Nathan Mollett, head of asset finance distribution at Metro Bank, talks to Brian Cantwell about Metro Bank’s new online platform, its recruitment, and its broker and asset finance strategies
Metro Bank entered the asset finance market in 2014, after it acquired SME Finance’s invoice and asset finance business; Mollett joined soon afterwards to lead the new brand’s desired growth within the broker market, after 17 years leading sales for Syscap.
Since then, Mollett has developed the roots of the new business by building market share and targeting the estimated £1bn worth of business orphaned by ING Lease’s departure from the UK.
Mollett says Metro Bank’s asset finance business now focuses on a dual route to market, with emphasis on the brokered distribution model as a priority.
“Our main route to market is currently via brokers, and I think that there’s a great opportunity to take market share there. A lot of the introducers that we speak to are mindful of ING Lease pulling out of the market, and there were a few entrants that benefitted from that happening that have significant market share now.
“As a new business coming into the leasing sector with a really strong service proposition, we have invested quite a lot in people,” Mollett continues.
“Those additions are good-quality account managers and broker managers who can actually add value to deals, so we think we can take market share and add value.”
However, the main focus for Metro Bank seems to be presenting choice to the customer as part of the commercial sales process.
“The most important thing is giving customers a choice – if you just push them down one route or the other then they don’t have a choice,” explains Mollett.
“I think you need to give customers both options.”
Future challenges for asset finance
Mollett says the industry needs greater profile amongst SMEs when they are at crucial points of decision-making.
“The biggest challenge for the asset finance market is most trading businesses will go to their bank when they want finance, and a lot of the time the business will get a working capital loan rather than asset finance – even if the asset they are investing is a traditional asset finance type asset.”
Mollet says that within the SME sector, there is more demand than ever to pay for equipment over time, after the spread of utility-based pricing in the consumer market.
“Utility-based pricing is creeping into the consumer items like phones and tlevisions, and the majority of IT vendors that sell to SMEs now offer a monthly subscription, which is effectively a form of finance.
“There’s an opportunity for asset finance businesses to provide funding into the vendors that are offering subscription. If they do a good job of that, eventually they will wean the vendor off the requirement for finance.”
In the past year a number of leasing businesses and bank-backed asset finance funders have started to consider digital platforms as part of their channel to market.
Some of these platforms have been a host for a bank’s asset finance brand online, others have been a sales and lead channel, while lessors have also appeared on a range of alternative finance platforms designed as portals for SMEs to access finance.
Most recently LDF, Midland Asset Finance and former NACFB chair Adam Tyler have launched digital platforms for SME finance.
Mollett agrees about the growing need for the digital channel, but says there are still some parts of the asset finance process that requires specialised one-to-one attention.
“I think in asset finance particularly, there is a place for that automated online approach on flow deals where the market’s quite commoditised and the customer gets value, or where the customer associates good service with a quick decision and a fair price, and does not really want to invest a huge amount of time in the sales process,” says Mollett.
“But I think it is very different if you start looking at refinance deals, and maybe deals where there is a balloon payment or residual value or some nuances around the deal structure. As soon as it is not vanilla and it is not small, I think you have to give people the option of the human touch.”
Mollett tells Leasing Life that Metro Bank is targeting the market with its own asset finance online offering, which will offer D2C and a broker option, and is being developed in cooperation with asset finance software developer Cassiopae.
“I think it is about choice,” says Mollett. “We are investing in a new asset finance platform at the moment that will have customer-facing and introducer-facing points of sale.
“We do not have a firm go-live date with it yet, as the site is under testing. The site will be mid-office, and back-office for us, because we’ve outgrown our legacy system, and will extend our points of sale, as a type of one-stop shop. It will be an online platform where clients can come and access direct finance offers and also interact with brokers.”
Changes to the broker market
It has been a well-known fact in asset finance and consumer motor finance circles that the introduction of the FCA regulation was going to trim down broker numbers.
Smaller broker outfits either looked to seek association with an Appointed Representatives scheme, or worked in succession planning or exits, as a response to the changes in practice and increased reporting requirements that FCA regulation would demand from the broker community.
“More brokers are adopting the agent or appointed representative model, and lots of the independents now come under those,” says Mollett.
“I think it is a good deal for both parties: for the people that provide the service and the people who sign up to it.”
Despite concerns about enticing young talent into the broker market, Mollett says there are some brokerages that Metro Bank is working with which are putting new talent at the centre of their business plan and as a result are becoming transformative businesses, which Mollett says Metro Bank will be more vocal about across the coming year.
“We have been doing some work with three or four brokers that we see as break-through brokers, owned by people, where the owner-principles are under 40,” says Mollett. <