New regulations and AI advancements are prompting equipment financiers to ramp up technology investments as they work to stay ahead of the digital revolution.
A survey of roughly 300 banks and capital markets firms by research firm Statista reported that in the second quarter:
- 83% plan to increase spending on data management technology;
- 75% plan to increase spending on cloud computing services; and
- 63% plan to increase spending on AI and machine-learning solutions.
Some equipment financiers plan to increase their tech spend in 2025 to adhere to regulations, including Section 1071 of the Dodd-Frank Act, Mark French, president of Atlanta-based Crest Capital, told Equipment Finance News. Section 1071, currently under legal challenge, mandates that financial institutions collect and report data from small business credit applications to the Consumer Financial Protection Bureau.
Section 1071 would create “significant paperwork and data management burdens that slow down credit access for those small businesses,” French said.
“To address more paperwork and data demands, we’ll be investing in automation to maintain compliance while keeping customer friction as low as possible.”
— Mark French, Crest Capital
The financial automation market was valued at $6.6 billion in 2023 and is expected to grow 14.2% annually over the next eight years to $20.7 billion, according to research and consulting firm Global Market Insights.
Equipment lenders are also using AI-driven automation tools to meet compliance requirements such as the Know Your Customer section of the Patriot Act, Jody Ray, relationship manager at Chicago-based BMO Bank, told EFN. The federal rule requires financial institutions to verify a customer’s identity to prevent fraud, corruption, money laundering and terrorist financing.
Compliance changes spark new tech products
Lenders’ demand for technology to address regulations is also sparking innovation among fintechs and other service providers, Shannon Barnes, chief product officer at the Institute for Financial Integrity, told EFN. The institute recently launched AskFin, a generative AI tool that supports compliance training by providing answers to questions about specific rules and risks facing the lending industry.
“If I wanted to do [Know Your Customer] training for a company, there are so many guidance papers that have been put out by the Financial Action Task Force and different U.S. regulators,” Barnes said. “So, someone who’s working at a bank that sort of needs a reminder on how to do that, can easily pull those back” with AskFin.
Generative AI can also help provide different outlooks on some rules or proposed legislation, “including identifying key considerations with the incoming U.S. administration,” he said.
Need for speed
AI spending in the financial industry is projected to grow to $97 billion in 2027 from $35 billion in 2023, according to Statista.
Many lenders may invest more in technology simply to keep up with the times and meet evolving customer demands, driven by the desire for faster financing, Mike Hanzel, technology group head at Wells Fargo Equipment Finance, told EFN.
“The way that we transact business has changed so much since I started in this industry,” he said.
“We just have to be there to meet our customers where they want to meet us. … So, I think you just keep evolving.”
— Mike Hanzel, Wells Fargo Equipment Finance
Hanzel has been in his current role with Wells Fargo since 2016, according to LinkedIn.
Crest Capital’s French said the lender is looking to upgrade its operating systems to accelerate transactions while automating tasks related to fraud prevention and compliance.
Moreover, understanding new technologies that equipment dealers and businesses are using will also be key for lenders, Hanzel said. These technologies include inventory management systems, operating systems and AI tools to support them.
“We’re working with the vendors and the dealers to understand how they’re transacting business with their clients, how Wells Fargo transacts with our clients, and then just kind of pulling it all together,” he said.
The third annual Equipment Finance Connect at the JW Marriott Nashville in Nashville, Tenn., on May 14-15, 2025, is the only event that brings together equipment dealers and lenders to share insights, attend discussions on crucial industry topics and network with peers. Learn more about the event and register here.
