Broker-tech: Revolutionising vendor finance and creating new opportunities for brokers

Summary

The world of vendor finance, traditionally dominated by large banks and a few independent lenders, is undergoing a significant transformation, thanks to the rise of tech-savvy brokers. This evolution was the focal point of a recent webcast hosted by Asset Finance Connect and sponsored by NETSOL Technologies.

The panel, which included representatives from bank-owned and independent lenders, hybrids, and intermediaries, explored how technology is reshaping the vendor finance landscape, offering brokers new opportunities to grow their market share and even rival traditional lenders.

Technology eroding boundaries between brokers and lenders

The webcast highlighted how technology is breaking down traditional barriers between brokers and lenders, creating new business opportunities. A standout example was Societe Generale Equipment Finance (SGEF), a global finance company with a strong vendor-direct approach. While SGEF has traditionally focused on close relationships with manufacturers and distributors, it has increasingly embraced brokers, particularly in the UK, where brokers originate a significant portion of its business. This includes sectors like IT, medical equipment, and transport.

According to Vincenzo Scalzone, head of technology, healthcare & green energy at SGEF, the rapid development of technology is transforming how brokers serve end-customers, particularly when it comes to the customer experience. Brokers, unencumbered by legacy systems, are often more agile than large lenders, allowing them to offer faster, more flexible solutions. Scalzone noted that SGEF, while working to upgrade its own systems, acknowledges the advantage brokers have in implementing new technology quickly.

Joe Lloyd, director at Complete Leasing Solutions, echoed this sentiment, explaining how his firm is working to streamline the vendor journey by reducing touchpoints from proposal to payout, all while complying with KYC and regulatory requirements. By investing in APIs that connect with a diverse lending panel, brokers like Complete Leasing aim to complete financing processes in a matter of hours, highlighting the agility that tech adoption offers them.

For Malcolm Workman, chief operating officer at Shire Leasing, a former broker turned hybrid lender, technology has allowed his firm to deliver service at speed. Shire Leasing’s average deal turnaround is just over an hour, a testament to how tech investment, including in-house IT teams and e-documentation, can give smaller funders a competitive edge over bigger banks.

Opportunities and challenges in replacing primary lenders

The discussion also delved into the opportunities and challenges of brokers potentially replacing traditional lenders as the primary source of vendor finance. While brokers are gaining ground, panellists were quick to point out that such a transition isn’t straightforward. Joe Lloyd noted that forging new relationships with vendors, and winning over customers from long-term lenders, is a time-consuming process.

Smaller funders like Shire Leasing can attract vendors who feel underserved by large banks, particularly when their transactions are too small to be a priority for the big bank-owned lenders. Workman explained that vendors can grow alongside smaller brokers or funders, developing long-term relationships that may eventually lead to larger deals.

However, Vincenzo Scalzone emphasized that large manufacturers are generally less likely to switch to a broker-led model unless acquired by a competitor. Yet, the collaboration between brokers and lenders is growing, with brokers often playing a key role in customer education and sales, while lenders handle documentation, credit, and lending. Scalzone highlighted that SGEF are happy to partner with intermediaries to manage certain parts of the vendor’s business if that provides a better solution to the vendor and their customers.

A significant point made by Jason Hurwitz, sales director of Europe at NETSOL Technologies, is that tech-savvy brokers now have the ability to offer multiple finance options through a single interface, providing a compelling service proposition that can help unseat primary lenders. This flexibility, combined with brokers’ focus on customer service, is proving attractive to vendors.

Innovations in broker-tech: What’s next?

Looking ahead, the panellists discussed the latest innovations in broker technology that will further revolutionise vendor finance. Joe Lloyd mentioned his firm’s development of a new system aimed at speeding up the proposal-to-payout process, with increased API interactions and auto-decisioning. Similarly, Malcolm Workman shared how Shire Leasing is working on automating the entire financing journey, from credit decisions to payout.

NETSOL’s Jason Hurwitz emphasized the growing trend of “super configurability” in finance technology. Brokers can now create multiple financing journeys that run simultaneously, tailored to different sectors, asset types, and transaction sizes. This flexibility allows brokers to offer bespoke solutions, delivering efficiency without sacrificing customer experience.

However, Hurwitz was cautious about fully automating the broker role. He argued that while technology can streamline processes, the broker’s key value is in matching deals to the right lender—a service that should not be fully disintermediated.

The role of brand in broker-lender relationships

One of the closing discussions of the webcast revolved around the importance of branding in vendor finance. Joe Lloyd and Malcolm Workman both acknowledged that while brand matters, particularly for manufacturers and end-users, service and commercial terms are often more crucial. Brokers, by focusing on delivering a seamless customer experience, can build long-term relationships with vendors and end-customers without needing to rely heavily on brand prestige.

Hurwitz agreed, adding that customers are more interested in the benefits of a lending relationship than in the brand itself. In the financial services sector, where deals are more about service and value proposition, branding plays a secondary role to the quality of service provided.

Conclusion

As the vendor finance landscape continues to evolve, technology is enabling brokers to challenge traditional lenders and offer vendors new, innovative solutions. Agile, tech-savvy brokers are now able to compete by delivering faster, more tailored services that meet the needs of both vendors and end-customers. While the path to fully replacing primary lenders is complex, the growing collaboration between brokers and lenders signals a shift in the market.

There was an understanding between the panel that the transaction size plays a part in the process. Tech savvy brokers can process smaller transactions (the sweet spot for Shire Leasing and Complete Leasing Solutions was £1,000 to £25,000 deal size) with efficient systems whereas bank-owned lessors had a much larger average transaction size. The tech savvy brokers had a strong proposition for the resellers and dealers whereas the bank-owned lessors had strong relationships with the OEMs.

The AFC webcast made it clear that the future of vendor finance lies in the hands of those who can effectively leverage technology, creating opportunities for brokers to play a much larger role in the sector. With further advancements in broker-tech on the horizon, the industry is set for continued disruption and growth.

Watch the webcast in full here.