Owning a car is no longer a status symbol. Many customers, especially digital natives, prefer leasing and are starting to lean more toward a subscription-based model, in which they only pay for what they use. They don’t want the hassles, the maintenance and the extra costs that come with ownership — and they love the flexibility.
We’re seeing that same mindset shift with automotive finance lenders as they accept software-as-a-service (SaaS) in the cloud as a standard operating procedure. They are choosing usership or outcomes, rather than ownership, to grow their business. This means they prefer to implement tools that are already proven to work and ensure success rather than trying to do it themselves. They, too, do not want the hassles, the maintenance and the extra costs that come with ownership.
The cloud is no longer considered an elusive, futuristic, emerging trend. It’s here. And the acceptance of SaaS solutions in the industry has moved from early adopters to the early majority. Even large-scale global automotive finance firms who were initially cautious to embrace SaaS solutions are moving their entire business to the cloud. They’ve seen the proof and the value SaaS in the cloud brought to those early adopters — and they want in.
First, let’s clarify one of the most common misconceptions or myths about moving to the cloud. Many believe that “hosted in the cloud” and “SaaS in the cloud” are the same thing. They’re not.
What is a cloud-hosted model?
Typically, in a cloud-hosted model, the vendor is only responsible for building and deploying the infrastructure and technology. Then the user is responsible for maintaining the software, implementing the upgrades, testing, etc. Essentially, they build it and the user does the rest. This puts a lot of onus on the user and their limited resources, and often delays implementing innovation.
What is a SaaS-in-the-cloud model?
With a true SaaS-in-the-cloud provider, you are purchasing the right to use software that is web-enabled and accessible over the internet and leverages the power, scale and security of global platform providers like Amazon Web Services (AWS).
A SaaS-enabled provider takes care of security, redundancy, backups, disaster recovery, governance, change control, etc. The provider is responsible for maintaining the infrastructure, keeping it current with the latest releases and keeping it at high levels of performance — and all in the background so it doesn’t disrupt operations. This means you can then focus on what you know best: how to improve the customer experience and grow your business.
SaaS puts competition in the rear-view mirror
The most successful automotive finance firms, regardless of size, are those that prioritize digital transformation, automation and cloud computing, and move to a true SaaS platform.
We’re living in a world of disruption that lacks predictability, from the pandemic to technology innovation. Enabling digital and operational agility is a key driver for the automotive finance industry. The winners are those organizations that master core agility and the ability to innovate. The ability to respond to the speed of change is critical.
Future-proof and future-forward with SaaS Solutions
Even as digital transformation becomes more common, many manual and labor-intensive tasks still take place. A SaaS solution can help automate workflow processes and create operational efficiencies that are repeatable and scalable throughout the entire organization, and even in other lines of business.
SaaS is not just about how it can help your business and enrich the customer’s experience today. Implementing SaaS solutions set you up for future success. For example, a secured open finance platform from Solifi (formerly IDS) allows finance lending firms to scale fast and is future-proof. This means your system can evolve quickly and provide technology and integrations to help you stay ahead of your competition.
Unlike a cloud-hosted model, a SaaS-in-the-cloud solution helps organizations remain relevant by keeping pace with emerging technology. For example, the biggest, single technology change that SaaS will better equip users for is the continued emergence of artificial intelligence (AI) as a mature technology – whatever can be automated will eventually become automated.
Other technology advancements where SaaS solutions can provide speed and agility for future success:
- The growing importance of self-service, enhanced by chatbots, conversational AI and machine learning (ML).
- Open banking: An emerging technology that streamlines digital onboarding, enhances the credit and underwriting processes, and accelerates borrower verification.
- API-level integrations: Digitization and integration of the full end-to-end finance process based upon pre-determined workflows and API-level integrations.
- Near real-time data streaming: Allows users to turn data into business insights quickly and use alongside other enterprise data sources for deeper insights and reporting to grow and guide the business.
- Internet of Things (IoT): Monitoring usage in real time will provide better data insights of your customers, create revenue opportunities and offer a better customer experience.
- Business model disruptions: Customer behavior changes, government regulations and innovation will require a SaaS solution that offers speed and agility.
Flexible cloud technologies with an SaaS partner lets you build components to optimize your automotive finance business today and capitalize on emerging opportunities tomorrow.
Top 10 questions you should ask before selecting your SaaS provider
- What is the scope of services I’m purchasing?
- What exactly are you developing and managing when it comes to the IT infrastructure?
- As a SaaS provider, what are your roles and responsibilities (i.e., what will the SaaS provider do that my organization historically did)?
- What are my roles and my responsibilities?
- Do you do upgrades? How often?
- What is the licensing model? Or what is a licensing model?
- What does availability look like in the cloud? How can I access my data in the cloud?
- How do you integrate with the cloud? What are your integration options?
- What is your governance model?
- What new insights are captured that I don’t have now?
The answers to these questions will reveal if they are simply a cloud host, or if they’re willing to share the risk and the reward with you as a true partner, and not just a vendor.
Shim Mannan is the Global Head of Services Sales Enablement at global fintech Solifi, previously known as IDS.