Equipment Leasing and Finance Association - Equiping Business for Success
Equipment Leasing & Finance

Inviting Technology to the C-Suite

Spring 2020

TechART

Partnerships between an equipment finance company’s business leaders and its technology experts are more important than ever. Here’s why.


You could say Stonebriar Commercial Finance in Plano, Texas, has earned bragging rights. The independent, middle-market commercial finance company is just five years old but has a $2.8-billion balance sheet, multiple business platforms and a mere 47 employees.

“If you’re wondering how we’ve grown a business like this in just five years, I’ll tell you: Technology is a significant part of the answer,” says Dave Fate, President and CEO. “Our technology professionals take the volumes of data we accumulate from every transaction and synthesize [the information] so we can better understand it and use it. We’re very dependent on data analytics, and the ability to organize our data and use it well is mission-critical.”

Also mission-critical is the working relationship between the company’s executive suite and Steve Siler, Chief Technology Officer. Fate and Siler say monthly meetings and effective communication between the two result in a stream of projects and an impressive amount of innovation. Siler gives an example:

“We’ve developed an analytics app we can pull up in a meeting with our bankers or investors and see our entire portfolio by transaction, state or customer. We use it to examine any part of the portfolio to see where we need to lower our cost of funds. Two of us attended a two-day training session by Salesforce for Einstein Analytics to learn how to develop the app. Then we worked together for a couple days to start the whole thing up and refine it. It was an experiment, and it worked. Our bankers and investors say they’ve never seen anything like it.”

Significant Strategic Value
If business and technology leaders at your company speak different languages and perspire at the thought of working more closely together, Deb Reuben suggests taking a page from Stonebriar’s playbook. “Now more than ever, equipment finance executives must stay on top of technology trends to stay on top of disruption,” says Reuben, Chair of ELFA’s Technology Innovation Workgroup and President of Tomorrow Zone in Minnetonka, Minnesota. “We know now that disruption can come from anywhere, even a virus. And companies whose leaders are forward-thinking about technology are better able to respond with agility to quickly changing circumstances.”

This is not to say CEOs need to become technologists, Reuben qualifies. It is to say that they need to be aware of the implications and opportunities technology creates. “Business-model innovation is where game-changing advances happen,” she stresses. “When CEOs and technology officers work together to increase their awareness of technological possibilities, companies can become agile and adopt new ways to innovate during disruptive change.”


Dave

“We’re very dependent on data analytics, and the ability to organize our data and use it well is mission-critical.”

―Dave Fate, President and CEO, Stonebriar Commercial Finance



Barry Beer, Business Technology Director of Dell Financial Services, in Round Rock, Texas, says active partnerships between business and technology leaders allow companies to stay relevant against competitors—and to grow into markets that traditionally have paid up-front for equipment. “All industries increasingly require technology investment to grow and sustain their businesses, and equipment finance is no exception,” he says. “Historically, finance companies have used technology primarily for financial controls and management of receivables. But demands for technology have now reached all aspects of go-to-market and customer engagement.”

The Ticking Clock
Dave Giamvu thinks equipment finance companies without business-technology partnerships are running out of time. Giamvu is a member of ELFA’s Technology Innovation Workgroup and Head of Digital Transformation for the Commercial Finance Americas division of Siemens Financial Services in Malvern, Pennsylvania. “Changing demographics and customer demands are driving an urgency to meet customer expectations,” he says. “Clients are developing new expectations from a variety of experiences inside and outside of our industry, from banking online and using electronic signatures to applying for a mortgage in minutes. There are now so many variables in the equation that the gulf between available capabilities and where we are as an industry has widened, increasing our vulnerability to disruption.”

Traditional equipment finance businesses could be particularly vulnerable if a large technology company developed and applied new capabilities to disrupt the user experience, Giamvu believes. “If one of these large entities decides to play in our space, finance companies that have done little to anticipate changing customer demands would find it hard to respond,” he says. “But in reality, all companies in our industry would need to maintain and grow their market share in the new, more competitive landscape.”

Similar alarms were sounded not long ago about Fintech companies. Much ink and discussion were devoted to how the hybrid start-ups, with their low documentation requirements, state-of-the-art technology and ultra-fast decisioning, could put traditional equipment finance firms out of business. That didn’t happen, “perhaps because customer expectations were not as advanced as they are now,” says Giamvu. “But Fintechs have made inroads into our business and have an advantage in their ability to build around existing demand. And because that demand is more dynamic than ever, incumbents are continually racing to catch up.”

How to Get Started
Giamvu says that when business and technology leaders begin to work more closely together, a common trip-up is the identification of a particular work stream that warrants focus. “But it’s the outcome they should be focusing on, not the present state of the technology,” he emphasizes. “And the outcome should always be improvement of the customer experience—or the creation of a new customer experience that is a unique value proposition or product that you are selling.”

Siler believes technology professionals need to think about and adjust the way they communicate with company business executives. “Bring your explanations up to their level,” he advises. “Resist the temptation to get lost in the weeds. Instead, give your C-Suite the information they need to make a decision quickly, and be able to summarize to get buy-in at the top.”


Deb“We know now that disruption can come from anywhere, even a virus. And companies whose leaders are forward-thinking about technology are better able to respond with agility to quickly changing circumstances.”

―Deb Reuben, Chair, ELFA Technology Innovation Workgroup and President, Tomorrow Zone

Fate says a technologist’s understanding of the equipment finance business also influences the partnership. “Steve understands the business well and doesn’t just focus on his end,” he says by way of example. “He shows up to our meetings prepared, doesn’t use technical jargon and doesn’t talk over our heads. He synthesizes information in terms we can understand.”

Because the stream of new technology is nearly constant, Siler says he sets aside time each week to find out what’s new and research possible applications for equipment finance. He and Fate also formed a diverse working group that meets monthly to review procedures and processes and explore ways to build more depth throughout the company’s technology functions and platforms. “It’s great to have so much input, not only from Dave but from others of different backgrounds, ages and functions,” says Siler. “The working group also puts everyone on the same page as they look to ensure that all business units work together as efficiently as possible.”

Garland Brooks, Senior Advisor, Business Enablement & Sales Optimization at Dell Financial Services in Round Rock, Texas, suggests that since Fintechs continue entering equipment markets as competitors, partners or enablers, leaders of traditional equipment finance companies could benefit from examining them more closely. “I think it’s critical for our industry to follow and use the new standards set by Fintech companies,” Brooks says. “By balancing internal investment in custom solutions with best-of-breed options available in the market, companies can focus on differentiating themselves and appealing to the end-customer’s success. Doing this would continue the loyalty and trust of existing customers and help acquire new ones looking for the digital enablement, self-service convenience and simplicity that Fintechs offer.”

Setting or Expanding Parameters
Beer says that whether business-technology partnerships are internal or include external expertise, they require executive leadership that agrees on and sets business goals, such as growth, margin, operating-expenses control and other financial parameters. “They then should look to their digital and IT teams for ways to achieve these goals,” he says.

But Fate thinks the technology side should also be involved in setting business goals since initiatives to lower costs or enhance the customer experience are often technological in nature. “When we hired Steve, we reviewed a number of work streams from the front to the back of the business,” he says. “This is now a page in our business overview that helps us embrace change, establish goals, hold people accountable and measure results.”


Siler
“Resist the temptation to get lost in the weeds. Instead, give your C-Suite the information they need to make a decision quickly, and be able to summarize to get buy-in at the top.”

―Steve Siler, Chief Technology Officer, Stonebriar Commercial Finance


Fate shares information about Stonebriar’s data analytics as an example. “We know we fund one of every 10 deals we look at, have funded $4.5 billion in deals over five years, and have looked at $52 billion in transactions,” he says. “When you analyze all that data, you see many repeat characteristics that explain why a certain type of deal is a non-starter or is one that can be analyzed further to learn how we can fund other deals like it. We do triage at the top end to categorize the deals we don’t fund so we can learn from them. Analyzing all of this data also allows us to make credit decisions even faster and to be very good at it. We’ve been amazed at how well our data correlates with our years of experience.”

Siler says that moreover, this type of data analysis increases the efficiency of the company’s sales team. “The data helps everyone be more efficient and originate over $1 billion of business each year,” he says. “If every salesperson picks up an additional transaction each year as a result, that’s a significant amount of new business you can achieve just by moving the needle a little. Saving people time is important, and data allows us to do that.”

Data, and a business-technology partnership that directs the collection of data and facilitates its effective use. “Together, we’re constantly working to eliminate complaints that technology or training hinders someone’s job,” says Fate. “We get our staff members whatever they need to do their jobs better and more efficiently and sometimes, it surprises them. But at the end of the day, we have buy-in. People see the results and know that what we do works. And it all starts with having a strong chief technology officer.”

The Role of ELFA’s Technology Innovation Workgroup

In the summer of 2018, ELFA President and Chief Executive Officer Ralph Petta reached out to Deb Reuben with an idea. “He said that the Operations & Technology Committee does a great job providing resources to improve business processes and operational effectiveness through technology solutions and process improvement. But that he and the association’s Board of Directors thought member companies also needed a group whose mission was more strategic and long-term to help executives understand where technology is going and what it means specifically for our industry,” Reuben recalls.

That fall, Reuben and ELFA Vice President of Research & Industry Services Bill Choi put their heads together to select a diverse group of individuals who would represent each industry segment and sector as well as every category of association membership. Today the 16-person Workgroup acquires knowledge about individual technologies and examines options and potential applications for equipment finance. “We monitor emerging tech trends and consider how the future will play out, so we think long-term about the possibilities for our industry,” says Reuben. “We also write and contribute to articles in the industry press, influence industry event content and hold in-person and virtual events to facilitate deep-dive discussions on innovation.”

The Workgroup’s 2020 agenda includes new events focusing on such new topics as robotic process automation, Agile models of delivery and the future of work. Says Reuben, “Because our industry needs to focus less on evolution and more on revolution, we’ll be leading discussions on how we can take those leaps forward together to meet the challenges we face. Whether these events happen virtually or at a location near you, we’ll bring you information that distinguishes between reality and hype and helps your company identify its next steps in technology—and start to take them.”

Categorized With:

  • HUMAN CAPITAL
  • OPERATIONS & TECHNOLOGY