European equipment

How the European asset finance industry can address challenges and deliver opportunities for SMEs


Asset Finance Connect’s head of equipment finance, John Rees, was joined by two senior CEOs – Odile De Saivre, CEO of Société Générale Equipment Finance and Bill Stephenson, CEO of PEAC Solutions – for the latest AFC webinar, sponsored by Acquis.

Nick Leader, CEO of Acquis, which operates in 16 European countries and the US, provided the headlines from the recent 2023 Acquis white paper – Opportunity in change: A market research report on SME business sentiment – compiled from information gathered from April to May 2023 from SME decision makers across Europe.

Opportunity in change: An Acquis market research report on SME business sentiment

The latest Acquis white paper “Opportunity in change: A market research report on SME business sentiment,” highlights that 32% of European SMEs plan to fund investment in new business assets through leasing.

As we progress through 2023, businesses are facing significant socio-economic challenges, and the longer-term effects of the pandemic persist. With the aim of gauging the resilience of the market and its path forward, Acquis conducted an international survey, with the following objectives:

1. Determining the scale and nature of challenges faced by SMEs in 2023 and beyond.
2. Identifying growth opportunities for SMEs and industry innovations.
3. Investigating businesses’ investment plans and priorities.
4. Assessing the growing importance of ESG and the transition towards sustainability.

During their research, Acquis conducted 1,250 interviews with SME decision makers across Europe (UK, France, Germany, Spain, Poland and BeNeLux) from a cross-section of sectors (IT, finance and insurance, manufacturing, medical, retail) within the SME market.

The report research was last conducted in 2021 during COVID, so it was interesting to see how the market was feeling two years on in a post-pandemic world, and look at how the European asset finance industry can address challenges and deliver opportunities for SMEs.

Key takeaways from the report focus on resilience and recovery:

46% of European businesses feel optimistic about their long-term future.
41% of European SMEs have changed their working model since early 2020.
46% of European SMEs see cost and pricing optimisations as their top growth opportunity.
51% of European SMEs will invest in assets or equipment in the next 12 months.
32% of European businesses are planning to fund investment through leasing.
66% of SMEs in Europe would consider subscription-based products.

Download the Acquis white paper to discover how the equipment finance market can support SMEs in 2023 and beyond.

Business confidence and market sentiment

The Acquis SME research found that business confidence and optimism had fallen from 62% in 2021 to 46% in 2023 amongst SMEs, which Acquis’s Nick Leader found surprising after a three-year period of economic turbulence and upheaval for the industry: “if we can survive that, we can survive anything!”

Although optimism had fallen to 46% in 2023, the neutral responses had increased from 6% to 26% highlighting a pragmatic return in the industry to ‘business as usual’.

SGEF’s Odile de Saivre is not surprised that clients are less confident about the future following COVID and a string of other major economic issues. SMEs, however, are still positive for the future, just not as positive as in pre-pandemic times.

During COVID there was a massive injection of funds from governments to help SMEs survive and this has enabled them to come out the other side of the pandemic stronger than before. Odile believes that SMEs have rebounded and want to move forward and see growth in the market by upgrading assets.

The optimism is still there, according to PEAC’s Stephenson, with those companies that survived COVID emerging leaner, but more confident, and in need of growth and assets, equipment and acquisitions.

Considering the effects of a turbulent pre-pandemic world, surprisingly both de Saivre and Stephenson have not witnessed an increase in insolvencies since COVID in Europe which echoes Leader’s thoughts on the UK. It seems to imply that surviving companies from COVID are stronger than before when faced with external challenges. This is also an indication of the ‘state support’ that was provided during the pandemic.

Being a counter-cyclical industry, optimism in the leasing sector goes hand-in-hand with higher inflation and increasing interest rates.

Stephenson highlights that rising interest rates are fantastic for the asset finance industry: “Leasing starts to flourish in a high interest rate environment.”

According to de Saivre it took clients time to adapt and understand a new market with increasing interest rates. SMEs had to learn how to adapt and understand how and where the market was going. While it was difficult to read the market in 2022, SMEs have learnt that high interest rates are here to stay.


SMEs were interviewed across a wide range of sectors for the 2023 Acquis Report. Varying levels of optimism were observed across different industry sectors, with various opportunities available across different sectors and countries.

  • Medical and pharmaceutical: 56%
  • Retail: 55%
  • IT: 52%
  • Agriculture: 44%
  • Media and communications: 44%
  • Charities: 41%

It was no surprise to the panel that the agriculture sector was less positive!

On the other hand, 56% of SMEs were optimistic for growth in the medical sector. Investment in medical equipment differs country-by-country on a case-by-case basis, e.g. in France, hospitals need to renew assets every seven years.

Growth opportunities and industry innovations

The asset finance industry is well placed to support SMEs with their growth opportunities. SGEF’s de Saivre highlighted that, while green assets and sustainability are a critical part of the leasing industry’s growth opportunities, green assets tend to be more expensive to buy with a large cost differential between older assets and greener assets, for example, ICE vehicles and EVs.

Green assets present a new era for the industry with a fresh set of challenges and questions surrounding uncertainty of the lifecycle of green equipment, asset management and residual values. As Stephenson notes, “it is harder to give a competitive financial solution when you don’t know what the future holds for RVs”.

If you want SMEs to invest in more expensive green assets, de Saivre believes that the investment gap needs to be reduced, hence we are seeing a lot of subsidies, and OEMs must look at cost to make the product more affordable. The industry needs to find new ways of financing, reducing costs and risk sharing.

Bill Stephenson sees that the green movement of financing assets that are more expensive but bring a more sustainable future is a natural progression in the industry, which is unfortunately being expedited by governments, subsidies and regulation which is making it harder to happen and extremely expensive.

The green transition is also driven by consumers who unfortunately are not moving to green assets as quickly as expected due to high costs and lack of infrastructure. For example, a joint survey of 11,565 drivers in June 2023 by and The AA showed that consumer confidence in electric cars is falling, with a staggering 87% stating that electric cars are too expensive to purchase, while 66% said rising energy prices had put them off owning an electric car.

During COVID, supply issues led the industry to focus on the value of assets and the second life of assets and reusing assets (which goes hand-in-hand with ESG momentum). Looking at the whole lifecycle of an asset presents new opportunities to finance different assets or finance the same assets in different ways (with a focus on second life).

There are also growth opportunities for SMEs to move to sustainable assets using sustainable usage-based financing products such as subscription and second life leasing. In the Acquis Report, 60% of SMEs said they would try subscription-based products.

Pay-per-use products need three things, according to DLL’s Stephenson, in the video below.

The introduction of usage-based products would require the re-education of sales teams, who frequently default back to selling on interest rates. Along with such training, massive investment would be needed in the product, data and tech system.

According to SGEF’s de Saivre there would only be a demand for pay-per-use financing models if it was a cheaper option for SMEs, hence why we are not seeing a gigantic move in the market towards usage-based products.

Growing commitment to a sustainable future

ESG momentum is broadening with a universal transition towards ESG policies, but according to Odile de Saivre, leasing companies need to help clients with this transition.

Having an ESG policy sets the tone for a business as to what their intentions are towards the environment. The 2023 Acquis SME Report found that 95% of SMEs already have an ESG policy or are planning one in the future, with 80% having an ESG policy now or will have one within the next 12 months. Spain is ahead of other European markets, according to the Acquis research.

The market will naturally evolve towards this, according to Bill Stephenson, and SME clients who are at different points on the ESG journey will need help from their finance providers. Stephenson sees government interaction, regulation and subsidy as an unnatural contribution to the ESG transition, hence why governments are starting to pull back from their aggressive timelines.

For more information or to download the Acquis white paper – Opportunity in change: A market research report on SME business sentiment, please visit

Analysis from John Rees Equipment Finance Community Leader, Asset Finance Connect

The Acquis report provides an excellent document for finance companies to understand SME sentiment. It is a valuable source of data for all lenders.

Again, the asset finance industry finds itself well placed (in its usual counter cyclical way) to help SMEs invest in assets in the coming years. Both our panel guests have a clear vision as to what the asset financiers can bring to support investment. Subscription and usage-based products continue to be talked about but present big challenges to the lenders. ESG policies are a must have for all companies in the next few years.

European automotive
European equipment

It’s all in the foundations: microservices architecture

In today’s rapidly evolving business landscape, organizations face a multitude of challenges when it comes to addressing threats and opportunities with agility, scaling their operations, adopting new technologies, and delivering value to customers efficiently. Many software architectures pose obstacles to business growth and agility.

In this article, I’ll explain some of the pitfalls that you should watch for when evaluating your technology partners’ software architecture.

The original architecture is the monolith. Characterized by tightly coupled components that are compiled and deployed together, the monolithic architecture is considered a closed architecture that is expensive to scale and modify.

Monolithic architecture has been used for decades, dating back to some of the earliest commercial software. While products with this architecture are relatively simple to install and operate, their architecture often hinders scalability and agile delivery of new functionality. In an era when most commercial software was hosted by customers in their own data centers (on premise installations), monoliths were common because they required less administration from the IT team. However, they have limited options for scaling and use their hardware inefficiently, requiring more IT infrastructure to run at scale.

As they grow in complexity, they require exponentially higher amounts of development and testing to make changes, which impedes agility. Monoliths typically have limited integration options. While they may offer APIs or file-based integration points, their tightly-coupled nature often leads to difficulty in providing clean interfaces for external integration. These issues often yield high hosting costs, delayed product releases, limited integration into customers’ ecosystems and missed opportunities to capitalize on emerging market demands.

Other popular architectures that have been used for commercial software include layered (or tiered) architectures and service-oriented architectures (SOA). These architectures became popular in the 1990s and 2000s. Compared to monoliths, layered architectures improve scaling and code maintenance. They usually separate into 2-3 tiers, and each tier is usually hosted on separate servers, which allows IT teams to optimize each server specifically for its job. Some layered architectures support horizontal scaling, allowing the IT team to add servers to share the load for any of the application’s tiers.

Service-oriented architectures take this a step further and allow specific functions or services to run independent of each other. When designed well, each of these services can be maintained and scaled independent of the others, which improves the system’s overall agility and scalability. The cost of getting these benefits comes with the added complexity for the IT team, who now has more components and servers to maintain. While these architectures reduce the impediments for customers to scale and adapt, the improvements are small compared to more modern architectures.

Two architectures that have become popular in more recent years are low-code and microservice architectures. Low-code architectures are meant to provide extremely agile change by taking the vendor out of the process. While this can sometimes work, they sometimes lack the ability to scale and to remain agile as they become more complex over time.

Low-code applications provide means for customers to essentially develop their own custom application on the vendor’s platform without using traditional software code. Instead, they use drag-and-drop visual tools, rules and simple domain-specific languages to customize the platform for the customer’s needs. This usually allows the customer to quickly adapt the product to meet changing needs. However, it is common for these changes to have a negative impact on scalability and performance because low-code tools don’t offer the same level of support for managing these more technical features of a product. Also, complex configurations on these platforms tend to become difficult to maintain.

At a basic level, ‘low-code’ is still code and these platforms tend to lack the sophisticated capabilities needed to maintain many layers of dependencies and changes that occur during the life of the product. For some, difficulties in maintenance can even show up during the system’s initial implementation.

Many of the challenges noted above with monolithic, layered, SOA and low-code architectures can be overcome with a well-designed microservice architecture. A well-planned microservices architecture means that the technology provider develops and tailors independently deployable microservices to serve specific business capabilities, promoting modularity and decoupling between components. This modular approach facilitates the development and integration of new technologies and functionality, as each microservice can be developed, tested, and deployed independently.

Microservice architectures are inherently open because each service communicates with the others through APIs, and these APIs can provide integration points with the customer’s ecosystem.

Microservice architectures go hand-in-hand with software-as-a-service (SaaS) in the cloud. They make it possible to take advantage of the extreme scalability of the cloud. Usually, each service is set up to ‘autoscale’ (automatically scale horizontally with the load placed on it).

When managed in the cloud by a SaaS provider, the deployment, monitoring, scaling and upgrading of microservices can be automated. This allows the partner to seamlessly deploy updates without taking the system down. This approach is used by many of the technology platforms that we all use on a regular basis, including search engines like Google, media platforms like Spotify and Netflix and social media platforms like LinkedIn and Facebook. These platforms are continuously upgraded and improved, and we almost never experience downtime or other negative consequences.

Through a reliable and innovation-minded technology partner, secured finance providers will be able to capitalize on the latest architectures, tools, frameworks, and technologies for specific services without being constrained by the limitations of the monolith and other dated architectures. This technical flexibility enables secured finance lenders to capitalize on emerging technologies and stay ahead of the competition, whilst offering their customers tailored solutions which fully meet their requirements and needs.

At Solifi, we have taken the microservice approach. We have found that this architecture allows us to provide the agility, scalability, quality and efficiency that our customers require. We have the added benefit of improving our internal development scalability and quality, which we pass on through improved responsiveness and quality to our customers. With the loosely-coupled, independent nature of our services, we can make changes and deploy them safely in minutes and hours instead of weeks and months. The quick response time to market demands positions Solifi as an adaptive and customer-centric organization.

When you evaluate partners for your next technology upgrade, remember to look beyond the functionality provided by the products you evaluate and also consider the ability of the software and partner to enable your company’s growth and agility.

About the author

Eldon Richards joined Solifi’s Executive Team as Chief Technology Officer at the start of 2020, bringing more than 20 years of enterprise software product development and global technology leadership. In this role, Eldon leads the development of the company’s product portfolio, including Solifi’s Open Finance Platform.

Eldon joined Solifi from Recondo Technology, an enterprise SaaS platform providing revenue cycle management for healthcare organizations. As Recondo’s CTO, Eldon was responsible for all aspects of their SaaS technology platform including integration of advanced technologies like machine learning (ML) and natural language processing (NLP). Eldon was a key contributor to the company’s success which led to the acquisition by Waystar. Prior to Recondo, Eldon held executive technology leadership positions at PatientPoint, Optum, and United Health Group.

Eldon holds an undergraduate degree in computer science from the University of Utah, MBA from the University of Minnesota Carlson School of Management, as well as graduate level certificates from Stanford University, Washington University in St. Louis and is a Six Sigma Green Belt.

European automotive
European equipment

AI innovation in financial services


The next big thing in tech – generative artificial intelligence – is promising to change everything from the world economy to our personal lives. The hot topic was discussed in depth in several sessions at the Asset Finance Connect Summer 2023 Conference.

Sulabh Soral, AI Officer at Deloitte said: “At its most basic, AI is software that mimics and generates human behaviour – planning, generating ideas, understanding speech and visuals. Its ability to scale human intellect will have a profound impact.”

Forms of AI in use today include digital assistants, chatbots and machine learning amongst others. As humans and machines collaborate more closely, and AI innovations come out of the research lab and into the mainstream, the transformational possibilities are staggering.

As a source of both huge excitement and apprehension, AI and its limitless potential operates at a superhuman level. While the applications of generative AI are in the early stages, the capacity of these AI models is doubling every three months.

There is huge investment potential in this complex and highly intelligent technology. PwC’s Global Artificial Intelligence Study: Exploiting the AI Revolution describes AI as: “the key source of transformation, disruption and competitive advantage in today’s fast changing economy.”

According to PwC, AI can transform the productivity and GDP potential of the global economy with global GDP rising to 14% higher in 2030 because of the accelerating development and take-up of AI. However, strategic investment in different types of AI technology is needed to make that happen. 

ChatGPT is a generative AI model developed by OpenAI and is at the forefront of this revolution. It is nearly on par with the human brain and it is only getting smarter.

Shaping up to be the most revolutionary technology since the internet, the full implications of generative AI are still untold. This latest innovation in AI will drive an explosive growth and value creation in the technology sector over the next couple of years and vast potential implications for the financial services sector.

Generative AI

The launch of ChatGPT, an example of a Large Language Model (LLM), has sparked an explosion of interest in AI technologies. The development of LLMs allows the access of natural languages, unlocking vast amounts of information, for example, scientific, historical accounts, literature.

Generative AI is not just about linking data and databases but trying to behave like humans to create responses that make sense with, for example, conversation and human-like dialogue; instantaneous responses; and being able to act in a nuanced way with cultural references and adapt to the tone of the conversation.

ChatGPT can be trained to operate within a particular industry knowledge foundation. For example, in retail, AI language models have a number of benefits including accessing a lot of information, interacting in a natural way, assisting with complex data tasks, and solving a number of problems and issues.

New findings from Deloitte’s 2023 Digital Consumer Trends research found that a third of those who have used Generative AI in the UK have done so for work, equating to approximately four million people.

Paul Lee, partner and head of technology, media and telecommunications research at Deloitte commented: “Generative AI has captured the imagination of UK citizens and fuelled discussion among businesses and policymakers. Within just a few months of the launch of the most popular Generative AI tools, one in four people in the UK have already tried out the technology. It is incredibly rare for any emerging technology to achieve these levels of adoption and frequency of usage so rapidly.

“Generative AI technology is, however, still relatively nascent, with user interfaces, regulatory environment, legal status and accuracy still a work in progress. Over the coming months, we are likely to see more investment and development that will address many of these challenges, which could drive further adoption of Generative AI tools.”

Implications for UK businesses

As generative AI further develops, more and more services can become automated. AI can understand mass amounts of data so can reduce the workload of humans, make speedier decisions, and be more personalised.

In the business world, AI can be used in:

  • Customer service – enhance customer service and increase customer loyalty
  • Fraud detection – AI can be used to detect intent
  • Tax service – improve customer service and help file taxes
  • Process optimisation – credit and loan decisioning, process automation, internal document tagging. AI can help accelerate slow application processes, improve loan collectability and user experience, personalised loan collection communication, segment credit users.
  • Improve decision making – in areas such as portfolio management, asset allocation and investment strategy. Roboadvisors are widely touted as one of the highest potential technologies involved in AI in fintech.
  • Regulatory compliance – ensuring transparency and security, anti-money laundering, KYC systems, compliance mentoring.

AI provides the potential to enhance quality, personalisation and consistency, and save time.

In a recent analysis of the potential long-term impact of automation – Will robots really steal our jobs? – PWC determined that almost 30% of UK financial services jobs could be replaced by automation by 2030, offering big gains in productivity and customer experience. However, the report also predicted that the nature of some occupations would change rather than disappear. It added that automation could create more wealth and additional jobs elsewhere in the economy.

PwC’s Global Artificial Intelligence Study: Sizing the Prize highlighted just how big a game changer AI is likely to be, and how much value potential is up for grabs. AI could contribute up to US$15.7 trillion to the global economy in 2030. Of this, US$6.6 trillion is likely to come from increased productivity and US$9.1 trillion is likely to come from consumption-side effects.

According to the study, the adoption of ‘no-human-in-the-loop’ technologies will mean that some posts will inevitably become redundant, but others will be created by the shifts in productivity and consumer demand emanating from AI, and through the value chain of AI itself. In addition to new types of workers who will focus on thinking creatively about how AI can be developed and applied, a new set of personnel will be required to build, maintain, operate, and regulate these emerging technologies.

In the near-term, the biggest potential economic uplift from AI is likely to come from improved productivity. This includes automation of routine tasks, augmenting employees’ capabilities and freeing them up to focus on more stimulating and higher value-adding work.

More and more businesses are turning to automation, investing in AI to replace staff and cut costs. The 2023 McKinsey Global Survey – The state of AI in 2023: Generative AI’s breakout year found that one-third of survey respondents said their organisations are using gen AI regularly in at least one business function and 40% of respondents said their organisations will increase their investment in AI overall because of advances in generative AI.

Recently, telecoms giant BT announced it will be shedding about 10,000 jobs by the end of the decade as it digitises and relies more on AI automation.

However, the ultimate commercial potential of AI is doing things that have never been done before, rather than simply automating or accelerating existing capabilities.

The potential for advances in artificial intelligence will be one of the areas researched at the recently launched Gillmore Centre for Financial Technology at Warwick Business School. The aim of the Centre is to spearhead cutting-edge research and innovation for the UK’s financial and technology sectors, with leading research on AI development and machine learning.

Ram Gopal, Director of the Gillmore Centre for Financial Technology, said: “The Gillmore Centre for Financial Technology will act as a beacon for industry leading research across fields such as AI, blockchain and machine learning, helping to elevate government policy, inform regulators, and guide businesses through the safe development of these areas.”

AI: Not a new concept in the business world

We are seeing a proliferation of AI tools and applications in the business world, including digital assistants, chatbots and machine learning amongst others.

Despite recent advances in generative AI and the explosion of public interest in AI with the launch of ChatGPT, the AI data modelling concept including machine learning and statistical models has been around in UK businesses for many years, developing further since the emergence and development of Cloud technology, a key component for AI allowing it to evolve due to the need to store and process large volumes of data.

AI is already being used by retailers for metrics for pricing, writing advertising copy, and service booking systems, for example.

Fintech Innovator presentations

The Fintech Innovator session at the recent Asset Finance Connect Summer 2023 Conference provided four use cases for artificial intelligence in the auto and equipment finance sectors.

AI in onboarding: In auto finance, AI can use browser behaviour data to predict car brand and buying intent. AI will enable the ability to segment customers by data and enable better customer journeys in a real-time solution.

Currently, there is a revolution in the way cars are being sold which could be enhanced by incorporating AI in all ecommerce platforms.

AI in manual underwriting: AI can be used to predict the outcome of manual underwriting. There are many opportunities and challenges of using AI to progressively automate credit decisions to reduce cost to service and decision times. AI has the power to automate the majority of the manual underwriting process, reducing time, saving costs and enabling growth.

AI in origination: Generative AI solutions based on ChatGPT allows customers to ask detailed questions about their finance contracts. AI can be used as a copilot to take away drudgery and unlock a new wave of productivity, without losing the human element. AI can be used to solve a communication problem across the industry.

AI in retention: AI can be leveraged for enhanced customer retention and OEM success in the auto finance sector, and can be used to optimise the timing and offer for auto finance customers at the end of finance contracts and ability to retain the customer mid-term.

By incorporating AI into various aspects of the customer journey, retailers and financiers can improve customer satisfaction, anticipate and address customer needs, and ultimately enhance customer service and retention.


With the unprecedented growth in AI technologies, it is essential to consider the potential risks and challenges associated with their widespread adoption, for example, security, privacy, bias, hallucinations, and repetition.

A 2023 Forbes article, highlighted the 15 biggest risks of artificial intelligence:

  • Lack of transparency
  • Bias and discrimination
  • Privacy concerns
  • Ethical dilemmas
  • Security risks
  • Concentration of power
  • Dependence on AI
  • Job displacement
  • Economic inequality
  • Legal and regulatory challenges
  • AI arms race
  • Loss of human connection
  • Misinformation and manipulation
  • Unintended consequences
  • Existential risks

The article notes that, “To mitigate these risks, the AI research community needs to actively engage in safety research, collaborate on ethical guidelines, and promote transparency in artificial general intelligence (AGI) development. Ensuring that AGI serves the best interests of humanity and does not pose a threat to our existence is paramount.”

The AI industry is working to solve these problems in a number of ways including focusing on more specialised models, such as BloombergGPTTM. This new large-scale generative AI model is a large language model that has been specifically trained on a wide range of financial data to support a diverse set of natural language processing (NLP) tasks within the financial industry.

Case study: Evolution AI

Evolution AI is using artificial intelligence in the financial services sector to assist with expedient, accurate lending decisions.

Set up in 2015, Evolution AI specialises in intelligent data extraction from business documents. Evolution AI rejected the traditional OCR (optical character recognition) technology as it failed to extract data from a lot of business documentation and is now using modern AI based methods.

Humans are no longer needed to read bank statements and balance sheets or go through business documents for underwriting purposes. Such boring repetitive manual work can now be fulfilled using AI algorithms.

Evolution AI’s CEO Dr Martin Goodson highlighted that you can’t 100% automate a process as you will always need people and human relationships, but you can automate elements of the process to reduce risk and drive efficiency.

Finance provider Novuna Business Finance and specialist commercial lending bank DF Capital both use Evolution AI software to simplify such business processes.

Novuna faced challenges with supplier invoices and extracting information using standard OCR technology. They decided to use Evolution AI software to extract data from business documents but had to address the orchestration of Evolution AI into Novuna’s system.

The successful implementation of Evolution AI’s software has allowed Novuna to extract from even more documents (for example, for sustainability reporting) and to use functionality during other stages of the process, such as with proposals earlier in the process.

Adam Crockford, Senior Change Manager at Novuna Business Finance said, “AI is not a threat but a tool to be used.”

DF Capital use Evolution AI software for the commercial lending side of their business with dealers and manufacturers. Previously DF Capital had to manually extract data from invoices and upload into their core banking platform. However, DF Capital wanted to scale up their business and use more automation going forward.

DF Capital are now taking the Evolution AI solution to the next level and are building API integration between Evolution AI and DF Capital’s core banking platform, linking to pre-existing automation from dealer and manufacturer portals. This allows for processing times to be reduced by 90%, increased even further by straight-through processing, an automatic solution for seamless electronic transactions and interactions without manual intervention.

For DF Capital, taking people on the AI journey with them is as important as bringing in the new automation technology.

Next steps

Artificial intelligence is constantly evolving. The financial services sector is planning to increase their AI investments across infrastructure, model development and deployment over the coming months and years. The industry therefore needs to look at AI use cases using a design thinking approach to enable financial service organisations to respond to this rapidly changing tech environment and to create maximum impact.

Are jobs at risk? This is always asked when a big technological change happens. While artificial intelligence will replace some human jobs as the technology advances, this evolving tech will in turn create new roles and new opportunities. AI can take away a lot of the repetitive drudgery, but it cannot take away all human roles.

With AI technology rapidly advancing, Evolution AI is further developing their use of AI for the future. Evolution AI’s Goodson commented that, in his 20 years in technology, there has never been a time when things have moved so quickly with weekly breakthroughs.

“AI combines excitement with anxiety in a shifting landscape of hands-on exposure to modern AI capabilities. Big changes are afoot,” concluded Goodson.


More than four million people in the UK have used Generative AI for work – Deloitte | Deloitte UK

Will robots really steal our jobs? (

Report – PwC AI Analysis – Sizing the Prize

The state of AI in 2023: Generative AI’s breakout year | McKinsey

The 15 Biggest Risks Of Artificial Intelligence (

Find out whether AI can change everything from the world economy to our personal lives by reading our review of the Asset Finance Connect Summer Conference 2023 Session

Analysis from Dr Martin Goodson CEO of Evolution AI

Perhaps the biggest impact of the rise of generative AI is on the credibility of the big four consultancies’ ability to predict the impact of AI on jobs! Only a few years ago, PwC predicted that education and healthcare were among the industries least likely to be affected by automation. Yet, today, we witness AI models like GPT-4 outperforming humans in medical examinations and chatbots usurping the roles of human tutors. The inconvenient truth is that the redrawing of the future landscape of employment by AI defies neat forecasts.

What is certain is that AI will become an integral part of operations in the commercial lending industry. Its potential for optimising tedious and error-prone business processes is too massive to be ignored. We should embrace this, as it means greater employee and customer satisfaction – and increased productivity.

The adoption process will take time. It’s a long way from a chatbot interface to a complete, well-designed product for the automation of a complex business process such as underwriting. Along the way, it will be important for AI vendors to recognise the importance of developing their AI technology’s capabilities in collaboration with businesses and end users.

Another consideration is the reliability of generative AI in the context of a highly regulated environment like the financial services industry. Generative AI suffers from hallucinations and is subject to bias, meaning that its various outputs – credit scoring models, predictive models, compliance reports and so forth – are less than 100% dependable. Human oversight, therefore, remains an indispensable component.

For businesses eager to leap into automation, the most immediate windfalls lie in the mechanisation of rote tasks: think data extraction from financial documents or reconciliation of invoices. As AI’s role morphs from the theoretical to the practical, the watchwords for industry should be collaboration, caution, and a healthy dose of scepticism about what lies ahead.

Register now for future related webcasts
European equipment

Power of partnerships to enable a sustainable transition


Creating partnerships and ecosystems between lenders and specialist partners to provide strong client-facing asset finance solutions is increasingly becoming the norm within the asset finance industry in order to support the move to net zero.

At the recent Asset Finance Connect Summer Conference, a panel of industry experts from DLL, Lombard, Dell Technologies and Lloyds Banking Group looked at the potential of the asset finance industry to help businesses go through a sustainable energy transition and to help parent companies and partners on their path to a decarbonised economy.

“The whole energy transition is about the orchestration of partnerships.”

Leo van den Dungen, DLL

Partnership between parent company and subsidiary

Stuart Clark, Head of Climate Transition at Lombard sees the relationship between the parent company and subsidiary as fundamentally important to both sides of the business. Lombard is fully aligned with the values and purpose of their parent company NatWest, highlighting their “natural synergies” in working together on their strategy to support their customer base.

As Stuart Clark confirms, “Lombard can enable a faster transition for NatWest customers, for decarbonising transport or stronger and quicker investment in green technology, highlighting the unique role Lombard play in the NatWest Group.”

As part of their green asset finance proposition which was launched last year to support the transition to a low carbon economy, Lombard are playing a key and fundamental role within the NatWest Group with their corporate partnerships.

The partnership with large corporate client McCain, who are increasingly conscious of their ESG commitments, helps to reduce supply chain emissions and also allows Lombard and NatWest to help SMEs and sole trader farmers with access to capital and critical knowledge about the sustainability transition and green assets.

In another example parent company Rabobank joined together with DLL (their asset finance subsidiary), whose partnerships are core to the company. As Leo van den Dungen, Head of

Transformational Growth at DLL confirmed, “without partnerships, DLL would not exist.” Through their partnership, DLL can offer the food and agricultural specialist bank the impact needed for their energy transition through existing partnerships.

Leo van den Dungen noted that DLL and Rabobank wholeheartedly believe that “the whole energy transition is about the orchestration of partnerships.”

Richard O’Donohue, Senior Director, Partner Solutions at Dell Technologies pointed out that, through the partnership with their parent, they are able to leverage a big organisation and access insights into customers’ channel partners, and insights into various parts of the tech business.

Tim Biddle, Head of Asset & Invoice Finance Sales at Lloyds Bank Commercial Banking highlighted the “genuine” partnership between the asset finance product specialist department and the wider Lloyds banking group. Creating an interesting dynamic between parent and subsidiary, Biddle explained how asset finance customers can be introduced to a broad range of products and services from the wider banking group as well as expertise and consultation services, making the sustainable journey for SMEs clearer and more accessible.

Customer benefits

When starting on their sustainability journey, many SMEs are time constrained and don’t have the relevant knowledge and capital. Faced with risk and funding issues, SMEs require guidance and expertise from their trusted banking partner.

The trust relationship that parent companies have with their customer base can be leveraged by the specialist subsidiary companies and their partners, leading to additional business and consultation services for the customer.

For example, Lombard has partnered with specialist green companies to bring services to their clients that can help them to understand their energy usage, reduce costs and take action to save money and cut carbon. For example, through their partnership with Absolar, specialists in renewable energy services such as solar panels, Lombard can offer their clients guidance, funding and energy solutions – a ‘one-stop-shop’ providing a unique, bundled, aggregated green solution for the customer.

Importance of partnerships

Partnerships go beyond a transactional relationship and can plug-in to long-term business strategies within the ecosystem, according to Lloyds’ Biddle. Collaborations are becoming increasingly important in the energy transition in areas where specialist companies can excel and are more knowledgeable with more experience than the partner business.

During sustainability consultations, many banks and finance houses saw the benefits of third-party partnerships leading them to restructure their sustainable propositions. Plugging in partnerships during discovery phases can bring up some surprises and can change the original vision of the company.

Richard O’Donohue sees “a real opportunity for more and more partnerships” going forward as the world becomes more complex and more expertise will be needed.

However, he notes that it is important to know your strengths and what you can bring to the ecosystem before entering into external partnerships. For example, Dell dissolved some partnerships in areas where they themselves had better skills and expertise or where partners were not comfortable in new spaces. To be impactful in the energy transition, you need to know the strengths within your organisation and appreciate that there is room for failure, before engaging in new partnerships.

Leo van den Dungen discussed a soon-to-be-announced partnership between DLL and a major parcel delivery company who want to make a difference in sustainability by migrating their subcontractors to electric vehicles, highlighting the need for partnerships to share data and broaden the credit bandwidth to support the energy transition.

Emerging risk

While banks are used to analysing credit risk, new products and services to enable the sustainability transition come with emerging risk, for example, project related risk, supply chain risk, uncertainty around asset values, behavioural risk and usage risk that are unknown and challenging for banks.

Tim Biddle noted how the asset finance industry is becoming better at acknowledging their inherent capabilities and strengths as well as their weaknesses where support and partnerships are needed to plug in the gaps.

Lombard’s Stuart Clark sees the “biggest transition as a cultural transition,” with banks and finance houses needing greater cultural awareness to see opportunities in partnerships whilst not having a fear of failure.

When discussing the risk transfer mechanism, banks and finance houses need to look at things from a forward view, innovate and turn a problem on its head, according to Stuart Clark: “We need to think about future propositions and innovate, it is not just about the rear-view risk”.

When educating themselves in new models, processes and risks, banks and finance companies must allocate the emerging risks to companies who are best positioned to deal with them. With new risks arising on the road to net zero, it is unlikely that just one party will provide the overall end-to-end solution. Partnerships are needed where you can allocate risks and specialist roles.

Shift to consumption-based models

As we transition to a decarbonised economy, the asset finance industry is evolving, not just by decarbonising assets but with new funding models that need to rapidly develop to help the sustainability transition.

However, many banks and finance companies are cautious of the high risk-reward profile of new consumption-based products and services, such as subscription and pay-per-use, as they need more historic data to understand the usage and the accompanying risk.

As the industry starts to adopt consumption-based models, data will become imperative. DLL’s Leo van den Dungen believes that asset financiers must partner with AI data companies to provide the necessary data and analysis for new usage-based models.

With the launch of a tech-as-a-service partnership proposition on the horizon, Lombard’s consumption-based model links to circularity and the repurposing of an asset for a second life and the reuse of parts and material. New funding models and links to shared asset ownership will be a transition to a transition, according to Stuart Clark, and will be hugely dependent on successful partnerships.

The pace of development of new products and services is increasing quite rapidly, according to Biddle, particularly with changing industry attitudes towards risk, and consideration of behavioural understanding of asset use and client behaviour.

Concluding remarks

Partnerships are an essential requirement for the asset finance sector in the energy transition as businesses move to greener assets and new consumption-based financing models where uncertainties, challenges, data and emerging risks can be shared amongst members of the ecosystem, all with their own unique area of specialism.

Find out how the asset finance industry is helping businesses on their path to a decarbonised economy by reading the review of our Asset Finance Connect Summer Conference

Analysis from John Rees Equipment Finance Community Leader, Asset Finance Connect

It is clear from our panel with representatives from major global asset finance providers that partnerships will be crucial to the transition to net zero.

Single entities, even if large, will not have the expertise or credit appetite to provide all of the solutions that the move to net zero requires.

It is positive to hear representatives of global companies acknowledge that the need for partnerships is crucial in their development to support the transition to net zero.

Register now for future related webcasts
European equipment

Nivo: AI co-pilot, combined with secure messaging, can unlock a new wave of productivity

AFC Summer 2023 Conference: Fintech Innovator Award

Winner: Nivo

Sponsored by Lendscape and voted for by the Fintech Innovator judges and AFC conference delegates, the Fintech Innovator Award Winner for Summer 2023 is Nivo.

Matthew Elliott, Chief Commercial Officer and Co-founder of Nivo took to the stage at the Asset Finance Connect Summer Conference to showcase how generative AI based on ChatGPT style services can open up a range of possibilities for lenders, intermediaries and consumers, by plugging it in to Nivo’s secure messaging based communications platform.

Nivo is a fintech company focused helping brands shift away from email, portals and post, to a faster and safer way to communicate. The solution combines biometric identity verification and secure messaging in one simple app that customers love, and allows intermediaries and lenders to gather and share all the evidence, documents, and approvals required for a loan.

Looking at generative AI through a human-centric lens, Nivo are focused on solving a communication problem facing the industry today with an AI GPT-style service which slashes the amount of time spent by people finding the latest documents, chasing for updates, understanding what’s done and what’s outstanding, clarifying lender policies, and getting management information on how their teams are performing.

Analysts see generative AI having a high impact on sectors which are time and knowledge intensive, involving learned expertise, a range of data sets, repetitive tasks, and high levels of administration or documentation — characteristics that are prevalent across the asset finance industry where skilled, experienced, relationship-focused specialists are matching niche products and services from a wide array of lenders to specific customer needs, driven by relationships and human interaction.

At the same time, these specialists are typically spending 70% of their time on repetitive administrative tasks. Nivo believes that far too much time is wasted gathering, sharing and checking the information required to get a deal done.

Nivo currently solves this issue with their Verified Identity Messaging app by combining people, data and natural language – but can AI help this process even further?

Matthew Elliot sees AI’s potential to take this even further by removing this drudgery and unlocking a new wave of productivity, not by replacing humans but as a co-pilot.

Nivo already has the scale, volume and type of data flowing through its bank-standard secure Verified Identity Messaging service, but with a Large Language Model (LLM) deployed over that network, Nivo’s Nevis AI co-pilot can sit in their existing interfaces and use their existing data to find answers to questions raised by Nivo’s clients.

Simple questions can be answered by focusing on customer and lender data, but by combining and connecting different data sets, Nevis can answer more in-depth questions and interrogate different policy documents to find the best deal for the client.

Nivo are keen to create the best possible customer experience when dealing with regulated service industries by taking out the timeless waste and deploying a generative AI solution in their secure mobile journey. With the industry’s increasing appetite for AI, as well as the limitless potential of generative artificial intelligence, who knows where it will take Nivo!

Find out more about Nivo at or contact Matthew Elliott at

For more insights from this June's conference, see the Asset Finance International website
European equipment

The transition to a ‘new world’ of usage-based models

In association with Leaseurope and Eurofinas


Sustainability representatives from the equipment finance industry came together at the Asset Finance Connect ESG Unconference to discuss the emerging opportunities and challenges facing the industry as we transition to net zero.

The Science Based Targets initiative (SBTi) drives ambitious climate action in the private sector by enabling organizations to set science-based emissions reduction targets.

The finance sector is key to unlocking the system-wide change needed to reach net-zero emissions. With the SBTi Finance Framework, financial institutions can set near-term science-based targets that align their investment and lending activities with the Paris Climate Agreement. With a 50% reduction in greenhouse gases required by 2030, financiers need to start focusing on new ‘greener’ financing models.

Many in the industry see that a product shift is required from ownership to servitization and usage as we move to a ‘new world’; with usage-based and ‘As-a-Service’ models seen as the ideal products to tackle environmental issues. However, the transition to these new financing models requires a “total industry mindset change” according to the unconference participants.

As-a-Service models and the circular economy

Usage and As-a-Service models are important and impactful tools to enable the circular economy, all contributing to extending the life and use of products and assets.

The exclusive authority on Product-as-a-Service solutions, Black Winch, supports organisations in turning a product-based business into an in-house and circular subscription model and moving from transferring ownership to providing usership. Black Winch helps companies to re-think business models around servitisation and circularity to help organisations stay tuned to market changes.

Black Winch’s Sophie Féret believes that the industry needs to take a “holistic view of the ESG journey” with ESG seen as “an enablement to progress to the circular economy.”

The circular economy aims to eliminate waste by reusing it in the production process of manufacturing new products and to extend the life of these products. However, its implementation will not be effortless. The As-a-Service rising model, which is defined by the sale of the use of the product rather than the product itself, can contribute to extending the life and use of many products when applied to an asset, and therefore links to the circular economy.

For the users, the usage-based model enables them to satisfy their needs without the burden of ownership and without the need to continuously make large investments. It means that the manufacturer who owns the product has the responsibility to maintain its product in as near to purchase-day condition as possible. At the end of the many life cycles, the manufacturer is responsible for the after-use step, whether it is remanufactured, recycled or reused.

For the manufacturer, there are many economical and financial advantages with a usage-based business model: recurring revenue streams, maintenance and service product bundles, increased customer loyalty, flexibility and scalability. However, the manufacturer is now passed the risk from the financiers, with a focus on performance risk.

The goal of the usage model is that the asset is to be used for the longest time possible, by a variety of clients, whilst providing the best user experience possible. Therefore, the durability of the product is crucial; a solid and dependable product will be used for a long time, whether it is by the same user or many others.

Because the manufacturer is able to reuse the raw materials and various components after the product’s main lifecycle, the natural resources consumption decreases. The environmental and social impacts that are inherent to the extraction of raw materials and the production of one asset are therefore spread across many users instead of one asset for one user. The value of the raw materials is optimised to the maximum.

The usage-based model promotes the principles of a circular economy and, since users are more and more sensitive to environmental concerns and tend to choose the most sustainable solution, the As-a-Service business model is an opportunity to seize.

With users and manufacturers increasingly being asked to provide key information on the environmental impact of activities, As-a-Service allows all the players and their asset financing banks to access and monitor key data about environmental concerns, specifically around production and usage of the assets.

Changing mindset

While the case for usage products is compelling, many participants believe that such models will take time to take hold in the industry and will require a mindset change for the whole industry – manufacturers, finance companies, customers – and, as a result, the industry will get the maximum life out of the asset.

Manufacturers will need to redesign products to be more circular and part of a pay-per-use model, while finance companies will need to better understand this new economy and restructure their finance concepts to allow pay-per-use to thrive.

Many unconference participants see the adoption of As-a-Service models as a commercial and economic challenge for the industry. The transitional change to usage-based products requires a different approach to risk, documentation, sales and marketing.

Sales forces will need to be re-educated in order to sell a totally different financial product, or new younger talent recruited who think, act and sell completely differently. A further obstacle is finding customers who are willing to take a leap of faith and change to new sustainable models.

It was highlighted during the session that whilst customers appear to want these changes to help the transition to net zero, they too need to be re-educated so that they don’t continue to opt for traditional methods that they know and are comfortable with.

To scale up these new finance models, a fresh perspective is needed, without a comparison between traditional models.

Some finance houses see pay-per-use as a massive step for financiers and a very difficult market in which to shift. However, a huge step forward will happen for usage products when larger businesses start to support the circular economy and promote the second-hand life of assets. New financing products are essential for the transition to net zero.

We are living in an era where subscriptions are infiltrating our common life e.g. streaming movie channels; it will therefore only be a matter of time before these products are commonplace in the asset finance industry.

Partnerships needed to bring together a solution

Many businesses won’t be able to reach net zero alone. Collaboration and partnerships will be a key factor of success on the road to net zero, especially when trying to adapt to new usage-based circular models.

The uncertainty surrounding emerging technology, new risks and residual value unpredictability has led many banks and financial institutions to be hesitant about these new financing models.

With traditional financing models, banks have experience with credit risk and expertise at the beginning and end of the asset’s life. However, the period in-between is the most important part of the asset’s life in the circular economy.

Finance houses therefore need to create partnerships within their ecosystems, including manufacturers, asset managers and third-party consultants, to assist with the uncertainties and new risks.

The industry needs to deepen manufacturer relationships and enter into risk sharing or buy-back agreements in order to allow proper risk-taking on new assets. Lenders need to get smart enough to assess which manufacturers have the right technology to make it past the first wave of consolidation that will inevitably occur in the coming two to three years.

Knowledge needs to expand beyond a simple financial analysis – lenders need to develop the acumen to go beyond the numbers and get comfortable with the long-term potential of start-up players in the transition.

Confidence needed in new models

Before entering the new world of usage-based products, many funders and manufacturers need to gain confidence with the transition, which can be fuelled by data from client usage and manufacturers.

Through a new emerging data set, software ratings company Twist can provide the infrastructure to help companies get comfortable with new business models. Data such as how products are shared, remanufactured, resold, is provided to investors by an API that reports live ratings on the environmental and economic impact of circular companies. This is data that, until now, has been foreign to the asset finance industry. The digital and live way of conveying the data reflects the dynamism of the new business models.

Documentation issues

A number of participants raised concern about the lack of a Hell or High-Water clause in usage-based contracts. To promote confidence in these new financing models, changes are needed in contractual documentation. However, this process could take time with slow baby steps.

Some suggested that the contracts need to be standardised to pass through law with industry collaboration essential to provide standardisation.

Concluding remarks

The transition to a ‘new world’ of usage-based models is cautiously welcomed by the asset finance industry, but time and a mindset change are needed to enable the transition to these new environmentally-friendly financing models and circular economy.

Find out about the emerging opportunities and challenges facing the industry as we transition to net zero. by reading the review of our Asset Finance Connect Unconference
European equipment

ESG webcast review: From good intentions to effective action

In association with Leaseurope and Eurofinas


While businesses may care about the environment and have plenty of good intentions, enforcing strategies and roadmaps and putting them into action is more challenging. Some approach the transition with a quiet determination to push things through, while many simply don’t want to pay to protect the planet or see it as too difficult to action.

However, the prospect of exchanging “dirty assets” to green ones offers opportunities for the asset and equipment finance industry to potentially make profit whilst at the same time acting on caring values. Equipment finance is in the right place to support the energy transition as well as considering how to take on the added residual value and credit risk.

But how can we turn the ESG dream into a reality? Odile de Saivre, CEO of SGEF, and Sacha Balachandran, Head of Equipment Finance at HSBC are senior representatives and knowledgeable leaders from two global banking groups, where ESG is a critical part of the parent bank’s strategy. In our recent Asset Finance Connect ESG webcast, they talked to AFC’s equipment finance community leader John Rees about getting into the details to make their ESG strategies happen.

The growing impact of socially sustainable business

Social factors have gained greater attention since the Covid pandemic forced working and living practices to change, highlighting the social issues that were already there.

With social issues being brought to the forefront, Odile and Sacha highlighted the growing impact of socially sustainable business and its importance in staff management and motivation. The importance of building a socially sustainable workforce through talent acquisition and retention is critical to futureproof our businesses, according to SGEF’s de Saivre: “People are key in our business for today and for the future.”

Both Balachandran and de Saivre are passionate about the importance of recruiting, retaining and motivating staff, and making sure that company values are consistent with modern values.

As de Saivre notes, we cannot do business the way we were doing it before, with Covid shifting the boundaries between professional and personal life, along with the expectations of people of all ages. Business is changing, assets being financed are changing, and there is an acceleration in striving for a positive impact for the planet. In these changing times, de Saivre believes that businesses need expertise and mindset: “people who can think out of the box and are motivated to go to work; they can be the future leaders of the business.”

For Balachandran, ESG is vital in recruiting and retaining staff, along with the alignment of a company’s purpose and values: “Existing and new employees want to align their personal values with a company’s values and purpose, and see the impact they can have both personally and in their workspace.”

Great companies need to follow up on the claims they make to prospective employees on their alignment with sustainability and D&I objectives, with positive action to ensure that is what new employees actually experience when they start work. According to HSBC’s Balachandran: “Sustainability is about being relevant, reliable, resilient and responsible, and that touches not just the environmental piece, but diversity and inclusion as well. If you’re not addressing those points, then you should question how sustainable you actually are and what that means for an individual wanting to join your organisation.”

A company’s culture is of the utmost important, according to de Saivre, with SGEF’s Care and Dare strategy putting ESG at the centre of SGEF’s vision. The Care and Dare motto focuses on the future and the planet and goes beyond ESG. ‘Care’ highlights the need for “true alignment” with employees’ values and the impact these values can have.

To ‘dare’ is to push the boundaries, linking to entrepreneurial innovation that is needed in the industry. Whilst guidelines are needed, innovation and experimentation are essential to confront new ways of looking at things. The industry needs to dare and take risks, but this can be difficult to implement in a larger organisation due to understanding and accepting new risk factors. Individuals need to be allowed to experiment and take “new” risk in order to feed innovation and new transactions, according to de Saivre who commented that, “if you want to move forward, you have to dare.”

As part of HSBC’s leadership team, Sacha Balachandran promotes the encouragement of employees, giving them the space to be entrepreneurs (both internally and externally). As well as challenges, there are also benefits to working for a big banking organisation: you can attract diverse talent across the group (from different markets, jurisdictions, experiences) and can leverage the brand. This helps to build diversity of thought, experience and skills, which in turn has the ability to challenge the status quo.

Circular economy

In the Circular Economy Action Plan of March 11, 2020, the European Commission highlighted the move away from the prevailing “take-make-use-dispose” model of the linear economy into a circular economy to keep the resources used in the economy for as long as possible. Resources should be used efficiently, with every phase in a products’ lifecycle being designed to ensure the product, and its individual components, are used to their maximum potential.

Many asset and equipment finance companies have been promoting the transition to a circular economy for a number of years, focusing on refurbishing and recycling their assets and components to ensure that assets are used throughout their lifecycle and recycled accordingly.

The leasing industry is circular in its very nature since the primary goal of companies active in the sector is to ensure that the assets remain in good working condition for as long as possible. Leasing can actively promote a circular economy by encouraging customers towards use as opposed to asset purchase. This massively reduces the amount of wasted resources since customers no longer dispose of assets once they have finished using them. Instead, customers simply return the asset to the leasing or rental company, who are well placed to either re-lease the asset to another customer, re-sell the asset, refurbish it for a second/third life cycle, or (where appropriate) dispose of or recycle the asset safely.

Balachandran noted that HSBC Equipment Finance works with partners to support circularity in terms of reuse, refurbish, redistribution and resale of assets as they come to the end of their first life. While some assets can go beyond their normal maturity and are naturally easier to reuse, refurbish and remarket, for example, buses and construction equipment, there can be a challenge to fund the second and third life of some assets. You need to be very knowledgeable as an asset financier with the asset and its use, and how to extend the life of the asset.

SGEF and its vendor partners see that assets can be used after their first life and are willing to make sure that the secondary market is ready and under control in order to help to refurbish and remarket these assets. Developing a reselling strategy for reused assets presents a number of new opportunities. Many manufacturers are developing spare parts and refurbishing assets as it is becoming increasingly important to them and their ESG strategy. SGEF is becoming increasingly comfortable to finance the second or third life of assets.

Usage-based pricing models are being introduced across the industry as a more beneficial financing option for the environment. While HSBC supports businesses who have adopted the pay-per-use model, they have not actually used the model for funding themselves. However, Balachandran believes that there is a place for usage-based and subscription models from a portfolio approach.

SGEF are increasingly seeing ‘as-a-service’ models, particularly equipment and energy ‘as-a-service’, with SGEF financing some of these transactions. These are new offers and understanding the risk factors associated with such products are key to the product development.

Transition to greener assets

As we transition to new greener assets, we must find the right ‘balance,’ according to Balachandran. Balance cannot be understated and is very important as customers, clients and assets are all at different stages of their journey and therefore no one-size-fits-all approach will work. There must be alignment.

The move to greener assets presents a big dilemma for the equipment finance industry. On the one hand, green assets are good for the planet, but on the other hand these green assets are frequently more costly and potentially present a greater risk with differing or uncertain residual values.

To prevent customers doing a U-turn reverting to older assets and technology, many industry players feel that governments must step in to help the transition to greener assets. There needs to be wider collaboration with governments in terms of incentives, funding and risk sharing. De Saivre points to a “collective movement” of governments, manufacturers and financiers to help with this transition and enable the industry to move further forward.

Partnerships in the ecosystem

Both Odile de Saivre and Sacha Balachandran believe that collaborations are critical to ESG strategies and building ecosystems is extremely important.

“Partnerships are very important for ESG strategies,” according to HSBC’s Sacha Balachandran, “the reality is that you can’t do it alone.” While some partnerships are informal (education, upskilling), others are more formal (RV risk sharing).

During the webcast, SGEF’s Odile de Saivre noted that a new combination of expertise and techniques is needed to achieve a successful ESG strategy. Ecosystems will grow and develop, but businesses must be open to partnerships with new start-ups who are more agile and risk averse and can help to move businesses and their strategies forward.

Concluding remarks

Throughout the AFC ESG webcast, Odile de Saivre and Sacha Balachandran discussed how the equipment finance industry cares and how it plans to deliver on caring for the planet and its people.

We need to be brave to dare in this industry, but we also need to deploy some of that entrepreneurial innovation that is exhibited in the asset and equipment finance industry to succeed with ESG.

Find out how a new combination of expertise and partnerships is needed to achieve a successful ESG strategy by reading the review of our Asset Finance Connect Webcast

Analysis from John Rees head of Asset Finance Connect equipment finance community

It is very clear that ESG is a critical topic for these industry leading asset finance companies.

This starts with a need to ensure that the company’s goals and purpose are aligned to the private values of employees. The need to maintain, recruit and motivate staff was a key topic for both Odile and Sacha.

And then once the staff are in place the delivery on the ESG strategy is critical. It is important to have an ESG strategy but even more important to deliver on that strategy. Talk is cheap – action is critical. It was clear from talking with SGEF and HSBC that the asset finance industry is uniquely placed to support the energy transition and support the circular economy, but it is also very clear that both companies are on the start of a journey and on a learning curve.

It may take some more time but there was a clear determination from both Odile from SGEF and Sacha from HSBC that this was a critical journey. And a journey that banks may not be able to find all the solutions to but in partnership with third parties (be they manufacturers or fintechs) a journey that ultimately is critical to the future of the industry and the planet.

Register now for future related webcasts
European equipment

Managing utilization risk: how companies are managing the risk of usage in pay-per-use models


There was a lot of positivity at the Asset Finance Connect December 2022 conference surrounding pay-per-use models in auto and equipment finance industries.

The pay-per-use model is a much-discussed business model that businesses and consumers are considering due to its flexibility and sustainable credentials. The flexible consumption business model ticks lots of boxes – affordable for the customer, a sustainable solution, and the next step forward in future financing options.

Under the pay-per-use model, the ownership and responsibility of the product or service lie with the provider, and the customer pays a fee for usage. Many customers are considering this model because they like the idea of paying only for the services they require and use. In many cases, they also end up receiving better service because the manufacturer has a greater interest in providing a product that lasts.

While pay-per-use is not a new solution (cost per copy has been available in the copier/printer sector for many years), the rise of IoT has made the usage monitoring of the products easier, more accessible and more accurate than ever. This new data flow has made pay-per-use a more viable option for industries that previously didn’t have the tech capabilities to gain value from it.

In order to successfully leverage the benefits of the pay-per-use business model, you need to have access to two critical pillars: technology and data. Moving to a pay-per-use business model may call for changes to business capabilities, operating models, and enabling technology platforms.

There are many advantages and environmental benefits of the pay-per-use financing model with the potential to address the challenge of underutilisation of expensive machinery during the energy crisis. With many machine operators considering a switch to pay-per-use, the potential for greater flexibility and benefits for both manufacturers and operators are significant.

Pay-per-use and ESG

Pay-per-use models are a driver for sustainable consumption and the circular economy, where the asset can be reused, ensuring that the asset is serviced and as new for further lifecycle usage. As part of the energy transition, many businesses want to replace old unsustainable machines with new or used equipment supplied via a cost-effective flexible finance model.

“Pay-per-use models are a driver for sustainable consumption and the circular economy.”

Pay-per-use business models are often linked to increased environmental performance, with consumers becoming more conscious about consumption patterns and companies taking responsibility for product lifecycle issues.

In the Asset Finance Europe 50 Report 2022, Black Winch’s Yann Toutant observes that, “In response to the environmental challenges that we are facing, there are strong solutions that make us thrive while simultaneously not endangering the future generations and existing business models. The As-a-Service model is an important and impactful tool to enable the circular economy. On top of providing economical and financial benefits to the manufacturer/integrator to consolidate its position in its market or even increase it, this model reduces the environmental and social impact of industrial extraction and production of assets when associated with the circular economy principles. And since users are more and more sensitive to environmental concerns and tend to choose the most sustainable solution, the As-a-Service business model is therefore an opportunity to seize. And one last thing, for both the users and the manufacture/integrators, since it is increasingly required to provide key information on the environmental impact of our activities, As-a-Service allows all the players and their asset financing banks to access and monitor key data about environmental concerns, specifically around production and usage of the assets.”

Case study: machine manufacturer

Heidelberg Druckmaschinen AG, the world’s largest manufacturer of sheet-fed printing presses, has offered pay-per-use transactions with its printing equipment since 2017.

Heidelberg initially pioneered the new business model when they discussed changing to an Equipment-as-a-Service model (EaaS), adding the service option to the equipment. Heidelberg customers increasingly wanted support on how they could increase the efficiency of their machines. By adding a package where the price per sheet to be charged includes all the equipment, all consumables required such as printing plates, inks, coatings, washup solutions, a comprehensive range of services geared to availability, and consulting services intended to boost performance, Heidelberg was effectively allowing the customer and the machine to become more productive and efficient.

Heidelberg’s Head of Financial Services, Ralf Steger, addressed the conference session about the benefits of pay-per-use for Heidelberg’s customers, with their new digital business model following the growing pay-per-use trend in mechanical engineering, aiming to move away from growth based solely on selling and installing printing capacity.

At Heidelberg, pay-per-use offers a flexible model where the customer is only charged for the number of sheets they actually print. The model must include a base fee (related to cost of production and consumption of consumables and number of prints) which the customer must pay, but this can be flexible.

The first Heidelberg pay-per-use deal was signed in December 2017 and that first customer has now signed their fourth contract. With their pay-per-use model, Heidelberg experienced an immense learning curve, and today they have signed around 35 subscription contracts. As Ralf Steger noted, “The wise man does” and Heidelberg did!

Heidelberg has been exploring pay-per-use models for several years, looking for partners to share the risk. As an established German manufacturing and leasing company, Heidelberg knows their customers from immense data from over 20 years; they can therefore easily assess the customer risk and equipment residual value risk.

However, out of these 35 signed pay-per-use contracts, only a few have been financed externally, with most held on their books waiting for external finance partners to fund. As Steger notes, Heidelberg will take part of the risk, but they have a cashflow issue to fund the build of the printing press machinery, each costing €3-5 million. They therefore needed a finance partner to manage this cashflow.

Since the conference session, the Heidelberg Group has been able to further develop their pay-per-use model by entering into a strategic partnership with Munich Re Group. With this cross-industry partnership, the two companies are pooling their strengths: Munich Re, as the new contract partner, takes over the financing of the machinery, while Heidelberg is delivering everything which is needed for running a printing business.

Case study: pay-per-use financing

linx4 is an Austrian-based European financing company offering true pay-per-use financing for industrial equipment.

The pay-per-use financing of linx4 is based on an industrial IoT and AI risk management solution, to enable usage-risk sharing. Operating in over 20 European countries, linx4 offers data-driven pay-per-use financing products and tools to revolutionise machine financing operations using data-driven financing products and algorithms.

With a big appetite for pay-per-use financing solutions, linx4 has seen strong demand with business growing fast across different industries and different regions.

linx4’s Managing Director, Peter Oser, also sees the pay-per-use financing model as providing a sustainable solution, with the current energy transition creating a lot of demand from customers who want to replace energy-inefficient machines. If the customers do not have the balance sheet or traditional financing options to buy new machines, they therefore want variable, flexible financing based on a cashflow base.

linx4 enter into vendor partnerships, with 100% of business conducted through machine manufacturers who want to move to an EaaS model. Oser believes that many manufacturers see pay-per-use as presenting a real opportunity to have a more intense customer relationship. Often it is very difficult to get data from a client according to Oser, but if the vendor provides pay-per-use financing through linx4 they can access the data, have long-term service contracts and use the data to build additional business models, all while enhancing and digitalising the customer relationship.

“Pay-per-use is an enabler for vendor partners to develop new business models.”


With the pay-per-use model, it can sometimes be difficult to predict individual case utilization according to linx4’s Peter Oser, so transactions can be observed on a portfolio basis to spread the risk of utilisation.

Oser highlights two things that are essential for pay-per-use financing that traditional finance companies are struggling with:

  • Technology – The ability to connect the equipment to your lease administration systems once the transactions start, so that you can collect data through a secure data transfer from the machine to your system. Middle and back-office functionality are needed for invoicing and other administrative processes. As Oser points out, this is easier to set up as a new start-up company rather than a company with legacy systems. With the rise of IoT, tracking the usage of products has become easier, more accessible and more accurate than ever.
  • Data – To understand the future volatility of the usage of the equipment, you need to look at different sources of data – from vendors/machine manufacturers and individual customers. Based on the data, the risk can be assessed, and the risk margin determined for each individual deal and priced accordingly.

To look at utilization on a portfolio basis, a diversified portfolio with usage risk focusing on more than one industry and region is essential to build an understanding of different utilization.

Oser notes that it is not unusual to look at a new type of risk along with the data behind it and the evidence you have. You can also look at ratings agencies and then pricing can change as you grow more confident.

With this model, a possible partnership approach between pay-per-use financiers (who have the technology/connectivity to the machine and understanding of machine usage risk) and more conservative bank lenders (who have funding and expertise in underwriting credit risk) can create complimentary relationships.

In the current climate, Oser points out that there are many investors in the European private debt market which has grown massively after moving away from banks. As money has moved into these areas, spreads have tightened, and a lot of capital is available. The pay-per-use business model with its risk returns and margins are attractive to the private debt market because pay-per-use financing offers real value to the customers and so they are prepared to pay a premium relative to traditional financing.

Case study: Technology

Basikon offers a cloud native technological solution that manages the full lifecycle of assets financed under pay-per-use transactions. As Renaud Winand, Country Manager for Benelux and Nordics for Basikon points out, digitalisation is needed from the front to back-end of the pay-per-use transaction.

Winand highlights the significance of products that are used part-time and the use of ‘used’ not new assets. Refurbishing and reusing the assets links to a sustainable circular economy. This also provides access to assets for smaller companies who want limited use of equipment, whilst also extending the life of the assets.

Basikon’s Winand believes that there are three fundamental characteristics needed to conduct pay-per-use financing:

1. Help the client to identify what they need, and the relevant pricing.
2. Measure usage of the asset (adding IoT devices to machines) and invoice that use.
3. A flexible digital system that can reconfigure traditional solutions.


For pay-per-use to be embraced by the business world, there needs to be a change in the industry’s mindset, according to the session panelists.

Asset Finance Connect’s John Rees believes that, historically, we are a client financing business and there is an asset. But with a pay-per-use full-service model we need to become an asset financing business with multiple clients for the one asset; if you fully understand the asset, you can change the clients.

Basikon’s Winand agrees, you no longer need to understand the risk of the client, but you need to understand the asset, with a shift from risk managers to asset risk managers.

The focus is no longer on interest rates and traditional bank loans either; it is now about the usage of the equipment and assessing the utilization risk. With the correct data and technology, this risk can be managed.

“For pay-per-use to be embraced by the business world, there needs to be a change in the industry’s mindset.”

With big demand for pay-per-use going forward, this rising business model must be seen as a future financing solution for both auto and equipment industries that can offer flexibility and environmental benefits.

Find out how companies are managing the risk of usage in pay-per-use models by reading our summary of December's Asset Finance Connect Conference Session

Analysis from John Rees head of Asset Finance Connect equipment finance community

The conversation about pay-per-use models continues to dominate discussions at industry conferences including the recent AFC conference in London in December 2022. Whilst there is a strong feeling that the real number of pay-per-use transactions that are currently delivered is relatively small (compared to more conventional finance products), there is an even stronger feeling from leading industry executives that, firstly, this discussion is critical and, secondly, that in the coming 5 to 10 years pay-per-use products will become more and more important.

It is easy to see why there is such a strong feeling that this is a significant product for the future for the asset finance industry. The pay-per-use product charges the user of the machine on outcomes rather than being a fixed periodic charge based on capital and interest repayment. It means that the machine is only paid for when it is being used. This brings significant efficiency for the user and contributes to a much more efficient lifecycle for the machine, allowing for a potential second life for the machine. All-in-all a product that greatly supports the financial efficacy of the user and contributes greatly to the circular economy.

The product is in its early stages of development, but its relevance will surely grow and grow. As usual the early adopters pave the way for the industry. The asset finance industry needs to learn how to sell the product as there are different risks associated with the model, but the industry learns and adapts quickly.

How soon before the industry refers to provider and user as opposed to lender and borrower? Not long, I suspect!

Register now for future related webcasts
European equipment

AFC leaders’ interview with Carlo van Kemenade, CEO of DLL

In association with Leaseurope and Eurofinas


Carlo van Kemenade, CEO of DLL, spoke to Asset Finance Connect’s equipment finance community leader John Rees in the latest AFC leadership interview, in association with Leaseurope and Eurofinas.

Carlo van Kemenade leads the world’s largest asset finance and vendor finance provider. Taking up his leadership responsibility in February 2022, Carlo has recently completed a tour of the DLL global network to bring his vision and refreshed strategy to DLL. So, what is it like to manage a global vendor finance company which is a 100% subsidiary of Rabobank, a Dutch cooperative bank?

Future vision for DLL

After being appointed as CEO and Chairman of the Executive Board of DLL in February 2022, Carlo van Kemenade is responsible for implementing the company’s strategic plans, which enable DLL to deliver integrated financial solutions to manufacturers and distribution partners in more than 25 countries around the world.

Van Kemenade joined DLL from Obvion, one of the largest mortgage providers in the Netherlands and a wholly-owned subsidiary of Rabobank, where he held the position of CEO and Chairman of the Board between 2018 and 2022. Prior to his time with Obvion, Van Kemenade had a career with DLL that spanned more than 25 years, where he progressed through the ranks and built leadership experience in finance, operations, risk, IT, sales and general management, including assignments in several European countries and the United States. In 2013, he was appointed Chief Operating Officer and Member of the Executive Board of DLL and was responsible for all country operations and IT activities across DLL’s entire global network.

During his first year back at DLL in 2022, Van Kemenade spent time travelling throughout DLL’s global network reconnecting with DLL’s 5,500 employees in over 25 countries. The reunions with colleagues but also with customers were a fantastic experience for Van Kemenade. The reconnection was a big success as a following engagement survey amongst the 5,500 showed an extremely high score that outpaced the market, showing that loyalty and engagement is ever present in DLL’s network and making Van Kemenade extremely proud.

DLL has a strong management organisation. Currently composing and expanding the Executive Board team, Van Kemenade sees his ‘Team EB’ as “collectively responsible for the total strategy, while speaking with one voice”.

Van Kemenade sees DLL as united with a strong foundation, hands-on, and good at executing and delivering strategies due to:

  • Consistent service across DLL’s global network
  • A people strategy, where all employees can get the best out of themselves every day. Execution power and teamwork is part of the cultural experience at DLL.
  • Discipline in planning processes – DLL’s refreshed strategy has roadmaps with timelines, initiatives, ownership. Roadmaps are clear and realistic, with progress monitored. Roadmaps have critical paths to see when things are delayed and might affect other roadmaps.

Rather than looking at geographical expansion at the current time, DLL are focusing on sustainability, digitalisation and DLL’s unique culture, whilst optimising and expanding their value propositions for their vendors, dealers and customers.

The core business model of DLL

“We strive for deep partnerships with deep mutual understanding not just for one another’s industries and business models, but we also want to be a cultural fit for our partners as well,” commented DLL’s Carlo van Kemenade.

Delivering a consistent experience for its vendor partners across all global markets in which it operates, DLL represents its partners’ business and understands the customer experience.

DLL’s commercial performance, and partner and customer satisfaction are constantly monitored and measured, with DLL’s Net Promoter Score exceeding the market and improving for a fourth consecutive year to +62 (2021: +53).


DLL has a new and refreshed strategy which is accelerating their digital transformation. Van Kemenade sees digitalisation starting at the point of sale and connecting with customers, partners and dealers with DLL systems and databases to enable the most flexible customer journey possible.

DLL wants the customer journey to be 100% digitalised and customer friendly. With Covid accelerating the digitalisation journey, DLL have more than doubled their investment and resources in accelerating the strategic digital journey over the next three years.

Bank-owned benefits

Van Kemenade highlighted the benefits of having Rabobank as its parent company including the stability during a financial crisis to always provide 100% continuity in funding to its partners and customers. As well as sharing knowledge and expertise with each other, particularly relating the food and agricultural business, Rabobank and DLL also share people talent (like Carlo van Kemenade himself) as the bank can offer career advancement in different ways.

Significantly, DLL has recently become one of the three key strategic pillars of Rabobank, who see DLL as a co-facilitator for the ESG journey (climate and energy transition as well as food transition, many of which are applicable to DLL’s new strategy). As Van Kemenade notes, “the bank views DLL as the facilitator and the lead player in asset-based finance products”.

ESG and sustainability

The Energy Transition Team was set up at DLL to manage its sustainability goals across all sectors and divisions. DLL see the ‘Road to Paris’ as their highest priority, helping to facilitate the transition to net zero. From a sustainability perspective, DLL’s redefined purpose is to help improve the world, combining with their partners to create a better world. This also provides new commercial opportunities for DLL and their partners.

Most of DLL’s partners are also on the ‘Road to Paris’ and they expect DLL to be on the same journey. Some partners want to be guided by DLL and some will go at a faster pace than DLL, according to Van Kemenade. This is most evident in the construction, transportation and logistics/industry (30% of portfolio) business, and in the food and agricultural business (40% of portfolio), so effectively 70% of DLL’s portfolio and their partners are busy on the ‘Road to Paris’.

DLL aligns and strategizes with their partners whilst looking at commercial opportunities with them; for example, clean technology from a climate perspective but also looking at greener assets that help the transition – finding the right balance in the journey to Net Zero. DLL are also currently developing an e-mobility strategy.

Organisationally, DLL are addressing the energy transition by establishing an energy transition team in the commercial domain. The team will support NGOs to capture commercial opportunities by following developments and translating them into commercial plans to approach the players and networks where these opportunities can be found.

Pay-per-Use financing is a topic at the forefront of DLL’s thinking. As a frontrunner in the Pay-per-Use concept, DLL have been able to apply it successfully to the marketplace and, whilst current demand is low, Van Kemenade sees huge potential over the next decade.

Carlo van Kemenade believes that the industry must be patient with new sustainable financing models, with the ‘Road to Paris’ justifying any investments and creating payback.

Pay-per-Use is the future, according to Van Kemenade, as he believes that over the next few years almost everything we do will be focused on circularity, with Pay-per-Use being an important part of it.

Van Kemenade sees ESG as a critical part of the DLL recruitment process. Younger talent care for purpose and want to work for a purposeful company who positively contribute to ESG and DLL gives all members an opportunity to contribute.

Carlo van Kemenade spoke passionately and honestly about his own career journey at Rabobank and DLL and how that positive rewarding experience has helped him see the importance of talent recognition and development in the asset finance business: “Healthy growth combined with healthy opportunities combined with a very well thought through people strategy where there is sufficient money available to invest in talent.”

Purpose is important because people want to work for a company which doesn’t just prioritise profit but has a clear focus on planet and people. Van Kemenade believes that DLL have an obligation to look after the planet as well as the next generation of talent.

Van Kemenade believes that there is a need for both new and mature experienced talent: “In the war for talent you have to cherish several generations.” Members who stay at DLL need to be kept fit, happy and healthy for longer, which requires extra investment. Van Kemenade discussed bringing back retired members to DLL to share their experiences with younger talent.

Find out from Carlo van Kemenade what it is like to manage a global vendor finance company by reading the review of our Asset Finance Connect Webcast

Analysis from John Rees head of Asset Finance Connect equipment finance community

It was a great pleasure to interview Carlo van Kemenade – CEO of DLL. What did we learn?

DLL remains the world’s leading vendor finance provider, delivering very high levels of satisfaction to its partners and their customers.

DLL appears to get the mix between centralised control and local variation right. Providing a consistent experience which makes sense both in a local market and to global manufacturers is a challenge for most global vendor finance providers and DLL manages this challenge well. They get the right balance between global and local.

The organisation sees the ‘Road to Paris’ as an enormous opportunity – as does Rabobank, its parent bank. DLL is well positioned to capitalise on the Net Zero transition.

Whilst DLL currently does not see a great demand for complex Pay-per-Use deals, Van Kemenade expects that in 8-10 years almost every solution will be related to circularity and innovation, with Pay-per-Use being a key part of it.

Van Kemenade sees the importance of the link between prioritising purpose and attracting the next generation of talent. DLL attracts very high-quality staff and van Kemenade clearly intends to prioritise further developing its workforce.

Perhaps the biggest challenge for the business comes not from within but from the banking regulators. As a bank-owned finance provider, DLL will have access to competitively priced capital, but it could also be more constrained by regulation.

As a lifer at DLL, Van Kemenade really understands the business he now runs. He is a safe pair of hands. His accession at DLL has been managed with great skill with a formidable and talented team assembled around him. He has gently massaged the business’ strategy to include more focus on ESG. There has been an increased focus on people – an asset which Van Kemenade clearly sees as vital for the business’ future prosperity. It is difficult not to conclude that the company remains in good health and in good hands.

Register now for future related webcasts
European automotive
European equipment

How digital business ecosystems are changing the auto and equipment sectors

The concept of ecosystems originated in the geographical world but has traversed to the business and technological environment. As John Murray, Head of Solution Architecture (EMEA) at Alfa confirmed at the recent AFC Winter Conference, “Ecosystems are an environment with a set of rules and a number of participants who collaborate and compete against each other, where ultimately the overall value of the ecosystem is greater than the sum of its parts.”

Over time and following the pandemic, customers have become increasingly competitive and more demanding over what they expect to see in the marketplace, e.g. self-service applications, 24-7 availability as key requirements. Ecosystems answer these customer demands, with strong software providers offering a variety of components that are put together on a single platform which can be flexible, innovative and can adapt to requirements.

Building a digital ecosystem for asset finance is explored in Alfa’s Digital Directions 3 report, which draws on industry experts’ input to understand a future in which technology’s power is channelled not by individual operators, but by many participants, who collaborate in an ecosystem on delivering new value that exceeds the sum of its parts.

“Ecosystems are an environment with a set of rules and a number of participants who collaborate and compete against each other.”


Application programming interfaces or APIs are crucial to today’s digital economy as they are the foundation of many digital platforms, enabling organisations to build and plug-in new products and solutions in their ecosystems.

Digital Directions 3 emphasises the importance of open APIs as “a cornerstone of modern technology” in the way they simplify the process of connecting applications and enable ordered interaction between them.

For example, Alfa can provide APIs, such as to their credit decisioning engine, and clients can connect to these APIs with their own front-end portal. APIs together create an ecosystem that is incredibly powerful.

John Murray noted how Alfa can create direct links via open APIs to specialist products and services which will enrich their customers’ experience, reduce the need for Alfa to develop every element required in-house, and provide access to innovative fintech solutions.

“The system orchestrator plays a key role in making ecosystems deliver what is intended.”

Role of the orchestrator

The orchestration layer of the digital platform brings together all APIs and components, and is one of the most important aspects of the ecosystem for the customer journey.

As highlighted in Alfa’s Digital Directions 3 report, “The system orchestrator plays a key role in making ecosystems deliver what is intended. They are trusted advisors to their customers, charged with handling the complex data sharing, technology selection and value metrics involved in building an ecosystem. They have an overall picture of all the participants in the network, and an understanding of what new functionality is required, who will supply that requirement, and how risk and reward will be shared.”

An orchestrator could take on an advisory and consultancy role focusing on the customer and what is best for them, looking at what could be added to the platform, and then orchestrate what is the correct and best tool for the job.

With industry expertise and customer experience, a company such as Alfa would be ideally placed as an orchestrator bringing its trusted leadership to the ecosystem, forging successful partnerships, and integrating components to make a successful ecosystem. With Alfa’s industry knowledge, John Murray highlights that they can look at what is already available and put the solutions and products together effectively in a business relationship.

John confirms that as an ecosystem orchestrator, “the key thing is to understand the business benefits alongside the technical options that are available.”

Boston Consulting Group notes that, “Orchestrators are the pivotal players and stand to gain significantly as platform-based ecosystems increase market share and eat into the profits of traditional companies.”

“The key thing is to understand the business benefits alongside the technical options that are available.”

Collaborative partners

Whilst not a new business concept, ecosystems are essentially about choosing the right solutions and products and plugging them into a single platform for a seamless customer journey.

Ecosystems therefore need strong collaborations with partners who have a single focus and can deliver the functionality in a solid way. As John Murray points out, Alfa could build each individual function but this could be time consuming, or they could partner with a trusted company with a good reputation who can provide that functionality quickly. Alfa would help choose the best solution with the most flexibility that could add the most value to the ecosystem, while not necessarily doing much – if any – development work itself.

The key benefits when creating partnerships and ecosystems are twofold: (i) speed and improving time to market, so that customers get the solutions quickly; and (ii) reducing risk.

Ecosystem partnership strategies can generate significant value both by growing the core business and by expanding the portfolio into new products and services.

One such integration partnership with Alfa is Tomorrow’s Journey, whose SaaS platform JRNY is purpose-built for subscription and usage-based mobility, and integrates perfectly with the Alfa Systems platform. Tomorrow’s Journey CEO Chris Kirby said, “the customer’s desire for an enhanced digitalisation to plug gaps in their journeys resulted in a necessity to partner with other specialist brands and provide a seamless customer journey.”

But with so many solutions in an ecosystem, which players – large or small – actually benefit from the partnership? Andrew Martin, Chief Data Officer at CrediCar would like to think that everyone can benefit, with large companies, like Alfa, having the flexibility to plug in new technologies and leverage advancements that they can’t or don’t have time to build in-house, while smaller companies can focus on new solutions and technologies and then interface with big players who can plug in their packaged-up solution to the ecosystem.

There are also advantages for business customers who get the benefit of all these varying solutions and products being brought to them on one platform in a seamless journey.

“Ecosystem partnership strategies can generate significant value both by growing the core business and by expanding the portfolio into new products and services.”

Partnership risk

Digital business ecosystems present a number of potential pitfalls as well as opportunities. Working with smaller fintechs, who often need to generate new funding, can be seen as a risk for bigger players in case they suddenly disappear and there is a gap in the platform.

John Murray highlights that companies such as Alfa will ensure that they only collaborate with trusted partners with a successful track record, to ensure that their customer won’t be affected, with any risk being looked at from a business sense (a need to mitigate risk through procurement and due diligence of new partners) and a technological one (cloud offerings have resiliency built in which provides strong backing).

There is also an element of risk for smaller companies who partner with large companies in the ecosystem, as a large player could decide to build the third-party functionality themselves or replace it with a better solution. The use of APIs in a software platform built of many components allows the easy replacement of an individual component when a better one becomes available, making it easier and faster for platforms to evolve and develop.

Alfa’s John Murray points out that major companies like Alfa prefer to focus on the customer and customer journey when providing them with the partner’s functionality. They like to interact with smaller specialised companies as the more ecosystems they can be part of, the stronger the overall solution will be. If they were to create each solution internally, the time to market would be too long so it makes sense to partner with specialists.

Large tech companies no longer have to be seen as a one-stop-shop, and they present the opportunity to plug-in specialised flexible solutions which help to adapt to new customer requirements. In turn, small companies can be integrated to many different ecosystems creating a stronger offering.

Another risk could be identified when smaller companies move between the ecosystems of more than one big player. However, John Murray confirmed that Alfa is happy for their partners to be part of many ecosystems as it makes them stronger. The downside to being exclusive to one ecosystem is that you can only move as fast as that one system, so working with a large number of players allows the smaller company to be functionally stronger and have a wider awareness with new visions from different markets.

“Large tech companies are no longer seen as a one-stop-shop; they present the opportunity to plug-in specialised flexible solutions which help to adapt to new customer requirements.”

For more information on building digital ecosystems in asset finance, download Alfa’s Digital Directions 3 report, which offers insight into the emerging role of technology providers as ecosystems orchestrators, identify various types of ecosystems, and discuss the current opportunities to deploy them in order to meet the needs of the auto and equipment finance industry.

Find out how digital business ecosystems are changing the auto and equipment sectors by watching our Asset Finance Connect Conference Session

Analysis from Andrew Flegg CTO, Alfa Systems

One of the key goals for many of today’s customers and providers is to embed all technology using APIs in a wider digital ecosystem.

Open APIs are a cornerstone of modern technology which simplify the process of connecting applications, and enable ordered interaction between them. Granular, well designed APIs empower organisations to build ever-greater value for their users in less time, and with less investment, than has been possible in the past.

A digital business ecosystem provides cutting-edge capabilities and can be developed by the provider, its clients, or specialist third parties that deliver anything, from state-of-the-art digital engagement channels to innovative, usage-based products.

Finance providers are recognising the opportunities to create new forms of value through partnerships, and collaborating via shared data such as telematics, causing ecosystems to become increasingly popular.

As more participants collaborate, they begin to create a community with a common purpose, which can work together to tackle challenges. Further to this, entire platforms and applications can be fully integrated to deliver new business solutions.

The vision for an open digital platform such as Alfa Systems is to empower customers to leverage the power of these connected ecosystems, which could be through receiving telematics or credit data, or introducing new products or origination channels.

Growing economic pressures, combined with the prospect of businesses facing increased strain on budgets and investments, represent an argument for collaborating with other providers and forming partnerships. These alliances can offer the customer a complete, seamless journey in one ecosystem of specialist modules.

Alfa is therefore exploring more integration partnerships, to satisfy the future needs of the industry, while opening up possibilities for our customers and showing them what is available in our growing ecosystem. Through such collaboration, Alfa can introduce customers to specialist ‘out-of-the-box’ applications in a central ecosystem, providing a managed solution that will save them from having to embark on that journey themselves.

Entitled Building a digital ecosystem for asset finance, Alfa’s Digital Directions 3 Report draws on industry experts’ input to understand a future in which technology’s power is channelled not by individual operators, but by many participants, who collaborate on delivering new value that exceeds the sum of its parts.

In the report, Alfa offers insight into the emerging role of technology providers as ecosystem orchestrators, identifies various types of ecosystems, and discusses the current opportunities to deploy them in order to meet the needs of the auto and equipment finance industry.

Download the Digital Directions 3 Report

Register now for future related webcasts