Yamaha Financial Services’ former Chief Risk and Chief Strategy Officer Vijay Patil departed the lender in July, 2021 to helm a new venture that brings the indirect lending model to commercial vehicle finance.
Patil is the co-founder and chief operating officer of the new venture, Trnsact, a software-as-a-service fintech that aims to seamlessly connect consumers, dealers and lenders in the commercial vehicle space in the same way as indirect consumer auto and powersports.
“I call it an extension of what I’ve done in my career,” Patil told Auto Finance News. “What I see in commercial truck or equipment finance is an industry that is five to 10 years behind auto and powersports when it comes to the processes, the business practices and the technologies that are being used.”
The lending process for big-ticket commercial trucks and equipment is still “old fashioned,” Patil said. For example, the customer still has to fill out a PDF form and submit it, a process that can take two to three days.
“For the bank, the processes we have been seeing … most of the work is manual, it’s not automated. There’s a huge opportunity to improve the efficiency and consistency in this market,” Patil said.
The commercial vehicle and equipment finance industry logs, on average, about $1.8 trillion in annual sales, with about 55% of those purchases in the private sector financed through a loan, lease or secured line of credit, resulting in a $900 billion industry, according to the Equipment Leasing and Finance Foundation’s 2019 Industry Horizon report.
“We’re trying to solve the pain point of a trillion-dollar industry when it comes to financing,” Patil said. “There’s an opportunity in this space to streamline the data industry from a financing standpoint and from a user experience standpoint.”
Conceptually, the software works similar to a Dealertrack-type platform, Patil said. Dealers submit credit applications, which are then funneled to the lenders who are able to review the documents electronically. The entire process is automated using proprietary technology, he explained.
The dealer ecosystem is similar to auto and powersports, Patil said, noting that both franchise dealers and third-party dealers sell multiple OEM brands. There are between 40,000 and 50,000 domestic dealers in the space, he said.
Banks and equipment OEM captives make up the lion’s share of financing, with Bank of America Global Leasing coming in at the No. 1 spot, followed closely by Wells Fargo Equipment Finance with $50 billion in assets, Patil said. John Deere takes the No. 3 spot with about $43 billion in assets; and Caterpillar’s captive takes the No. 4 spot with somewhere between $35 and $40 billion in managed receivables. Volvo Financial Services, which underwrites loans on commercial trucks, has a portfolio of about $22 billion.
Trnsact, formerly Dealer Credit Resources, was founded in 2018, and has been live for two years, Patil said, estimating that about half a million dollars of purchases have been facilitated using the technology on a daily basis in recent months. The underlying automation technology took three years to build, he noted.
“We’re just trying to make sure that the process — from a user experience standpoint, from a dealer experience standpoint — is very smooth.” Patil said. “As opposed to the old-fashioned manual hiccups of, ‘send me your credit application, let my type in your name’” in the system.
This story first appeared on Auto Finance News, a publication of Royal Media.