Commerzbank has developed a prototype for a new 'pay-per-use' loan for capital equipment which taps into the Internet of Things to adjust repayment terms according to the actual usage of the machinery on which the loan was taken out.
The German bank says the ability of machines to communicate and post production data and capacity constraints over the Internet is creating new business lending models, such as pay-per-use, pay-per-part and 'equipment-as-a-service'.
The prototype platform was developed by the bank's recently established big data and analytics division in conjunction with networked machine tool manufacturer Emag and car parts supplier KMB Technologie.
The loan repayment schedule is calculated based on the actual usage of capital equipment, which helps preserve the user’s liquidity. If machine utilisation is low, the repayment burden is also low. It follows, then, that if there is an increase in production - and a rise in turnover - the repayment rate for the pay-per-use loan also rises.
“The pay-per-use loan from Commerzbank allows us to invest in a new generation of machines from Emag,” says Sven Hartwich, commercial manager at KMB Technologie. “With the flexible repayment rates we can adjust our liquidity for production and turnover. This in turn allows us to lower our break-even point further in order to achieve better overall financial stability.”