Overall, executives at financial institutions will continue to find this year chock full of challenges, some harder than others. To prosper rather than just survive, they will need creative thinking, mental flexibility, and true partnerships with digital change agents. Here are two tips to give your business the edge it needs in this difficult economy (If you missed the other tips in this series, you can check them out here, here, here, and here):
Update your auto financing models to account for EVs
The growing adoption of electric vehicles (EVs) will change the auto-finance sector. Already, longer battery life, more charging stations, tax breaks for EV manufacturers, new environmental regulations, corporate ESG goals, success with EVs among commercial fleets, and better affordability for consumers are driving higher rates of EV adoption.
The switch to EVs will dramatically change the ownership model and hence the financing. Vehicle buyers will own the chassis, but rent the battery, which accounts for up to 60% of the cost. Separately, many drivers will increasingly opt for subscription-based car usage models – like Netflix, but for cars -- rather than ownership, leading corporations to finance fleets of vehicles. Zipcar started a similar operation over a decade ago, and we expect more to catch on this year and beyond.
Platform consolidation, upgrades, and cloud adoption to increase in commercial banking
Banks' need to achieve cost efficiencies, speed to customer response, and scalability this year will drive a continued increase in consolidation, upgrades, and cloud adoption with respect to commercial banking platforms. In the US, recently completed or in-progress mergers and acquisitions among banks with sizeable commercial portfolios will lead constituents to focus heavily on integrating their individual IT infrastructures this year. We expect to see adoption and upgrades with cloud-based platforms such as nCino and Loan IQ across originations, credit, and servicing.
"Platformification, enabled by cloud, seems to be one of the biggest trends in 2023," confirms Jerry Silva, program vice president for IDC Financial Insights. "This aligns with the simplification institutions are looking for to become more agile, resilient, and efficient."