By Allen Jones

The advent of open banking and the continuing emergence of new challenger and mobile banks is not limited to traditional banking. Asset finance is ripe for market disruption as specialist lenders move to target discreet market segments. The key to this changing landscape is the flexibility and availability of operating software.

At the heart of the emergence and rise of challenger asset finance providers is specialist asset knowledge, which when combined with financing expertise provides a compelling case for businesses of all size, but most especially for the growing number of SMEs which are often time and resource short. These customers want a superior, appropriate and insightful customer purchasing and financing journey. The people behind these emerging businesses know their markets and can provide the personal service that is being sidelined by the increasing move to online business banking and financing by the major traditional providers.

The trend towards market focused financing specialists is already evident in the rapid emergence of specialist car and van leasing businesses. It is not just a lease that these businesses are selling it is expertise on the item and how to link finance and asset effectively in a frictionless manner. The result of such market specialism is a deeper bond of trust and respect than just the availability of money.

Traditional barriers to entry are melting away. There is a growing entrepreneurial spirit in the UK and confidence by backers to support well thought through and agile lenders and brokers. This accessibility to market is being supported by smart software, which can be deployed rapidly.

By way of example, Countingup, which is targeting the UK’s 4.5 million sole traders, freelancers and contractors with a banking service with automated accounting services built-in points the way for specialist asset finance providers. The business took just four months from inception to launch its current account.

A decade ago, the processing breadth and agility available to asset finance business from products such as our Solar asset finance system were unavailable. Today, we can have an asset finance business up and running in hours rather than months with all the necessary products, workflow and documents and complete with the accounting controls required to manage a finance portfolio.

In today’s app-led world, customers want; speed, service, expertise, a frictionless buying experience and a fair price. I believe there will an increasing place for the type of nimble asset finance business that can provide this and inevitably this will accelerate a new level of market fragmentation in asset financing.

The rapid expansion of car and van leasing businesses will inevitably be replicated by specialists in other areas; marine, office equipment, hotel furnishing, transport and logistics and the type of specialist machinery and equipment that manufacturing businesses need to be competitive on the world stage.

Our own experience is that SME businesses like to work with people who understand them and which are service driven. There is a certain irony, that while traditional lenders are shifting from the High Street to online, providing chatbots and AI customer service capability, smaller players can prosper by filling the personal service void. The irony is that it is largely possible because technology is able to provide critical enterprise resource planning (ERP) capability to ensure these new businesses run cost-effectively and compliantly.