Decoding 5 Key Digital Technologies Reshaping the Agriculture Industry
According to a 2015 report from the McKinsey Global Institute, agriculture is the least digitized industry; far behind healthcare, hospitality, and construction. Conquering agricultural challenges need to break through the weakest link of the food chain by using technology, with digitization as a keystone. In recent years, technology in agriculture, which is also termed as AgTech has drastically changed the agriculture industry. The digital agribusiness is undeniably real, and it’s here to stay. Digital will play a vital role in the agricultural value chain by providing targeted information, data-driven decisions, and recommendations, access to sustainable practices and finance opportunities. How do we do it? Organizations must adapt to survive and thrive People in the industry—farmers, food producers—must embrace the digital transformation trends in agriculture. By leveraging digital technology as a sustainable and scalable resource, organizations can take agriculture to new heights, keeping farm to fork in our future. The overall food production needs to double in a relatively short duration, to support the growing world population. Digitization in the agribusiness sector significantly increases the ability to feed the rapidly growing world population sustainably. Aware but unsure Research shows 90% of CEOs strongly believe that the digital economy will have a significant impact on the agriculture industry; however less than 15% are funding and executing on the plan. It’s fortunate that digitization is helping to connect agricultural concerns across the globe. But what does the future of farming look like? A few significant AgTech trends that are shaping the agriculture industry currently: Artificial Intelligence and robots Agriculture is slowly becoming digital and AI in agriculture is emerging in three major categories, (i) Agricultural robotics (ii) Soil and crop monitoring (iii) Predictive analytics. AI is bringing a revolution to the agriculture sector. Farmers are using AI technologies for sowing seeds using drones, soil mapping, and commodity pricing. Robots will soon be automating many farming processes and take over tasks such as weeding, fertilizing, seeding, or pruning plants. AI helps bring down the operational costs in farms, by reducing dependence on manual labor and allows agronomic expertise to make data-driven decisions. Use of robotics helps in reducing the use of harmful chemicals and contributes towards eco-friendly practices. Soil and crop monitoring by robotics helps in early identification of pest or disease attack and helps contain the damage and treatment costs. Blockchain Blockchain technology will also be a focus in the coming days. It is possible to have real-time monitoring of supply chain leveraging blockchain, and there will be more transparency in agricultural transactions. It is vital for both farmers as wells as consumers: it allows farmers to negotiate better prices throughout the supply chain while enabling consumers to have confidence in the knowledge of precisely from where the produce they buy comes. It is an essential aspect when considering the growing lack of trust in the sourcing of produce sold in markets. Analytics The agriculture sector is innately complex with a wide variety of crops, geographic environments, and climates. This industry has always been loaded with data but scattered across various channels; however, this is changing, and organizations have started unleashing the power of data and analytics. Organizations are now working with farmers to enable them to use data to better plan seeding, management, and harvesting. By making use of sophisticated computer algorithms to evaluate decades of the crop as well as weather data, these days farmers can easily predict crop yields with surprising accuracy, before planting a single seed. Internet of Things The Internet of Things (IoT) is allowing data-driven intelligent agriculture. Intelligent farming using the Internet of Things will enable farmers to reduce waste and enhance productivity significantly, ranging from the amount of fertilizer utilized to the number of journeys the farm vehicles have made. IoT can help in gathering real-time analytical data and take faster commercial decisions. Sensors Recent estimates indicate that in 2025 the global market value of agricultural sensors will reach 288.3 million dollars – a vast increase from its value in 2016 at 99.3 million. Farmers are increasingly using sensors and soil sampling to gather data, and this data gets stored in the farm management system that allows for better processing and analysis. Using sensors to collect data about crops – water requirements, humidity, soil temperature, etc. – is on the rise. Sensors in the field measure soil and weather conditions such as humidity, temperature, and livestock data, while sensors on farming equipment give real-time insight into yield and quality parameters. Agribusiness leaders are learning how to leverage these technologies to: • Increase farming efficiency • Enhance customer experience • Create transparent and sustainable food supply chains • Implement new, sustainable business models • Manage market and price volatility • Engage with the right partners in business networks Connect businesses to the world of agriculture, and the world of agriculture to your business Digital technologies and analytics are transforming agriculture, making a farm’s field operations more insight-driven and efficient. Digital-based farm services are helping to improve business performance and boost yield. Tavant has combined digital technologies such as the Internet of Things with AI capabilities, analytics and its in-depth industry knowledge to help farmers increase their productivity and profitability. • A global digital agriculture company increased the productivity of growers and turned data into actionable insights leveraging Tavant’s AgriTech solution. • One of America’s premier agribusiness and food companies improved processes, boosted their yield, increased profitability, and enhanced customer experience by using Tavant’s AgriTech solution. Want to learn more? You are just a step away. We would be glad to arrange a meeting with you. E-mail us at [email protected] for more information.
Customer Experience (CX) – The Secret Sauce of Digital Transformation
The past few years have seen a tumultuous change in the mortgage industry as many servicers struggle to keep pace with stringent regulatory requirements, increasing per-loan servicing costs, operational challenges, fragmented view of the customer and rising consumer expectations. But what if this reaction could be less about just keeping up with the changes and more about a paradigm shift to a focus on what the borrower wants and needs? Recently, when Fannie Mae surveyed mortgage executives, one of the notable points of the survey was the use of next-gen technologies to improve the consumer experience across the loan life-cycle. However, most lenders agreed that there are many significant barriers including cost, implementation, and integration issues that are holding them back. 38% agreed high costs is the biggest challenge 23% said implementation of next-gen technologies is too difficult 20% found integration as a complex issue Two-thirds of lenders have not used next-gen technology vendors at all So, what are the ingredients of the ‘Secret Sauce’? Well! It’s the Customer Experience, which is a Journey of Expectations Personalization is more important than ever Customers expect personalized services, and it can be difficult for consumer lending organizations to deliver. Not because they do not have the desire, but because of legacy systems and regulations that restrict them to the traditions of the past. These constraints hold them back, even while they recognize that location and products alone are not enough to attract and keep empowered customers. A Good CX Means a Loyal Customer The customer is equipped with loads of information before even making the first contact; they are not that loyal as they look for the best deal and are likely to maintain a relationship with more than one financial institution. A recent report from Deloitte (Reshaping the retail banking experience for the customer of tomorrow) reveals the importance of positive customer experience: 90% of customers trust a recommendation entirely; they are seven times more likely to trust a reference than an advertisement. If a customer encounters poor customer service, he or she may never come back and will advise their friends as well to do the same. Transform Destination into a New Beginning Of course, integration of multiple systems is complex and one of the major challenges faced by lenders. But that should not impact the experience when it comes to quickly processing a loan. Think if your customers get an even better digital experience towards ending of processing cycle, the chances are bright when they are looking for next loan. The opportunity for change: How many loans originated this year? How much do you want to grow loan revenue? How many loans are processing on average? Do you want to raise this number? How long does it take to process a loan? Average wait time and processing cost? Are you expected to reduce these costs? If yes, then by how much? The answers to these questions can help you refine your vision for the future of your lending activities, and nurture discussions with your solution partner helping to pave the way to measurable improvement. LOOKING AHEAD The digital transformation underway in the mortgage industry is undeniably not a fad. Digital solutions address numerous industry challenges. The technology and process transformation will provide a single view of the customer and personalize the customer experience, spur innovation within services and products offerings, increase compliance and cut down origination costs. Lending companies and mortgage servicers must embrace digital solutions to stay relevant. Migrating from a legacy mortgage model to a digital-solutions-based model will require dedicated organizational alignment. Remember, digital is not just a box to be checked or leveraged only for pointed solutions to specific problems. Are you off late having a train of thought? How to modernize, measure and manage a mission-critical runtime environment and partner ecosystem that is high-performing, robust, efficient and responsive to change? Tavant’s AI-powered digital lending solution can help you: Reduce application processing time Reduce the cost of the overall process Better control over the process and reduced error rates High visibility on loan application status across the organization Increase customer satisfaction and business, and enhance employees’ efficiency Do you wish to explore further? E-mail us at [email protected] to schedule a meeting. Innovative Lenders have altered their way of doing business to not only roll with the industry changes but also thrive in – and even help drive – the transformation. We will discuss this in our next blog.
The Magic of Clubbing Customer Experience & Text Analytics
Analytics-driven customer experiences are redefining the Customer Journeys in the Digital 2.0 world now. According to Gartner, “By 2020, with the help of AI, customers will be able to manage 85% of their relationship with the brand without interacting with a human.” Today’s digital-savvy customers live in an omnichannel world and transact with businesses in many ways. When they set out to accomplish a task over time, they expect a seamless hand-off among devices and channels. The entire journey needs to be consistent, contextualized and connected to satisfy these increasingly demanding and fickle customers. Customer experience can drive superior revenue and is critical to growth and competitive differentiation for business. Data insight is one of the primary tools for CX enhancement. An enhanced CX clubbed with an in-depth data is an opportunity window for smooth customer journey. However, the practical challenge for organizations is to integrate all their digital and traditional channels to manage a friction-less experience. It is likely that data is trapped in siloed systems across marketing, sales, commerce, and service. Unlocking the potential of unstructured data hidden in the customer journey If structured data is so big, then unstructured data is enormous. It is known that organizations exploit only structured data that represents only 20% of the information available. That suggests that 80% of the data is lying mainly in unstructured form and there is a tremendous potential waiting to be leveraged in the analysis of unstructured data. Unstructured data usually includes comment boxes in feedback forms, is undoubtedly a significant way to gather consumer views on a brand or a service. Unstructured data is highly valuable when merged with structured feedback since it helps in visualizing the consumer’s journey with the brand. Making sense out of unstructured feedback is hugely complicated and organizations that decode this, gain a better grasp of the customer experience. Moreover, when monitoring customer feedback, the element that brings a couple of benefits is Text Analytics. This Text Analytics can help bridge the gap between customer expectations and the experience provided during entire customer journey. These days customer feedback data are coming from the emerging channels such as social media and mobile devices enabling companies to rely more on text analytics. Organizations that are quicker to identify emerging trends have drastically improved the survey experience with much shorter questionnaires where their questions are getting answered easily and are also realizing the potential of non-verbal expressions like emoticons in conveying customer’s sentiment in feedback. Business Value of Text Analytics Analyzing the overall sentiment of the conversation and ‘what, who, where, when, why’ transforms the unstructured data into structured data and enables organizations to pay attention to all of the conversations. An essential goal of analyzing unstructured data such as customer complaints, opinions or comments is to catch the pulse on what users perceive about an entity. It also helps organizations recognize what do the customers think of the various attributes of a company’s product such as quality, price durability, safety, ease of use. The key to digital transformation lies in combining the Text analytics pieces together with a well-thought customer journey at a strategic level. In conclusion The use of text analytics is burgeoning quickly, and organizations are unleashing the potential that is possible if textual data are analyzed and integrated with decision making. Given the exponential growth of unstructured data both outside and within the organizations, text analytics will continue to expand. Organizations need better insightful text analytics to understand the most relevant drivers to improve the customer experience, ultimately leading to ‘Delightful Customer Journeys’. Text analytics is undeniably actionable if it supports decision making optimally and if the results of the analytics can be shared in a way the business is empowered to act.
How to Increase ROI by Efficiently Capturing Leads From All Sources?
Lead generation is as old as the book, but in recent years digital channels have added a whole new chapter. Industries like consumer lending, automobiles, software, manufacturing and many others have turned to the Internet to generate sales leads. However, according to Econsultancy, only about 22% of businesses are satisfied with their conversion rates. Furthermore, for every $92 spent acquiring customers, only $1 is spent converting them. A key challenge- Capturing and measuring leads from various channels Online leads go cold fast. These are sobering facts. Moreover, capturing and measuring leads from various marketing channels and campaigns is the key challenge for most of the organizations. Apparently, data is all scattered and organizations are finding it difficult to capture and measure leads from disparate channels. Leads are not automatically getting distributed to team members, and this is hampering rapid response and revenue. This also makes data sharing between teams extremely cumbersome. Why is Follow-up of leads faltering? The main reason behind this is that the sales and marketing teams are not on the same page. There is a double entry of data and scattered and complicated data management process that is reducing the response time drastically. There is no systematic process to create rules to distribute leads to teams and no automated follow-up task alerts or e-mail notifications to initiate e-mail drip campaigns; subsequently, these causes are leading to the time-consuming setup and costly maintenance. In conclusion The need of the hour- Your leads deserve timely follow up To speed up your borrowing experiences by overcoming the inadequacies of worn-out legacy systems, we will soon be launching a secure, reliable, scalable, interoperable, cloud-based solution. It is natively built on Salesforce platform, allowing for origination, underwriting, and servicing end-to-end. The system is economical to operate and can dramatically change your go-to-market strategy which helps users connect with consumers more quickly. This results in increasing the effectiveness of your sales operations & improves organizational efficiency. Want to learn more? You are just a step away. We would be glad to arrange a meeting with you. Say [email protected] for more information.
The Fusion of AI and Cloud Computing in Consumer Lending
Digital transformation is the key to any organization’s survival. Compared to other industries, the consumer lending industry is slow in the process of transitioning from legacy platforms to digitized environments, 87% of the banks still use legacy systems. Consumer lending and servicing is loaded with data, involves long process times, and is driven by stringent compliance requirements. There is an increased need to move away from manual lending process to a more automated, digitized consumer lending ecosystem to drive efficiencies, reduce costs, and streamline process outcomes. Enabling an end to end digital integration facilitates more seamless and engaging customer experiences, fundamentally changing the business core of the lending industry. Leveraging AI and Cloud Computing to infuse sustainable value Though the permeation of these technologies is on the lower side in the lending industry, Cloud Computing and Artificial Intelligence are slowly playing significant roles in transforming the operational and business models of this space. According to a Gartner study, by 2020, banks can offer advice by using AI chatbots that can learn about customer’s user habits. Companies paying equal attention to security in parallel, when we see 65% of FS companies said they have adopted cloud-based security (source: pwc). Cloud Computing platforms are enabling the rapid deployment of services by seamlessly connecting and configuring virtualized technology resources, augmenting faster time to value and reducing the cost of ownership. Consumer Lending firms leveraging AI and Cloud While lending firms are building digital capabilities to harness more intelligence on customer needs, they are also actively leveraging Artificial Intelligence to deliver more personalized, context-aware services to their customers. An ideal mortgage lending scenario is loaded with data attributes, making it an ideal destination for AI algorithms to analyze customer behavior and buying probabilities, enabling lenders with more decisive insights for informed decisions. AI areas of impact include Compliance, Marketing, Portfolio Management, Origination, Capital Markets, and Servicing. What changes move to the cloud? Key benefits of adopting a cloud platform include higher participation levels across various businesses, quicker access to relevant information, and improved collaboration across time zones, enabling speedy decision making, cloud repositories are scalable, centralized, facilitating data integrity and security while preventing data theft. Centralized data access streamlines document management lifecycle and promotes transparency within borrowers, lenders, investors, and regulators. In conclusion, Consumer lending businesses can leverage the symbiotic power of AI and Cloud to drive business impact. With a huge amount of centralized data accumulated in the cloud, AI can access this data to develop better CX strategies. The merger of AI and cloud is bound to influence the evolution of intelligence-driven ecosystems and will lead the next wave of technological disruptions in the consumer lending space. FAQs – Tavant Solutions How does Tavant combine AI and cloud computing for consumer lending?Cloud-native AI platforms provide scalable processing, real-time analytics, and machine learning for high-availability, secure, and rapid lending decisions. What advantages does Tavant AI-cloud fusion provide to consumer lenders?Reduced costs, faster time-to-market, enhanced security, automatic updates, and the ability to handle peak volumes seamlessly. How does cloud computing benefit consumer lending?Reduces IT costs, improves scalability, enhances security, enables faster feature deployment, disaster recovery, and third-party integration. What is AI-powered consumer lending?Uses AI to automate credit decisions, assess risk, detect fraud, personalize offers, and optimize pricing with faster, more accurate results. Is cloud-based lending secure?Yes, through encryption, multi-factor authentication, audits, compliance certifications, and advanced threat detection.
Create a Smooth Digital Experience for Millennials on Cloud
50% of the world’s population is under the age of 30: these millennials are digital savvy, socially liberal, educated and excited about future. Organizations are leveraging digital technologies, such as cloud, AI, analytics, and blockchain to radically change the way they connect & innovate for millennials. Every element of business, from the supply chain to customer experience, business processes to finance, is getting disrupted. However, there is no aspect of organizational change that is more profound than the effect felt by the employees. It’s not just technology that is acting as a disruptive force in today’s business environment. The workplace itself has also changed with the arrival of millennials into the workforce. PwC’s research states that by 2020, millennials will form 50% of the global workforce. Millennial workers are entering the workplace and this generation is redefining and reshaping the workplace of the future. What’s new & quickly available in shelf to consume? These ‘Digital Natives’ were born into a world where technology played a vital role in all aspects of life – at home, school, work, and personal interactions. They have an admirably tech-savvy view of everything. However, as the number of millennials in the workforce grows, organizations are faced with a need to re-evaluate everything from organizational structure to business processes to fit with their inherently ‘digital first’ view. Millennials simply aren’t willing to adapt out-of-date technology. Whether it is hardware, software or services. They are shunning the enterprise traditions of PCs or laptops and bringing their own devices to work (BYOD) – and expecting the same levels of access to the network as ‘enterprise hardware.’ They are demanding access to social media tools – not only to keep in touch with friends during work hours but also to make them more productive and collaborative. And they will not stand for clunky software, unintuitive or confusing interfaces, or anything less than a smooth, fast, seamless experience. As part of the on-demand generation, they aren’t prepared to wait weeks – let alone months for anything. If their application doesn’t deliver immediate results, they head back to the app store to find one that does. Five minutes later they are downloading the next application that helps them do their job. This millennial instinct translates to enterprise apps as well, creating significant tension with IT procedures. Following well-outlined security procedures, IT departments spend years selecting, implementing and testing complex business systems. It is understandable that they are then concerned about holes being blown in their carefully devised governance, compliance and security procedures by this new generation. How millennials can get business advantages across industries when companies migrate to the cloud Better scalability and Infra with the cloud: Cloud has been a key driver helping lenders achieve scalability quickly while also helping lower the costs. More importantly, it provided the flexibility to innovate, launch products and structure deals quickly. Cloud infrastructure and modern lending services are thus interlinked to each other, supporting each other with the pace of innovation required by rapidly changing customer behavior in the consumer lending industry. Seamless integration with clouds: Mortgage and Lending cloud solution with a design-thinking led approach using business process automation, robotics, analytics and cognitive capabilities ensure seamless integration. Create a consistent omnichannel experience with cloud – Get the information you need, when you need it. It allows your users to search visually through your product catalog and enhance search and discovery, and subsequently, convert more customers using semantic and visual understanding. This involves a complete transformation of the core processing platforms, replacing legacy core processing engine with a cloud-based core processing engine. Create an omnichannel experience to innovate new product offerings in a meaningful way by leveraging highly accessible and versatile cloud models to get to market quickly that ensure innovative digital experiences for tech-savvy customers. A 360-degree view of all of their customers’ activities offers clear benefits. – Consumer lending companies can keep a watch on their users existing lending products, spending and income patterns, their savings profiles and by leveraging this information they receive across various channels, including social media and marketing campaigns, they can create a detailed customer profile with actionable intelligence. Making personalization easier with the cloud: Cloud and analytics provide meaningful and deep insights into customer preferences that can help in taking merchandising decisions. Personalization in retail banking entails a wide spectrum of offerings, as they say, ‘different strokes for different folks’. It extends beyond products and offers and is about providing a frictionless, seamless, and pleasurable experience to customers, while knowing who they are, what they like/dislike, predicting their behaviors, and optimizing their next best action. Management and operations. With the cloud, consumer lending companies can shift from highly manual to highly automated services. Self-provisioning allows business units request resources and build environments on demand, eliminating the need for IT to step in. Cloud platforms also enhance continuous application development and delivery. Workload management. Here, the shift is from a static approach to one that’s elastic. Cloud-based workloads can be moved from one computing environment to another based on the policies or conditions detected when the workload runs. This enables systems to strike the right balance, providing needed computing resources without any overcommitting. In conclusion Needless to say, millennials are a particularly important demographic for enterprises to pay attention. In all aspects, they are undeniably the first ‘digital native’ generation, and interestingly, the US Bureau of Labor Statistics has predicted that by 2030 millennials will make up 75 percent of the workforce. Moreover, as millennials grow into managerial roles, their priorities — i.e., working for their passion and more than just a paycheck — and leadership styles will have a significant impact on all organizations in the coming years. It means organizations need to innovate and be agile at the same time to meet millennials’ expectations when thinking about ROI on Cloud. Want to learn more about balancing various needs of your organization when using cloud?
Demystifying Digitization in Consumer Lending
There’s a continual rise of digital adoption, and the term “Digital” has been redefined in the consumer lending industry. Borrowers’ expectations have shifted drastically, and new opportunities are enabling lenders to provide additional value to borrowers, and they must focus on new sources of differentiation to gain competitive advantage. These changes are ushering in a true paradigm shift, creating a new generation of Digital Mortgage. Embracing these changes can be a good thing and is undeniably a big opportunity for lenders. Digitization should not be seen as a replacement of the loan officer but should be seen as an opportunity to increase efficiency and get rid of 100% of cumbersome transactional activities that the loan officer performs today, so they can spend 100% of their time on clients and enhance the customer experience. There are many trends that are dramatically reshaping the consumer lending industry; the more prominent ones among those include: • Increase in automation– Consumer lending automation enables fintech enterprises to transform their cumbersome manual lending process to a truly digital process that not only increases productivity but also meets the expectation of today’s customers. The automation allows banks to enhance customer service, reduce costs, improve compliance and generate revenue faster. • Emerging technologies like AI and machine learning leverages algorithms to enable lenders to predict borrowers’ requirements, inform underwriting decisions and accelerate the lending process. There is also a growing comfort with virtual assistance and Voice interfaces. • Blockchain Technologies to add transparency and efficiency into the lending process while reducing risk- Making use of a distributed ledger, parties involved in a mortgage transaction process could witness what’s happening with the loan and have a cryptographic level of security to claims against that data. • Adoption of design thinking approach and gamification techniques for more engaging customer experience • Changing customer behavior due to Self-service– Self-service technologies are changing customer behavior. These technologies now let service businesses streamline transaction processes, reduce overhead, and potentially increase revenue — all while giving the customer more control over the service process. • Offering live chat services, Proactive advice, and recommendations by viewing the customer’s journey and predict borrowers’ needs even before they realize what they need. Delivering an excellent digital experience is no longer an option for lenders in today’s marketplace- it has become a strategic imperative. Lenders should no longer question whether or not to invest in digital but focus on how to deliver long-term value. Advantages of digitalization • Processes/tech transformation– Digitization optimizes non-customer-facing processes through modern technology that is used to deliver superior customer experience. • Better transparency– Digitization allows organizations to target their customers effectively with thoughtful, relevant, and more appropriately timed actions and offers. • Innovative products and services– Inherent in digitization is innovation, which supports a redesign of products and services based on customer research, segmentation, and analysis. • Delightful borrower experience– Provide delightful personalized experiences to borrowers across digital channels • Faster processing with reduced operational costs– Back-office automation enables increased operational efficiency and reduced cost. Key opportunities for lenders 1. Know your customers 2. Put money into digital and time into traditional 3. Keep things simple 4. Make the customer experience your differentiator 5. Identify the gap and determine the top priorities Final thoughts Borrowers perceive home-buying as a single transaction and anticipate all stakeholders to work together effectively and seamlessly. Lenders who effectively serve as the central point to orchestrate the overall transaction can position themselves as trusted advisers and improve the overall customer experience. Are banks and credit unions keeping up with consumer demands when it comes to digital banking offerings? Are your competitors’ digital lending platform leapfrogging your online capabilities and customer experience? Is your overall digital lending transformation failing to achieve your desired goals? If your answer is yes, then you are not alone, and a strategic shift in your approach to digital can fix the problem. You are just a step away. We would be glad to arrange a meeting with you. E-mail us at [email protected] for more information. FAQs – Tavant Solutions How does Tavant simplify digitization for consumer lending institutions? Tavant provides end-to-end digitization frameworks including legacy system integration, cloud migration services, API development, and change management support. Their approach ensures smooth transitions from paper-based to fully digital lending operations. What digitization services does Tavant offer to traditional lenders?Tavant offers digital transformation consulting, platform modernization, workflow automation, customer portal development, and staff training programs. They provide comprehensive support throughout the digitization journey. What does digitization mean in consumer lending?Digitization in consumer lending refers to converting paper-based processes to digital formats, implementing online applications, automated decision-making, electronic document management, and digital customer interactions throughout the lending lifecycle. What are the benefits of digital lending?Digital lending benefits include faster processing times, reduced operational costs, improved customer experience, 24/7 availability, better data analytics, enhanced security, and the ability to serve customers remotely. How long does it take to digitize lending operations?Digitization timelines vary from 6-24 months depending on the complexity of existing systems, scope of transformation, regulatory requirements, and organizational readiness for change.
Knowledge Brief – Warranty Reserves and Accrual Rates Management
In the aftermarket business, the warranty reserves determine how serious a manufacturer is about their after-sales strategy. According to reports from Harvard Business Review, businesses are focusing on their after-sales strategy to generate additional business and improve customer satisfaction. Here are the top 3 things that give a better perspective about warranty reserve: 1. Basics of Warranty Reserve and Accrual Rates: Warranty Reserve is a fund maintained by the manufacturer to meet warranty expenses. The warranty reserve balance is the balance left after deductions of claim expenses for the year. The accrual rate is usually a fixed percentage of sales and is managed by the finance department of the company. The finance department can adjust the accrual rate to manage company earnings. Hence, management of warranty reserve and its accrual rates becomes crucial for a company. The finance department of a manufacturing company should ask these five basic questions to manage and analyze warranty reserve information: What is the opening balance of the warranty reserve? What is the current additional reserve including this year? What is the status of warranty expense? Are there any cost adjustments to the reserve? Are there any external factors, such as currency fluctuations, that impact the warranty reserve? 2. Influencers of Warranty Accrual Influencer 1: Manufacturing Quality The manufacturing quality of a product dictates the future course of a company. Companies have paid huge penalties and suffered declining market share due to poor product quality. Quality manufacturers invest in a robust Product Quality Management System that streamlines complex quality management processes and integrate efficiencies into the system. An efficient product quality management system helps identify and fix issues faster-providing insights into current manufacturing processes. These systems have a positive impact on warranty reserves by reducing warranty expenses. Influencer 2: Product Mix Every new product launched by the manufacturer could have newer product-related issues. These issues need to be analyzed and documented by the warranty teams to determine corrective and preventive actions and may see a surge in warranty expenses during this period of product stabilization. This influences the warranty reserve. If these scenarios occur for a series of products, the warranty reserves suffer substantially. The new product launch is probably the most precarious activity and can also be a challenge sometimes. There is no historical evidence of selling a product or offering warranty, upon which a manufacturer can rely to avoid the warranty impact. Influencer 3: Changes in Warranty Coverage Period Marketing initiatives can improve product sales by providing extra warranty coverage. The extra warranty coverage requires loading the company’s existing warranty reserves. This, in turn, increases the average repair cost per unit. Disclosing Accrual Information: Some U.S. regulations, such as FASB interpretation 452, require a manufacturer to disclose the warranty terms, accounting policies and sources of funding of the warranty accruals. U.S. regulations suggest that the Extended Warranty Cost reserve be handled differently than standard warranties, the costs of which are recognized at the inception of warranty. There are many accounting methodologies to manage accrual information; some of the popular ones are: Bornhuetter-Ferguson Test A Priority Average Age of Warranty Claim Times Annual Spend Active Life Approach Calendar Year Payments to Revenue Approach A good Warranty Management System must have reporting capability on metrics, such as: Average warranty cost per vehicle Breakup of costs by Parts, Labor and other Services Relation between product failures and warranties Top product models causing major warranty expenses These metrics will give an in-depth understanding of failure information and expenses incurred against each failure and help connect the dots between reserves vs. expenses. Tavant Warranty is a flexible, user-friendly, and effective warranty management solution for the complete warranty lifecycle of original equipment manufacturers and aftermarket industries. Its unique cross-functional integrations structure connects business departments and leads to a rapid reduction in warranty costs and reserves, increased supplier recovery, and enhanced reserves forecasting accuracy. The system backed by Artificial Intelligence (AI) results in better workflows for manufacturers, which in turn improves cash flow, thereby improving financial health and profitability for the organization. “Tavant Warranty is a one-of-a-kind, AI-powered solution that helps organizations maximize their aftermarket revenues by over 2%, reduce claim processing time by 30%, increase supplier recovery by 50%, eliminate fraudulent claims, improve product-return cycle time by 25%, and helps you improve your warranty reserves” Information.
5 Things Worth Sharing from MBA Tech 2018
The Changing Aftermarket Industry According to a global strategic business [i]report, the global automotive aftermarket industry is expected to reach $722.8 billion by 2020. This rising demand for aftermarket parts and services is driving new growth and revenue opportunities for automotive aftermarket organizations. Moreover, digital transformation is re-imagining the automotive industry. Platform-based innovation and hyper-connectivity are shaping the new world of the automobile. Interestingly, aftermarket, the secondary market of the automotive industry is also experiencing this paradigm shift from traditional legacy systems to the digitalized world powered by AI, Machine Learning, IoT, Big Data, Analytics and Mobility. Rising Customer Expectations There is a significant change in the customer buying behavior which has acted as a catalyst in the progress of automotive aftermarket. Interestingly, today’s consumers are keeping their vehicles longer and are more aware of the importance of preventive maintenance and scheduled servicing to maximize the lifetime value of their vehicles. Furthermore, in today’s modern parts marketplace, the millennial customers have become more sophisticated and mobile-oriented while staying connected with their local automobile retailer. They are more in control of the buying process than ever before – with the ability to price, source, and obtain products and parts from a wide variety of sources, including spurious parts suppliers who don’t have the same overheads as the OEM. Needless to say, the consumers are now expecting a seamless experience spanning via omnichannel including physical retail supply shops, apps, websites and so on. Data, Data Everywhere The exponential growth of connectivity and data in manufacturing is drifting aftermarket services towards a new era. The next generation of tools and processes is equipped with next-gen technologies that enable unprecedented collection and transmission of data, which can be exploited to improve aftermarket operations. However, the aftermarket value chain is still highly segmented in disparate data silos. Each player focuses on its perimeter, where it exercises a strategic control thanks to its assets (parts IP, integrated offering, global network, and so on). Business models are still primitive and rely on service contracts (diagnosis, repair, parts, and maintenance) using a transactional mode (cost per operation). Artificial Intelligence & Machine Learning to Rescue Leveraging IoT technologies and platforms built into devices have increased the potential for new revenue streams through innovative data sharing/insight opportunities. And the good news is the large volumes of data generated by IoT devices can now be understood, acted upon and monetized with the help of AI and ML. Organizations can consider integrating IoT data with the existing warranty data to obtain new insights into their customers, products, and operations. In turn, this can lead to optimized product service, enhanced support processes, and the provision of new and differentiating customer experiences, all of which can help in driving revenue. Eventually, improved warranty performance has a direct impact on the customer experience; for example, if a consumer feels that a company acknowledges when products fail to meet up with their expectations, they are more likely to stay in the future, building brand loyalty. The time to act is Now If you are looking to implement a world-class warranty solution without investing heavily in infrastructure or the resources required to deploy & maintain the solution at your premises; our on-demand solution is tailor-made for you. By applying AI and machine learning algorithms to massive amounts of customer data, Tavant’s enterprise warranty solution TWOD on the Salesforce Cloud combines its warranty solution expertise with industry best practices to offer end-to-end warranty lifecycle management. It provides enhanced visibility and proactively populates business opportunities for the sales, service, and marketing teams in their CRM. Want to Explore More? To delve deeper, attend our engaging session on ‘Artificial Intelligence, Machine Learning and the world of making smarter, faster and better decisions’ at WCM 19 and learn how to unlock your sales and revenue potential or just say [email protected] to schedule a meeting.
Digital Innovation FAQs Part II: Customers, Experience and Disruption in Consumer Lending
This is Part II of the Digital Innovation FAQs series. Part I talked about innovation, millennials and technology trends. You can find Part I here:Digital Innovation FAQs Part I. #4 So where do you start? How do we define the digital transformation strategy? Every company has its unique brand values and strengths. They also have some vision and strategy in place. In our Digital Experience (DEX) workshops, we work together with our clients to find the synergy and opportunities… by understanding their customers, their brand values, we go on the discovery, a journey, to see the opportunities where digital experiences can create the most value and impact. There is a fair bit of research and homework involved. In fact, some of our clients proactively do their own research and have figured out customer journeys and digital opportunities and pain points as well. The digital strategy is aligned with the overall strategy. We help with the strategy to account for any digital considerations and many companies already recognize this very well. Understand the customers, embrace the brand values and keep it simple. Strategies built around that can then focus on execution and give great results! #5 So give us an example of brand values. For example, take “trust” as a brand value. It’s still a very people-centric industry… real people dreaming about their own home and they trust lenders… real people who help them. The people in any company work a lot to get the trust of their consumers. Every channel, retail or digital, every interaction, every experience should build trust. Trust is precious… very hard to build but fundamental from a value perspective. Transparency is another. Most customers cannot understand the lending process and regulations. Lenders spend a lot of time educating customers when their time could be better spent helping them buy their dream home. By being honest, by being clear about steps, fees, regulations, you build more trust. #6 And, what is simplicity? Simplicity here can help by making information simple and clear. Lenders can then spend their time helping customers. Customers feel empowered because they understand and feel in control. You get operational efficiencies just by simplifying the information. Simplify the process, reduce the steps, make it easy to use, easy to apply, easy to approve… make it simple. You get more customers, more referrals, more business… lots of happy people. That is what digital experiences and transformation all about… happy customers! #6 That sounds simple… Why don’t we see more of that? That’s why you need to be strategic… have a clear digital strategy with priorities in place. It’s human to want more. The key is to focus on a few, experiment till you get it right and then scale it for your company. Listen to your customers. Look for business value and impact when evaluating projects and assessing where you are. #7 Can you show us more? Yeah, sure. Take a look at our Digital Practice @ Tavant for our offerings and case studies. We will be very happy to reach out and discuss… get it touch! ‘Customer journeys’ is one of the cornerstones of our Digital Experience offerings. We will be publishing a whitepaper on customer journeys soon.