A mixture of angst and concern as Big Data rears its head in Barcelona

Miqueu, speaking to delegates at the 2014 Leaseurope Convention held in Barcelona, added that with some 7.2 billion people on Earth – and with 7.3 mobile phones in existence – “our planet is becoming dominated by mobile phones!”.

With 90% of world data having been collected in the last two years, 550 billion pictures being uploaded on the internet during 2013, and 100 hours of video being uploaded on Youtube every minute, asset lenders’ clients’ aspirations are clearly changing very rapidly.

Philip Evans, senior partner & managing director of The Boston Consulting Group’s Boston office, stressed that, in fact, the world’s stock of data doubles every two years.

“With such staggering amounts of data currently available,” he said to delegates, “your statistical analysts are obsolete and outmoded.”
In many industries data is becoming infrastructure. “With retailers now becoming better at looking at credit than many banks – because they can ascertain customers’ buying patterns – the opportunities are created for new market entrants coming into the lending industry with the ability to innovate with Big Data – and having an advantage over older established players.”

“The collection of Big Data,” said Jukka Salonen, Leaseurope’s chairman, has become the ‘steam and electricity’ of the 21st century.”

 

Jean-Marc Mignerey, independent board director & advisor, confirmed that, with new leasing volumes of €252 billion, although Europe still maintained its position as the largest global leasing market, “the US leasing market has recovered from the recession much faster.”

“Nevertheless,” explained Adam Warner, president of Key Equipment Finance, “the US is still living in the shadow of the great recession. It is experiencing the slowest recovery in US history. We are witnessing unpredictable rates of growth. Business investment to GDP has been pretty slow not least of all because of continuing Federal government uncertainty.”

The US however, has adequate liquidity available for equipment financing but despite the large money supply “demand is simply not keeping pace with it.”

In 2013 Leaseurope’s total penetration rate remained stable compared to the previous year at 12.5%. When restricted to equipment and vehicles the penetration rate stood at 22% compared to 22.1% in 2012.

Warner confirmed that in the US “equipment leasing achieves 70% penetration rates. “The banks,” he explained, “are being rewarded by Wall Street for growing their balance sheets. Regional banks are starting to lend on equipment assets – and that is greatly assisting growth.”

 

US banks seem to be leading the way in developing relationship-based business models and achieving cross selling of products.
However the regulatory challenges faced by US banks is taking up much of their operational time and preventing them from expanding operations overseas.

“The ones that are expanding abroad,” Warner said, “are those that are following in the wake of their clients.”

The Ukrainian crisis is affecting equipment leasing in Russia. Matthias Laukin, board member of Deutsche Leasing said: “If you are doing business in Russia you have to be aware of the risks. It never has been easy to do business there and sanctions are now affecting the leasing market.

“We are decreasing market share in Russia and have a negative outlook for the near future.”

For the future, Warner sees the cost of regulation for smaller banks and the general operating environment in the US as being principal challenges and the cause of much “angst and concern in the industry”.