Software Providers Keep Up With Demands

By Eileen Wubbe

The Secured Lender’s Senior Editor Eileen Wubbe spoke with software providers to the ABL industry to hear their take on trends, technology advancements, fintech and their clients’ needs. Here’s what CODIX USA Manager Billy Quinn said:

What are the hottest trends for technology for ABL? What technological advances have been happening?

QUINN: I would say the big data aspect and having flexibility to pull and process that data in an automated fashion is more and more important. We have some clients that are currently running full automation, everything from the prospecting of new clients through the operations through collections. Everything is being done through technology through the ability to tie into external systems, processing that information, and also performing transactions through our web portal. Our clients are providing this portal on the front end to their customers and also rely on the backend workflow and process execution engines to process transactions in an automated fashion so that operations personnel can manage by exception. The core focus seems to utilize technology to increase efficiency, remain compliant, increase revenues and reduce costs.

How do you stay on top of market trends?

QUINN: It’s particularly important to listen to clients both across the world and domestically. Some of our FinTech clients are looking to us for advice on how traditional lending is done. In addition, our traditional client lenders come to us for advice. As I think everyone’s aware, they’re keeping an eye on what our FinTech clients are doing. Our traditional clients are asking, ‘How do we keep abreast of what’s going on in the technology market?’ We also attend webinars, conferences, and review market news on a daily basis. But also, in having the appropriate business experts internally, both domestically and global, we can bring new ideas across our client base and also implement that in our software as a standard feature. This also includes listening to other providers to the commercial finance industry such as credit insurers and collections clients.

Would you say finding the right people is pretty easy to do it or is it hard to find the right fit?

QUINN: In regards to finding people in the marketplace, as we saw with some recent international commercial finance standards convergence, people need to be more open-minded. The market is changing, so they need to be flexible and inquisitive enough to keep their minds open to different products. I think the convergence of commercial financiers and industry standards shows that the industry is changing, where there needs to be a multi-product approach. If approached from an open-minded point of view, people can be found. Specific product experience will always be important, and the right business and technology experts can be found through looking in the appropriate channels.

How quickly does the technology change in this field?

QUINN: We see a lot of the actual resistance to change; although, from a business level in traditional lending, they’re seeing FinTech providers pop up. We see a lot of resistance to that change unless it’s absolutely forced at the appropriate level within the organization. Typically, this is at a senior management business level. Technology is changing rapidly, but the business mindset is not, in a lot of cases. So, the technology is there, the features are there in a lot of cases, but it takes a while to adapt from a process perspective.

Yes, what we’re seeing is the FinTech clients that we’ve spoken to, from the very beginning, said, ‘We can do all of this through complete and 100 percent automation.’ What we’re seeing is that it’s kind of becoming an “in between” in regards to automation. FinTechs are already growing their back office, because they realize what banks have been doing for many years has been tried and trusted and proven. They are starting to see that true end-to-end full automation is not as viable as initially thought. However, the banks are being forced in many ways to change, to come closer to what the FinTechs are doing. So, we think it’s more of an in-between scenario of newer and existing technologies and mindsets that will ultimately prevail.

What are your clients needing or requesting and how are you responding?

QUINN: Clients are starting to offer new prospects some initial questions through our portal and then proposing different financing products to these prospects automatically. All of this is done through an alignment with what’s going on in the general world through web-based portals. Also, we’re seeing they’re requesting more mobile application functionality so clients’ customers and partners can log in and perform transactions over a mobile device. This includes transactions, such as checking the state of their accounts, pulling reports and making payments. We’re seeing our client requests align more with what’s happening in general around web-based tools.

An established system is a large investment, but thousands of tech startups are looking at ways to make existing technology obsolete. Which are the emerging new technologies that keep you up at night?

QUINN: Well, we have a few FinTech clients, so we work with them on new technologies and what’s going on in the FinTech world. But we also discuss with our traditional clients on an ongoing basis with them and say, ‘You know, if we see a technology out there that they can benefit from, we’ll look at it.’ We don’t necessarily look at it as a threat. We look at it as a potential collaboration and partnership. I think it’s key to keep our technology flexible enough to interact with any new technology that gets introduced. In this way, if CODIX can’t offer the functionality for some reason, at least our software can interact with it. The one technology we’re keeping an eye on is the blockchain technologies and how that’s going to impact the industry. As of today, that’s still under discussion and debate, on how that’s going to impact, as it’s going through proof of concepts.

How do you balance the need for systems to be able to be open and connect with other customer systems, with the rising tide of cyber-crime?

QUINN: As a software provider, we strive to provide the most open flexible and open integration points. This includes manual uploads through web portals and file drops, through full automation like computer-to-computer transfers. We handle both full administration of client servers and a hybrid model where clients handle administration duties, but we usually have ongoing conversations with clients on the following:

  • Making sure network level security is appropriate (secure VPN’s firewalls, DMZs, IDSs, etc.)
  • Operating system, database, and related software patching levels are kept up to date
  • CODIX’s application is kept up with any security updates, continuous OWASP testing on external facing application
  • Appropriate application authentication mechanisms to help avoid phishing (e.g., two-factor authentication)
  • Highest encryption levels to prevent sniffing.

An important aspect with connecting with customer systems is that there needs to be involvement from the customer, in addition to the commercial financier. It’s important that the endpoint on the customer side is also secure, so teamwork with customers is key. We always work with our clients to make sure security is foremost, while maintaining the usability and ability to connect with other customer systems.

Any final thoughts?

QUINN: I would just mention the importance and ability of having multiple sources of information and having a single system. What we’re also seeing is our clients, whether it’s to retain clients or to gain new clients, are sometimes forced to offer new products through their commercial finance platform. So, in the supply chain finance world, which a lot of people refer to as reverse factoring, we’re seeing clients actually take in purchase order information, shipping information and also receivable information. They then offer purchase order finance backed by a more secure receivable finance offering, for example. They can also use technology to match and reconcile all of the information received to add another layer of de-risking the financial transaction. So, they’re offering products that they typically would not have offered.

Published in TSL, December 2016

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