A collaborative and technology-driven vision for the future of the asset finance broker-lender channel

Key takeaways:

• Optimistic about 2024 with positive signs in the economy
• Focus on technology automating routine processes and linking APIs to brokers
• A technology-driven and collaborative vision for the future of the broker-lender channel

Outlook for 2024

Nathan Mollett is optimistic about the asset finance outlook for 2024, more so than he was six months ago. He now expects modest growth, a view shared by many lenders.

But unlike some of his peers, Mollett remains more cautious. “Some funders have been aggressively chasing market share at low price points and they may see their impairments rise faster than their profits this year. Our more conservative approach, combined with the benefits being delivered by our new technology, puts us in a great position to achieve steady growth, despite an uncertain, but improving, outlook.”

Nathan Mollett hopes lenders will take a cautious stance in 2024, managing costs to improve profitability rather than chasing increased new business volumes.

But while Mollett sees positives on the horizon for lenders, there is “some fog on the road ahead” that need to be considered including the likely removal of the SME factor in the Basel 3.1 capital requirements rules; high interest rates; availability of capital; and the outcome of the Financial Conduct Authority’s (FCA) review into motor finance commission.

Brokers

With the prospect of increased scrutiny from regulators, and the growing cost of falling foul of regulation, managing brokers’ interaction with end customers has become a priority.

Many lenders have been assessing the effort and expense of maintaining many broker relationships and have been gradually reducing the number of brokers with whom they work. At least one lender has started to explore whether having a direct sales force managed cost effectively using technology is starting to look better than dealing with a wide panel of independent brokers.

Mollett, however, takes a different view. He has a vision for the future of intermediated asset finance lending which is technology-driven and characteristically collaborative.

“Broker oversight is one of the biggest pain points which the industry currently has, but lenders should be wary of substituting many broker-lender relationships to deal with a fewer larger brokers.”

Mollett clearly wants the broker channel to thrive. He is supportive of organisations like The Broker Hub which incubates new-start brokers, to build their skills and which are attempting to build a secondary allowing broker businesses to be sold on to the next generation.

He is also supportive of a plan by the Finance & Leasing Association (FLA) to develop single audits for brokers which can be carried out once and the results used by many lenders. It is hoped that this reorganisation of the market to make it more efficient will reduce the work and cost needed to be borne by each individually.

He also seems supportive of the plan to pull brokers into the membership of the FLA.

United Trust Bank has been investing hard in technology to manage the business generally. He is quick to talk about the value of enabling APIs into larger brokers – a change which will increase efficiency and reduce the cost to serve each broker, as it rolls out in 2024 and 2025.

“Brokers using the API system will be able to send proposals direct into UTB’s system,” Mollett noted.

Technology

UTB started to implement Alfa Start in 2022. The platform was delivered in just 21 weeks.

The platform will be the foundation to deliver a better and smoother experience for customers as well as for brokers. Crucially it will reduce the cost to serve each customer.

UTB has already automated KYC and have linked the Alfa’s system to Lending Metrics via ADP. Compliance checks are now being performed automatically as a low-cost value-add task which has virtually eliminated any risk of human error.

In addition to enabling APIs into large brokers, UTB’s technology priorities over the coming months will include automating the ‘easy’. Automation in underwriting will enable increased bandwidth and capacity to be reinvested in building deeper relationships with brokers and working on more complex lends, according to Mollett, adding more value to the broker sales process and the customer journey.

Mollett sees technology as a huge part of UTB’s future, and will be extending the system further to manage portfolio risk. UTB is even considering the use of an AI plug-in to better identify fraud.

Industry opportunities

The asset finance industry needs to figure out how to successfully harness opportunity in green and renewable finance, according to Mollett, with only large banks and Close Brothers doing it properly at the current time.

The asset finance industry is currently seeing too much risk in green assets due to the unknown and unproven technologies affecting the security in the asset. Mollett sees a role for the British Business Bank here in facilitating the green transition.

“Green is on everyone’s radar as a growth opportunity and something they need to develop a strategy on because green assets are going to make up an increasingly big part of the overall investments in assets over the next 5 to 10 years,” commented Nathan Mollett.

Next generation of industry talent

As Chair of the Leasing Foundation, Nathan Mollett has made a considerable contribution to the industry by championing young talent – particularly through the 30 Under 30 awards – and raising awareness among employers of the importance of positioning the industry as a great place to work to better attract the next generation of career-minded professionals.

Drawing on important lessons learned throughout his own career, Mollett recommends that young people new to the industry should actively seek out mentors both inside and outside their own organisation.

“The importance of having a circle of people around you, some of whom are probably outside of your own organisation, who you can go to for advice or a second opinion on business challenges, is invaluable throughout your whole career. This is something we are trying to facilitate through the Next Generation Group at the Leasing Foundation, and the support we’ve had from Asset Finance Connect here has been excellent,” commented Mollett.

Personal insights

Like many people in the industry, Mollet balances the demands of a high-profile challenging role with a busy personal life.

Undertaking extreme hobbies including ultra-running and Ironman competitions in his spare time, Nathan Mollett likes nothing more than swapping the challenging asset finance environment for personal physical and mental challenges. And none more so than running the Marathon des Sables, a 250km ultra-marathon across the Sahara in up to 50-degree heat which is widely touted as “the toughest footrace on earth”.

In April, Mollett will be undertaking this extreme endurance event pushing himself to his limits for two worthy charities: Wings for Life (https://www.wingsforlife.com/uk/) and the South East Cancer Help Centre (https://www.sechc.org.uk/).

Please support Nathan Mollett by donating at: https://www.givengain.com/project/nathan-raising-funds-for-2-causes-68044