Will 2021 be a year of recovery and growth? The optimistic view is that we can and must ‘build back better’ after the pandemic. But that depends on the availability of financial support and, most of all, how we harness technology to rebuild the economy. One thing is sure: asset finance companies with strong digital foundations will play a vital role in helping small and medium-sized businesses (SMEs) secure the finance they need to recover after the pandemic.
Seizing the digital opportunity
Asset finance companies are an essential resource for SMEs, particularly now that Covid-19 has complicated the financial landscape. SMEs need access to finance more than ever, and although banks have been providing support through bounce-back loans and other emergency schemes, it has not been a smooth rollout. Slow processing and administrative glitches have highlighted the need for a fast-track and more modern approach to finance – one that is automated, intelligent, and collaborative.
This is where alternative funding, powered by fintech, can fill the gaps in our finance system. With the right technology infrastructure, asset finance companies can build speed, efficiency and above all greater customer focus – everything that today’s marketplace and digital economy demands. And not only can digitally-enabled asset financiers ensure resilience during the present crisis, they can also provide a much better finance model for the future.
Open banking and digitalisation
While Covid-19 has both accelerated and emphasised the need for digital change, technology and regulatory reforms were already redefining the financial world. In particular, the introduction of open banking in 2018 has forced banks to share data electronically with third parties via APIs, subject to the owner’s permission, enabling financial service providers to create new products and services.
Open banking, coupled with technologies such as data analytics and artificial intelligence, means asset finance companies can create a far more customer-focused and tailored service. The benefits include faster decisions following applications because paper-based processing is eliminated, which frees up time for better customer relationship management and support. Customers are also more likely to be approved because all the relevant information is provided, whereas manual processing may lead to information gaps. As a result, an application may be delayed or rejected.
Asset finance software and recovery
Access to capital is the route to economic recovery. Just as lending dried up after the 2007/8 financial crisis because banks became far more selective about who they would help, SMEs now face the same funding and operational challenges. Many businesses are fighting for survival as banks close business accounts and are reluctant to open new ones in the current climate, while the pandemic has severely dented liquidity and cash flow. SMEs therefore need the guidance and support of alternative providers who can use the latest digital tools to search the marketplace for the most appropriate funding.
The clarity, timeliness and completeness of financial information are crucial, and this is where asset finance software can create a matching service to bring lenders and borrowers together. Open banking data can be gathered and distributed in the most efficient way, delivering the service levels and attention that customers expect today, and security can be streamlined and enhanced through Electronic Identity Verification (eIDV). Instead of physical documents and time-consuming manual processing lenders can use instant and dependable digital audit trails to accelerate onboarding.
A platform for growth
In 2021, lenders must build their businesses on a future-proof asset finance platform that can maximise flexibility and customer focus. Borrowers will be looking for digitally-enabled lending and partnering to secure the finance they need for recovery and growth. They will want more choice, better communication and solutions that are on-demand and tailored to their needs. In the past, narrow product choice, an inability to match needs or preferences, and a lack of personalisation have characterised the borrowing experience. But now, thanks to open banking and digital progress, this need not be the case.
For asset finance companies, building the right strategy in the post-Covid era means using platform technology to add value to the lending process. Asset finance companies should therefore look beyond numbers and find ways to widen their core offering and become more than pure asset financiers.
When lenders access cloud-based platforms they can draw on centralised and consolidated customer information. And if they go one stage further and build their businesses with a Software-as-a-Service delivery model, then they have a highly versatile and scalable platform that can be updated with new functionality and services whenever required. The result, as demonstrated by QV Systems, is powerful partnerships and integrations, without the drawback of legacy systems and unwieldy internal IT architectures. For niche lenders, among others, it widens the field and is a chance to grow and diversify their customer base.
How to future-proof your business
With many SMEs choosing the wrong types of finance, perhaps leading to bad debt, and traditional lenders becoming more restrictive, there is a growing opportunity for asset finance companies to step in with technology to bridge the finance gap and create more value for customers.
Find out how QV Systems can help your business succeed in the new trading environment. Explore our end-to-end asset finance software on the QV Systems website.