From spreadsheets to the latest floorplan finance software: new technology has transformed service levels and increased customer demand at a Minnesota-based bank.
Merchants Bank launched its digital floorplan strategy following a four-month program to introduce new software that automates business processes, reduces administration and enhances the finance customer experience.
The bank was prompted to make the move after requests from customers to introduce a more efficient way of managing floorplan finance.
“We originally managed the process manually through traditional spreadsheets, which created unavoidable issues with human error,” said Dan Massett (pictured), regional president of the 140-year-old bank. “We then had a problem with items funded by floorplan finance appearing as individual loans on statements.
“What really prompted the review was one of our largest customers stating though they loved the personal relationship they had with us, the administration involved in the floorplan piece of their relationship was making it very difficult to keep that business with us.”
Operating in the states of Minnesota and Wisconsin, the community bank began the search for a vendor by working closely with its floorplan finance customer base. This included auto dealerships and a range of merchants selling specialized equipment, such as marine and powersports equipment.
Massett added: “Before we purchased, we made sure the product was going to meet the needs and expectations of our customers.
“We showed our proposed system to one key customer and within five minutes they said it was exactly what they needed.”
This system was CALMS Compass: a floorplan finance solution from Atlanta-based finance technology provider White Clarke Group.
The CALMS Compass solution supports floorplan business processes from initial credit review to full loan and portfolio servicing, automating labor-intensive tasks while providing exception-based portfolio management to control risk.
Merchants Bank’s customer base now has access to a 24/7 self-serve solution that allows dealers, suppliers (manufacturers) and auction partners to conduct business on their own schedules.
CALMS Compass offers rules-based electronic onboarding of inventory receivables, electronic disbursements and drafting, supplier integration, title and insurance tracking, auto debiting and payment application as standard features. It also provides customizable automated workflows so lenders can refocus their resources on more strategic areas.
Reports include turn time of inventory, interest expense and curtailment notifications.
For Massett, the self-serve capability of the system and its 24/7 availability has played a key role in elevating its floorplan finance offering.
“Customers can now access balances, make payments and obtain information when they need it," he said. "It has revolutionized the service we can provide; floorplan finance is now more high-profile within the bank.”
He continued: “We had a customer whose original supplier told them it would take weeks to arrange financing after they acquired a dealership. We were able to make arrangements to close in less than 10 business days.
“It gives us the confidence to take our proposition to a wider customer base. We have had calls about our services from as far as the East Coast and are proud to offer a floorplan system that rivals what is offered at larger corporate banks.”
Since launching the service overhaul in 2017, the size of the floorplan finance business has grown by 60%.
Although Massett adds the initial focus has been limited to its current markets, lending is expected to have doubled in the next two to three years to around $60 million.
Among the bank’s customers is Adamson Motors Inc. Randy Stevens, a partner in the business, stated: “We have been impressed with the convenience of the floorplan financing system from Merchants Bank.
“In a matter of a click, I can access a balance, payment and payoff information when I need it. Everything we need to manage our inventory is at our fingertips.”
A vital factor in the success of the technology development project has been the close teamwork between the bank’s different departments and White Clarke Group.
Massett, the lead internal sponsor of the digitalization initiative, said: “We really did a good job of bringing in a team around the project, which was sponsored by our CIO. White Clarke Group were very attentive, with a very well thought through project plan.”
The complexity of IT projects and their potential for disruption can often be a barrier to obtaining board approval, but Massett ensured that business staff led extensive internal discussions with senior management to cooperate on the implementation.
He explained: “Business staff worked closely with IT to create the internal proposal; if you do this in the right way to gain approval, then the net results are greater efficiencies and improved profits.”
Merchants Bank recognizes the need to respond to changing customer expectations when it comes to digital services.
The ongoing digital roadmap for the bank, which has assets of around $1.7 billion and employs 450 people, incorporates initiatives ranging from commercial online and mobile banking to treasury management.
“There is a growing expectation of digital services at all levels,” Massett stated. “We have several digital projects in the mix.”