. The ability to access automated origination, underwriting, and servicing information – within a single system of record – empowers lessors to serve their customers better. Creating new lease products quickly to meet market and regulatory needs immediately, offering configurable leasing solutions, and approving and funding leases immediately – without sacrificing compliance or creating credit risk—are all within the realm of possibility. (And the demand for such solutions is particularly high.)

“With the pandemic, the fintech strategy has come front and center for everyone,” Mittal said. “Other initiatives are being forced to the wayside, and the investment into the digital transformation through fintech is becoming critical for leasing companies to survive.”

Related Resources

Dig deeper into vendor finance with the Q2 eBook Vendor finance in the new normal depends on digital transformation.

Download the infographic, Top 3 challenges of vendor programs.


Written by Q2