Finance and Leasing: Plugged-and-PlayedFeatured in the World Leasing Yearbook 2023
By Kamran Khalid, Chief Product Officer at NETSOL Technologies on 01-02-2023
In the finance and leasing sector, there has been a shift towards "plug-and-play." In this system, all of the components of an application are pre-assembled and can be easily connected with a business. The advantage of this type of system is that it can be easily installed and used without the need for extensive training. So why is the finance and leasing sector moving towards this type of system? There are various reasons.
Plug-and-play modules offer a high degree of flexibility. This means that they can be easily adapted to meet the specific needs of each business. They are also effortless to use and require minimal maintenance. Further, they offer high scalability, so companies can grow their operations without investing in new equipment or software.
Additionally, they support emerging advancements in several technologies, which allows businesses to stay competitive. This article aims to shed light on why the plug-and-play module is becoming increasingly popular in the finance and leasing industry.
On-premise Solutions: A Thing of the Past
The finance and leasing industry has traditionally relied on on-premise solutions to manage their operations. However, in a rapidly digitizing world, on-premise solutions have started to become obsolete legacy systems.
On-premise software solutions can be very inflexible when accommodating changes in business operations. This can result in significant delays and disruptions in the ability of finance and leasing companies to keep up with their competitors. In today's dynamic business environment, the pace of change is constantly accelerating. To succeed, companies must adapt quickly to new market conditions and changing customer demands. There are many reasons why on-premise software solutions can be challenging to change.
First, they are often tightly integrated with other on-premise systems, making it difficult to make changes without impacting other business areas. Second, they are often customized to fit the organization's specific needs, making it difficult to modify without expensive and time-consuming re-engineering. Finally, many on-premise solutions are supported by long-term contracts with vendors, making it difficult to switch to a different solution even if it would be more effective for the business.
High Cost of Implementation and Maintenance
On-premise solutions can be costly to implement and maintain. A company must purchase the hardware and software upfront and then pay for ongoing support and maintenance costs. In contrast, plug-and-play modules can be much more cost-effective as a company only pays for what it uses, and there are no upfront fees.
On-premise solutions can be inflexible and difficult to scale. This is because they are designed to work in a specific way, and it can be hard to customize them or add new features. Plug-and-play modules, on the other hand, are much more flexible and easy to scale, as they can be easily added or removed from a system as needed.
On-premise solutions can often be complex and time-consuming to set up and manage. This is because every company needs to have IT staff who are familiar with the system in order to keep it running smoothly. Plug-and-play modules require no IT expertise and can be quickly installed and managed by anyone.
Open APIs: A Mode for Plug-and-Play
Open APIs are application programming interfaces that allow third-party developers to access certain features or data of an online platform. They usually come in a software library that includes instructions on how to use the API. They have been gaining popularity in recent years, as they offer several advantages for online platforms and third-party developers. Open APIs allow developers to build on existing platforms and create new value for users.
For platforms, open APIs can increase user engagement and retention by opening up the platform to new and innovative applications. Open APIs are a vital part of the plug-and-play module, as they provide a way for developers to access the data and functionality of the module.
An API-first Approach with Open APIs
An API-first strategy is based on a micro-service architecture, where applications function as a collection of small services. APIs can be used to access these micro services, which operate separately from one another and can each be expanded to other systems and functions. This enables functions and systems to seamlessly connect with each other. By using open APIs and deploying an API-first approach, developers can create new applications and services that work with the module or integrate the module into existing systems.
API-first approaches are revolutionizing the finance and leasing industry by enabling lenders to offer their customers a seamless digital experience. By utilizing this approach and making use of open APIs, lenders can easily integrate with a range of third-party software applications and services - from CRM systems to document signing platforms - which gives them the ability to offer a truly comprehensive solution to their customers.
Open APIs for the Finance and Leasing Industry
Finance and leasing companies can use open APIs to provide access to their data and services. This can enable them to offer new financing products and services or create new ways to use their data. For example, a company could use an open API to enable third-party developers to create applications that help customers compare different financing options. By using open APIs, companies can make their data and services more accessible to a broader range of users.
There are many reasons why open APIs are becoming popular in the finance and leasing industry. Financial institutions are under increasing pressure to improve customer experience and engagement. Open APIs offer a way for these institutions to tap into new markets and create new customer touchpoints.
There is a growing need for more transparency and openness in the finance and leasing industry. Open APIs can help create more transparency around data and processes. They can also offer a way for finance and leasing companies to partner with Fin-Tech startups to develop new products and services.
Moreover, open APIs also give lenders the flexibility to quickly adapt and respond to changing customer needs and preferences. By rapidly integrating new applications and services into their offerings, lenders can stay ahead of the curve and ensure that they always provide their customers with the best possible experience.
While there are many advantages of open APIs, it is essential to note that there are also a few risks associated with them. These risks include data security concerns and the potential for abuse by third-party developers. However, they can be mitigated through proper API management practices.
The Cornerstone of SaaS: The Plug-and-Play Feature
The Software-as-a-Service (SaaS) model is shaping the future of enterprise software. Software-as-a-Service allows users to access software services over the internet at their convenience without installing them on their devices. The majority of SaaS apps are pre-configured plug-and-play products, and everything underlying the app is managed by the SaaS provider, including:
- Hardware components, like networking, storage, and data center servers.
- Platforms, like virtualization, the operating system.
- Middleware software requirements, like runtimes, data, and the app.
The benefits of SaaS for businesses are numerous. Let's take a closer look at how SaaS can help a finance and leasing company stay competitive in today's market by exploring eight advantages of using SaaS for this industry and explaining why it's the future of enterprise software.
SaaS Reduces Costs for Businesses
One of the most significant benefits of SaaS is the reduction in costs. SaaS is an on-demand solution that allows businesses to pay for the software only while using it rather than purchasing it outright. This feature enables companies to manage their costs better because they only spend the money they need to do the job. In addition to cost management, SaaS also helps businesses earn more profit by increasing productivity and improving the ROI of their current equipment.
SaaS allows companies to scale their subscriptions up or down based on current needs. This makes it easier for organizations to switch from one solution to another without worrying about maintaining the equipment needed for each system. SaaS also helps businesses comply with various regulations and standards by providing secure software that meets industry requirements. This feature allows companies to avoid fines and other penalties associated with non-compliance.
SaaS Provides Constant Updates and Supports New Technologies
SaaS companies constantly update and upgrade their systems to incorporate new technologies and meet changing customer needs. This constant update cycle means a finance and leasing software will always have the latest features and functionalities to support a business and get the job done. SaaS also supports emerging technologies and new industry trends such as the Internet of Things (IoT), Artificial Intelligence (AI), Machine Learning (ML) and hybrid cloud technology.
For instance, AI, integrated with a SaaS-based (plug-and-play) product, can be used by finance and leasing companies to determine creditworthiness, automated underwriting processes, and identify fraud. This SaaS advantage allows software to grow and change as a business evolves and new technologies become available.
SaaS Makes Data Access Easier
One of the biggest challenges businesses face is ensuring employees have access to the data they need to do their jobs. This can be especially true for finance and leasing companies that use data from multiple sources, such as bank records and credit history information. SaaS provides a central hub for all data, which makes accessing it for specific purposes easier and more effective.
SaaS provides a single data source where employees can access all the information they need when they need it. This feature makes it easier for organizations to manage and share data across departments, locations, and time zones. SaaS also provides secure access to data and allows organizations to set up user permissions based on job function and department.
SaaS Allows for Remote Employee Collaboration
Another challenge many businesses face is getting employees in different locations to work together as a team. SaaS provides a central hub for collaboration and communication across the entire organization, which makes it easier for employees to collaborate remotely. This feature allows organizations to collaborate on projects and tasks as a team, regardless of location. SaaS also provides a secure communication channel for employees to ask questions, give feedback, and share ideas with their colleagues.
SaaS Provides Real-time Feedback and Analytics
SaaS provides real-time feedback from customers and team members. This feature allows finance and leasing organizations to get better insights into customer satisfaction, product usage, and areas of concern. This information can help companies better understand the problems their customers are experiencing and the ways they can improve their offerings and service. SaaS also provides analytics that allows businesses to track and measure their performance, which can help improve overall productivity.
SaaS Allows for Process Automation
Another benefit of SaaS is the ability to automate processes. This feature allows businesses to reduce manual efforts and increase productivity. Finance and leasing organizations can use SaaS to automate repetitive tasks, such as data entry and account management. SaaS also allows businesses to create rules and scripts that trigger actions based on specific triggers or events. This feature helps finance and leasing companies improve their efficiency and productivity by completing tasks more swiftly.
SaaS Enables Cloud Security
Security is one of the most significant concerns for businesses when deciding whether to opt for on-premise or SaaS. SaaS providers use modern security practices and technology that protects information from unauthorized access or tampering. SaaS provides end-to-end encryption, firewalls, and other stringent security measures to keep data safe. These solutions are regularly tested and certified by third-party organizations to ensure compliance with industry standards and best practices.
Organizations can also use SaaS to store data on the cloud, which provides additional security and privacy benefits. Cloud-based solutions allow businesses to avoid managing the hardware and infrastructure required to host their software. Cloud solutions also help companies to avoid the upfront costs and maintenance associated with on-premise solutions. They also allow businesses to scale up or down without worrying about buying additional hardware.
Bridging the Gap through SaaS
Another advantage of SaaS is that it allows organizations to bridge the gap between their current software and the next. Of course, this is to be expected since the idea behind SaaS is that it's meant to be a long-term solution for clients. The long-term nature of SaaS makes it easy for a company to make the transition from one platform to the next. The only thing clients need to do is ensure that the new solution integrates with the old one. And that is precisely what SaaS intends to do from the get-go.
The main advantage of a plug-and-play module is that all of the components of an application are pre-assembled and can be seamlessly integrated with a business. It can be easily installed into an ecosystem and can be used without the need for extensive training. The module continues to become increasingly popular in the finance and leasing industry due to technological advancements like open APIs and SaaS.
Open APIs give lenders a competitive advantage in the industry. Lenders who utilize open APIs are well-positioned to win market share and drive growth by making it easier than ever before to offer their customers a comprehensive digital solution. This is because open APIs enable businesses to make data-driven decisions, and hence they remain in high demand for developers. According to Straits Research, the global open API market was valued at $2.39 billion in 2021 and is projected to reach $13.21 billion by 2028, at a growing CAGR of 23.83%.
On the other hand, most SaaS applications, which are deployed on the cloud, are pre-configured plug-and-play products, meaning they're ready to be integrated and instantly used in a system with low user intervention from the get-go.
According to a recent report by SkyQuest Technology, the global SaaS market was valued at $143.77 billion in 2021 and is forecasted to grow at a CAGR of 25.89% for the period of 2022-2028 reaching a total market valuation of $720.44 billion. SaaS-based plug-and-play solutions can also support emerging advancements in technologies like Artificial Intelligence and Machine Learning.
Catering to the worldwide credit, finance and leasing industry, NETSOL's API-based, ready-to-use calculation engine Flex is a pure-play SaaS product that is integrated seamlessly into an organization's products, services and ecosystem. Flex provides instant, penny-accurate calculation results.
The calculation engine intelligently adapts to demand by monitoring usage to maintain reliable and predictable performance at desired costs. It is a one-stop solution that guarantees precise calculations at all stages of the contract lifecycle through various calculation types. It is a cloud-based calculation engine for out-of-the-box integration into your ecosystem.
With an onboarding time of mere minutes, Flex proves versatility by covering all the calculation aspects ranging from the pricing for the end customer at inception, in-life financial modifications, the re-creation of the repayment plan, termination, amortizations/re-amortizations, among other calculation types. All the calculations are parameter-driven, which helps perform simple, multi-dimensional, or complex calculations based on the needs.
Flex is a cloud-based calculation engine for out-of-the-box integration into your ecosystem. It is a comprehensive solution which creates an ecosystem of value across multiple functions, systems and industries to fuel growth and propel businesses into the future by increasing delivery efficiency and product management, centralization through a connected ecosystem resulting in higher ROI and a larger market share. To explore Flex, please click here. To connect with the Flex Team, please click here.
Kamran Khalid, Chief Product Officer at NETSOL Technologies
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