Read the previous installment: How Smart Technologies can Improve Equipment Financing Part 1
In Part 1, Capgemini’s Jeff Boots and Roderick Wilkins discussed what artificial intelligence, blockchain and smart contracts are and how the technologies can be used in equipment financing. In Part 2, they explain the benefits to equipment dealers.
RLD: Where does the technology actually live? How is it monitored and kept secure?
Wilkins: In this particular case, it is based in the cloud, which is a good deal more secure than most people allow for these days. Only members of the blockchain have access. One of the big differences between a public blockchain and a private one is that almost anybody can access a public blockchain. Only system members and blockchain members can access the private ones.
Boots: It’s not so much banks that are owning and providing the blockchain. We are now seeing blockchain as a service.
RLD: Would smart contracts be the same way then? Would that be operated as a service?
Wilkins: Yes, a smart contract is a type of distributed ledger. Smart contracts and a blockchain payment system in concept are very similar. One primarily is in the transmission of value and the other is in terms of agreeing to the terms and conditions.
RLD: Can you talk through some examples of these technologies in terms of rural equipment purchases?
Wilkins: In an ideal world, the dealer would be one of the lead people. The dealer would have been using their data along with that of the finance company to identify the best prospects. The dealer would be marketing to the farmer in advance of the farmer actually going online.
Let’s say it's the farmer that's doing the investigating and the dealer or the finance company is waiting for that contact. They've pre-built these personas that we're talking about. So, as soon as contact is made by the farmer, those personas are made live. If we're talking chatbot, it might be an AI-based chatbot that initially conducts part of that conversation.
RLD: After the initial interaction, let’s say the customer is interested and ready to make a purchase. How does that process work with the new technologies?
Wilkins: It normally would be the farmer contacting the dealer to say, “I am interested in buying this tractor. What are your terms and conditions?” If the smart dealer and the finance company have done what we are recommending, then the dealer would be able to present appealing finance options online.
Boots: Because the dealer and the financing company knows their persona, and because the artificial intelligence brings together their buying patterns and their needs, you're able to provide financing options that will suit their needs.
Wilkins: In addition to the price of equipment and consequential parts of this, the dealer can and should be offering bundled services, such as including service packages. And if the dealer knows that a particular farmer will use the equipment for a specific purpose, there may be downstream needs that the farmer has.
So that the dealer is enabling the farmer to reach their goals and objectives and to reach beyond those initial needs. If the farmer decides, “Right, this is the deal I want,” then the dealer wants to seal the deal quickly and stop the farmer from shopping elsewhere. The other advantage to this technology would be for the dealer to say, “Well, if you're ready, we'll get it all signed now and I'll load the tractor up on and deliver it you this afternoon, tomorrow morning, or whenever it’s convenient.”
Listen to the RLD podcast episode: What Smart Technology for Financing is & Why Dealers Need it.
RLD: What role do dealers play now? Should they be talking with their finance companies and their vendors now?
Wilkins: The dealer should be forming relationships with financers or finance companies that can help them do the things we're talking about. If their current firm can't express concrete plans to go and do that, then the dealer might want to look further afield for those who either can demonstrate this capability or plan to introduce it.
Boots: Dealers need to look at their current infrastructure from less of a technology standpoint and more about the solutions that they're providing to their own customers. There are certainly many dealers that may be saying, “Well, I do a lot of paper-based transactions” or “I still take credit applications via faxes. How can I possibly even think about moving to this technology?” The answer is there's no reason to wait. Dealers should be willing to take that first step, become educated about the possibilities and look for finance partners and/or manufacturers who are also contributing to this technology.
Wilkins: We’re not suggesting that dealers should turn themselves into some kind of technology-driven hybrids of finance companies and dealers. The dealers’ business is dealing in their equipment. It should be the finance companies, the banks and so forth that are the providers of these services. As we've begun to note, some of them are moving in this direction. Dealers need to take advantage of it.
RLD: What about some of the risks or some of the obstacles that are keeping this from moving forward?
Boots: There's definitely just the general fear of the technology. I think people are waiting for others to go first. The problems that dealers are facing are structuring sales to their customers. They don't know if they will get all the benefit from it. There are ways within these technologies that it can be done.
RLD: If the industry or dealers show a real interest, when could this happen?
Wilkins: The technology is available now. It's a matter of willingness to use it. Some people are already doing it.
Boots: I think that within the next 1-2 years, people in this space will be employing artificial intelligence and then they will start to look at smart contract and blockchain capabilities. Within 5 years, you will see people in this space utilizing one, two, perhaps all three of these technologies to service a customer base who are increasingly technology savvy and looking for optionality in their financing.
RLD: Are there any final comments about technology that either of you would like to share?
Wilkins: My personal standpoint is that technology can be and should be a huge enabler. People are resistant to technology because they feel it takes away something from the way they do things. My opinion used to be that was the case, but I now realize that technology can be a huge enabler. It can really make us better. I hope that your dealers become similarly opinionated.
Boots: I would add that the biggest thing is overcoming the fear of getting started or even looking into this. But, ultimately, it's not ever about the technology. It's about the customer and improving the service that you can provide to the customer. Be it through faster turnaround times and more options to fit their needs and help them accomplish their goals. Most organizations have the mottos of customer service and providing value and this will be a key value proposition to customers. I think it's important to educate yourselves and get started in terms of understanding what the technologies can do for you and most importantly, for your customers.