• Part 1: A Proposed Path Forward — A Three-Phase Proposal >> Read It
  • Part 2: What We’ve Learned & Done So Far — Emerging from Phase I >> Read It
  • Part 3: Checkmark or Full V Recovery? — Imperatives for Phase 2 >> Read It
  • Part 4: Leading in the Next Normal — Innovation Fuels Phase 3
  • Part 5: Keys to Recovery — Solid Strategies in Uncertain Times

Leading in the Next Normal

Innovation Fuels Phase 3

One way to think of the impact of Covid-19 on the asset finance business is to view it as an earthquake in a mining town. Your team was busy extracting gold from productive veins deep in the hillside when the pandemic hit. For a short time, work stopped while people got their bearings. The quake left some veins open, some partially covered and others completely shut off. At first, the focus was on ensuring all the workers were safe. Then, attention shifted to restarting work and recovering as much gold as possible.

Many businesses will stop there: making sure workers are safe, restarting work, recovering revenue that was in play and then — waiting. While some take that protective approach, others will recognize the earthquake has shifted the landscape and uncovered rich, new opportunities to explore and strike gold.

A majority of businesses will take the recover-and-wait approach. This is interesting because, in a number of surveys (including one conducted by McKinsey in the late spring of 2020), about 90% of senior leaders acknowledge that the onset and eventual dissipation of the pandemic will create new opportunities for growth. The reasons for pulling back and waiting are many: but the big three are talent gaps, technology gaps and the decision to spend available budget on more conservative measures. Even companies that had dedicated budget to technology investments and net-new growth strategies often shift their priorities and redirect those funds to maintenance-oriented activities.

A study conducted jointly by Monitor and IDS shows that the tendency to limit investment and shift spending to more operational and preservation-oriented initiatives is prevalent among asset finance firms as we slog through the coronavirus pandemic.

A look at history, though, shows a trend you might expect: the organizations that invest in innovation during a financial downturn or crisis, tend to outperform those that limit or shut down their innovation efforts.

graph2

McKinsey also conducted a study on this topic in its pandemic coverage. This chart shows how companies that continued to invest in innovation outperformed others during and after the 2008 financial crisis.

So what does “investing in innovation” look like in this most recent global crisis? In banking, it’s the proliferation of mobile apps and other digital channels. During the pandemic, consumers who wanted nothing to do with digital banking were nearly forced to use apps and online channels as banks closed or offered limited access to branches. Aggressive banks are using the move to digital to expand offerings and move into new geographic markets — after all, if you’re using an app or online banking, location matters little.

Forward-thinking health systems, hospitals and clinics are building up their telehealth capabilities right now. Patients who would resist online consultations with clinicians had little choice during the pandemic, as hospitals closed their doors to nearly everyone except Covid-19 patients, women in labor and emergency room cases. Providers expanding their telehealth offerings are winning the battle for patient loyalty and healthcare dollars. They’re reaching new patients, making their clinicians far more productive and expanding their partnerships in ways that increase their areas of expertise.

So what about asset finance companies? What does it mean to invest in innovation? And how does this investment translate into new clients, new revenue and market leadership as the world emerges from the depths of the pandemic?

Like banks and health systems, the path to innovation is largely digital. Investing in technologies that connect you with key business partners.

Move Beyond Remote Work: You’ve already enabled your team to work remotely. Now, start investigating technologies that do more. An easy one is transitioning from spreadsheets to a cloud-based platform that frees your team to spend more time developing new business opportunities. You can also leverage digital platforms to rethink your workforce. For example, you could consider hiring people who bring value to the company but live far from your central offices.

Connect with Ecosystem Partners: The right cloud-based origination and portfolio management platform will also provide connectivity with ecosystem partners who provide services related to digital signing, tax rates, insurance and payment automation. This connectivity not only offers operation savings, but provides the foundation for expansion into adjacent markets.

Explore New Asset Classes: Cloud-based origination and portfolio management tools also provide you with a simplified path for moving into new asset classes. Pre-built workflows that are unique to specific vertical markets can be quickly configured to align with your own internal processes. This makes it easier to create offerings and onboard new clients.

Expand Geographic Reach: Like banks and hospitals learned, more and more of the world is willing to do business through digital channels — and they are willing to work with companies that offer the best solution, rather than the closest proximity. Cloud-based platforms allow you to conduct business with clients anywhere.

Integrate with Customer Initiatives: The pandemic also prompted your customers and prospective customers to accelerate their digital transformations. They’re building their own digital platforms — and increasingly looking for partners who can connect seamlessly with them. Cloud-based technologies give them visibility over their contracts, powerful financial and operational analytics and the ability to collect data for a variety of applications, including new lease accounting practices.

COMING 10/01/2020Part 5: Keys to Recovery — Solid Strategies in Uncertain Times

Missed the first installment? [Read Part 1]

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