Changing Consumer Expectations Force Executives to Confront ‘Fear’ of Digital Transformation

Ed O’Donnell, CEO of Versatile Credit, said the benefits of digital transformation are well known.

“Everyone, especially in this part of the business cycle,” he told Webster, “is looking to make sure that their capital is being deployed in an efficient manner.”

That means taking costs out of operations, if possible, and automating manual processes as much as is practical.

Forward-thinking executives, he said, seek to leverage technology, and to embed lending products and services where they’d not been previously, to improve speed and the customer experience.

But there are any number of stumbling blocks — key among them the fear of moving too quickly.

Executives, of course, are human, and it’s human to feel uncomfortable about moving outside of one’s comfort zone. Inertia, then, is the biggest enemy of change.

“Because technology is changing so quickly,” he said, “there’s a hesitancy to grab onto the latest thing, because there’ll be another thing tomorrow.”

COVID’s only recently in the past, and the scrambling that took place over three years just to keep the doors open is still fresh in the corporate mind — and now there’s the ongoing challenge of remaining competitive.

Versatile Credit, for its part, is seeing increased interest among client firms and would-be clients who are at least open to exploring new technologies, especially in an environment where interest rates seem to have stabilized and visibility into their cost structures are a bit clearer. Consumers are proving to be resilient and are still looking to tap credit conduits to keep their purchasing power intact.

Against that backdrop, embedded finance is finding a wide berth, with lending offered at the point of sale, especially for larger-ticket items. Consumers want installment loans in addition to revolving credit. Nontraditional lenders are finding success with offering credit embedded into the purchase experience, and predictable ways to repay that loan.

Companies “are cautiously optimistic,” O’Donnell said, as consumers and loan portfolios have continued to perform relatively well. “But they’re not going to put rose-colored glasses on,” when it comes to new tech deployments. “They want to see demonstrated movement.”

The Fundamental Question

And yet, he said, many firms are not asking the most fundamental question that needs to be asked, directly, to firms like Versatile Credit: What is it that these companies should be doing that they have not yet even contemplated?

It’s difficult, said O’Donnell, to get the balance right between what needs to be delivered today and being realistic to deploy new strategies for the future, delivering results in a relevant timeframe.

Most corporate technological road maps, he said, are concentrated on fixing technical debt, and cleaning things up. Moving the “looking ahead” to partners such as O’Donnell’s firm, he said, can help enterprises avoid the “doom loop” that comes with becoming fixated on back-office functions and the “problem of the day,” while the competition leapfrogs ahead.

“We want to find the right business processes to improve outcomes,” said O’Donnell, who added that the platform approach can assemble various modular, Lego-like approaches to forge a path to real innovation and offer market-based intelligence in a consultative manner. Versatile Credit, he said, utilizes a robust data and analytics engine, built in-house, that can monitor what’s happening across its embedded finance partner in general, and on vertical-by-vertical basis, sharing information with merchants and lenders.

Looking ahead, and asked about the potential of artificial intelligence (AI) in embedded finance, O’Donnell said, “We’re slow-walking it to some extent,” due to industry concerns over the role of the advanced technology.

He added, “We’ll do a lot of things behind the scenes” in early 2024 that may not be as obvious to consumers and Versatile’s merchant lending partners. In the second half of the year, predicted O’Donnell, the company will deploy solutions that will be tied to tools for business partners to use more fully.

“This is the time when it’s really important to pick partners that have a track record of success,” said O’Donnell, “and can show that [technology] is not just vaporware — it’s out there in the market and it’s working well.”