Are regulators in danger of displacing the customer as the central focus for lessors?

Leaseurope’s conference held last week in Vienna took place against a backdrop of summer heat, parched earth and an outbreak of bedbugs (admittedly in France), the result of record temperatures which will far exceed the 1.5 degree goal which Government and regulators had hoped would be the limit for global warming.

The conversations inevitably included sustainability topics, but perhaps without the same idealistic fervour that was present at last year’s event in Cascais when Mike Berners-Lee (the brother of the famous one) spoke about the vital importance of driving a green transition.

Harald Waiglein, Director of General Economic Policy & Financial Markets at Federal Ministry of Finance delivered a half hour summary packed full of Austrian Governmental insights on financial services (impressively relying only on a single handwritten A5 sheet of scribbled notes to guide him).

He spoke about his concerns about the global economic situation including stagflation (combined with negative real interest rates), growing protectionism and its effect on the economy. In asset finance, Waiglein worried that battery electric vehicles may not yield the expected used values on which auto finance providers are reliant; and about poor portfolio quality, particularly in real estate.

Peter Campbell from the FT delivered his trademark polished summary of the outlook for the auto/auto finance industry. Campbell backed a call by David Betteley, Asset Finance Connect’s auto finance community leader, for a more rational debate for and against electrification and an end to the current scare tactics which focus, amongst other things, on range anxiety.

This was the first conference for Leaseurope/Eurofinas with Richard Knubben at the helm. In his quiet and understated way, he rang the changes. Gone are the lighter-weight keynotes who focused on general-interest topics; gone are the pan-European panelists to be replaced by local specialists bringing heavier-weight insights and a local flavour to events that was perhaps missing before. For me these changes worked well and are to be welcomed.

Knubben was guided by the topics he tackles in his day-to-day work at Leaseurope and Eurofinas. He revealed the size of the challenge asset finance public affairs faces, as a moderator in a session on day two. The EU view of consumer finance, he told delegates, starts with an assumption that it will probably harm the customer.

For many, the highlight of the conference was the session on data humanism – putting the customer at the centre of data collection and its use. Who would have thought a geneticist from Vienna University could deliver such interesting and relevant insights to the asset finance industry – and in such a light-hearted and compelling way?

Key take-aways included accepting that the cat is already out of the bag when it comes to protecting your data identity – you have already given it away; and inevitably that finance providers should rely on behavioural data as a predictor of future behaviour because it is way more reliable than an individual’s self-insight. It seems the machines that interpret the data know you better than you know yourself.

The annual Future Group session organised by specialist industry consultants Invigors focused on three pitches by emerging industry talent followed by a Q&A session with delegates. On its own, this long-running series delivers sufficient value to the industry to justify the effort spent in organising the conference. It is excellent.

The winning pitch was a platform which would enable BEV users to efficiently gather and therefore easily report information about CO2 emissions from their battery charging sessions. Another pitch explored an app which would deliver cheaper rates for finance seekers buying greener assets. “Can’t you think of alternative incentives which don’t involve giving discounts?” a member of the audience asked.

The downside of the conference, if any, is that it felt a little as though the industry had lost the customer-centric focus that dominated the debates when the opportunities for delivering more and better customer experiences through technology were at the forefront. Fintech has given way to sustainability.

I found myself worrying during day two that regulators have started to displace customers as the central focus for lessors, a view shared by a regular delegate I meet once a year: “The industry seems to have ceded innovative finance models like pay-per-use to the fintechs,” she gloomily told me.

As in the UK, however, there are emerging concerns about the European version of the new Consumer Duty – the European Consumer Credit Directive. Delegates expressed concern that it was getting gold plated. There was a call for a digital fitness check on current regulation and some (echoing my worries) voiced concerns that regulation is becoming a barrier to innovation.

Overall, there can be little doubt that Vienna was a great next step in a long journey of continual improvement in Leaseurope events (my first attendance was over twenty years ago in Marrakech where I shamefully fell asleep during the first keynote, beaten by the heat, real-time interpretation rather than a single language conference, and topics which focussed too much on procedure and statistics and too little insight). Leaseurope 2023 couldn’t have been more different.

The location for next year’s conference will probably be Spain, we hear. I can’t wait!