Servitization, or the shift from product ownership to Product-as-a-Service (PaaS) models, is quietly transforming industries — from automotive to consumer tech. While the term might still be unfamiliar to some, its impact is growing rapidly, particularly in the realm of digital lending, fleet financing, and subscription-based business models.
What is Servitization?
At its core, servitization refers to the transformation of products into services. Instead of a customer buying and owning a product, they subscribe to a service that provides access to the product, often bundled with maintenance, upgrades, and support. While not new — think Xerox’s pay-per-page model or Rolls-Royce’s engine-as-a-service — the model is seeing renewed momentum today.
Why the Resurgence?
Several factors are fueling this comeback:
- Quantum improvements in digital technology, AI, and data infrastructure
- The rise of Gen Z, gig workers, and SMEs prioritizing convenience over ownership
- Enhanced telematics, IoT, and GPS technologies that enable real-time usage tracking
These drivers are particularly prominent in the automotive industry, where servitization is finding strong footing in subscription models and mobility platforms.
A Shift in Lending Models: From Raj to Lessor Ltd.
Today’s vehicle loans are typically structured around individual ownership: the borrower takes a loan, pledges the vehicle, and repays over a period. Servitization disrupts this model.
Consider this example: Instead of Raj taking a ₹10 lakh loan to buy a car, he subscribes to a Maruti vehicle for ₹25,000/month. The car is owned by a leasing company (perhaps backed by Maruti), which holds a credit line from a bank or NBFC. Raj’s subscription services the leasing company’s EMI.
In this model, the bank is no longer financing Raj — they’re financing a fleet operator. The loan performance depends on vehicle usage, churn, and depreciation rather than individual creditworthiness.
What Does This Mean for Financial Institutions?
Banks and NBFCs must reimagine themselves not just as lenders, but as platform financiers and mobility underwriters. Servicing subscription-based ecosystems requires a different approach to risk, revenue, and operations.
The Tech Backbone: What’s Needed to Thrive
To stay competitive, financial institutions must adopt:
- Cloud-based lending platforms with real-time decisioning and API integrations
- Mobile-first user experiences and seamless onboarding with eKYC
- AI-driven engines for dynamic pricing, predictive risk models, and churn forecasting
- Big data lakes and customer 360 platforms for advanced analytics and regulatory compliance
Without these capabilities, traditional lenders risk being left out of the evolving Mobility-as-a-Service (MaaS) value chain.
The Road Ahead
While servitization in India is still in early stages — with challenges around pricing, regulatory frameworks, and consumer mindset — the momentum is unmistakable. Adoption is likely to accelerate among millennials, SMEs, and gig workers in urban centers. Electric Vehicles (EVs) will act as a further catalyst due to their software-first design and upgradable nature.
Lenders that invest in digital agility, data intelligence, and ecosystem partnerships will be best positioned to succeed. Servitization isn’t just about technology — it’s about rethinking the very foundation of lending around access, usage, and value delivered over time.
#Servitization #ProductAsAService #DigitalLending #UnciaEASE #MobilityFinance #FleetFinancing #AIinLending #PlatformEconomy
Boilerplate:
At Uncia, our award-winning AI-driven Loan Origination (Prime), Loan Management (Leap) and Supply Chain Finance (Flow) products help you stay on the cutting-edge of technology to simplify, accelerate, and transform your lending ecosystem.
Leading this transformative AI initiative is Raghu, a technologist, teacher, and lifelong learner. With over 35 years of experience in the software industry, Raghu brings deep expertise in Learning and Knowledge Management, Software Product Management, and Insurance Technology. A co-founder of KRIOS Technologies, he has helped shape learning and KM practices for organizations across domains.
Raghu lives by the mantra “Disco. Ergo Sum” (I learn, therefore I am)—a philosophy that drives his work, inspires his teams, and reflects in every innovation at Uncia.AI. Outside work, Raghu is a yoga practitioner, fitness enthusiast, and actively supports the revival of the ancient martial art Kalaripayattu through the Kalarigram Trust.
Let’s connect. Whether you’re building tech, delivering financial services, or rethinking risk — we’d love to hear from you.
#UnciaAI #FutureOfLending #AIInFinance #TechForGood #LeadershipInAI #LifelongLearning #DiscoErgoSum #AIInnovation #FintechIndia
