Innovation within asset finance: What needs to be done to progress?

(Image credit: Shutterstock) (Image credit: Shutterstock)

Physical paperwork always takes an age to complete, and is a great bugbear to almost all SME owners. While waiting for approval of the forms, SMEs are struggling with cash flow and not able to function as well as they could. The payments world is moving faster than Usain Bolt, with many using phones to manage finances, but the asset finance industry appears to be behind the trend.

While running a business is stressful as it is, the slow arrival of cash into one’s pocket causes anxiety. This becomes even more complicated when thinking about sourcing lenders and customers as this could become more difficult still, due to Brexit. This lack of access to those important groups is very alarming, according to C2FO. As an online market for working capital, they found in recent research that cash flow is the SMEs' greatest obstacle to growth. This is added to the fact that access to working capital is getting more and more costly. Undoubtedly, life for SMEs is incredibly difficult.

There is an opportunity for those who spot the link between the SME community and the niche asset finance industry. Now, new technologies have opened the door of innovation in the industry, as data-driven technology is available. With access to critical goods and services, businesses can be more cost-effective. This will dispel cash flow issues and make the business more resilient.

Very soon, lessors will rely on technology to form client relationships, control pricing and learn from broader marketing data. This will provide customers with accurate and cheaper lease terms. Essentially, lease agreements can be tailored to the business – decreasing the chances of wasting time and money. 

This may already seem like a huge step forward – and it is – but it doesn’t stop there. In this future, lessors will have the option to give SME customers opportunities to profit financially from their existing agreements using technology to sub-lease goods and services to other businesses and consumers when not in use. Potentially opening up huge alternative revenue streams. Industries such as agriculture and manufacturing, where the cost of infrequently used machinery is high, are areas where growth is most expected. 

However, it will be a while before this becomes a reality. Asset finance, as an industry, must become more open to technology and find a new mentality before this great change comes about. Technology is there to improve interoperability, but there needs to be fresh eyes on the way the industry functions.

In the asset finance industry, where things have remained the same for many years, there appears to be some trepidation when adopting technology. 

This apprehension could be costly to the industry. As consumers in most markets are able to do everything with the tap of an impulsive finger. These consumers are used to having things available to them within minutes of ordering them by phone, with services such as Uber for example.

Some SME owners might find it difficult to understand why the asset finance industry has operated the same way for decades. These SME owners feeling that technology is not being welcomed as warmly as is necessary. Especially when the cash flow problems it is creating are slowing access to goods and services, and making it more expensive overall.

So, what can be done to shake up the asset finance industry?

At the moment, it appears that it's life in the slow lane for many SME owners, who simply cannot deal with severe cash flow problems plaguing their businesses. The demand for change to ease the burden on SMEs is at a critical stage.

Whatever happens, whoever finds the innovative solution to the problems in asset finance, will benefit themselves and the industry as a whole.

Daniel Layne is CTO and founder, Quotevine 

Daniel Layne

Daniel has 17 years experience designing multi-million pound systems for blue-chip automotive funders, providing technical consultancy and guiding projects from inception to delivery. He loves using Quotevine to bring big company features to automotive businesses of all sizes. He is passionate about using technology within the UK automotive and asset finance sectors. Have designed and built some of the largest automotive finance systems in the UK, travelling widely in the UK and Europe.