Invigors event debates “digital disruption”

Natalia Grigoreva, strategic marketing director, De Lage Landen (DLL) EurAsia, highlighted this as one of a number of mega trends impacting the market, along with volatility, environmental awareness, demographic trends, the regulatory environment, automation and globalization.

Natalia Grigoreva

Grigoreva stressed that 3D printing had the potential to be a “disruptive” technology, with applications in the healthcare and manufacturing environments for the production of prototype and customized items. In the future, this technology could be used to print spare parts on a manufacturer’s premises, a development with significant implications for asset finance.

“We also need to be aware there are seven times more mobiles in the world than PCs. We are seeing mobile technology used for equipment monitoring, remote access, sales training and new ways to interact with customers. There is greater access to data and expectations of faster responses,” Grigoreva added.

Grigoreva said this technology could be used to track equipment use and provide more transparency about an asset. In future this could led to innovations such as asset-sharing deals, for example where one company uses a piece of construction equipment during the summer and another in the winter.

It could also usher in fully automated materials handling systems using driver-less vehicles in warehouses which picked items according to information sent from online sales systems.

“The technology is very revolutionary,” she said, “but at the moment there are lots of initiatives trialing different approaches. It’s not clear which technology will be a winner and that means customers are looking for more flexible finance contracts.”

Grigoreva also said increasing environmental concerns meant manufacturers were looking to fund new types of asset such as solar energy-powered vehicles and hybrid trucks and buses.

DLL reports growing interest in finance solutions which are structured so lease payments became carbon neutral and is also looking at solutions tailored to the developing market for refurbished assets.

Patrick Gouin, global head strategy & business optimization, Société Générale Equipment Finance, agreed that lease financing has become a sales and marketing tool for vendors and said the onus was on finance companies to bring added value to the relationship.

Patrick Gouin

He said: “For both partners to capture the expected value, the relationship must be managed like a joint venture, so each partner contributes to objectives which have been defined upfront.

“There is too much of a gap between front and back office activity, with silos and tribes. What is needed is more strategic thinking and risk-based strategy.”

Richard Guilbert, partner, Invigors EMEA, pointed out that creating an effective vendor programme required careful consideration of three elements: evaluation, planning and delivery.

Richard Guilbert

Firstly, the finance provider needs to ascertain whether the manufacturer sees finance as strategically important. Then both parties need to align their processes and agree responsibilities, boundaries and communication paths.

“Finally, don’t think the roll-out is just a formality. Managing a manufacturer finance programme calls for a clear means of managing teams, communicating the project ethos and having independent review and audit,” Guilbert said.

Speaking from a captive’s perspective, Richard O’Donohue, director of business development EMEA, Dell Financial Services, said developments in the technology market were a key reason for Dell bringing its finance business in-house.

Richard O’Donohue

“The value now is in the software, not the hardware,” he stressed. “We wanted the flexibility to finance end-to-end solutions with a consistent global approach. We want our financing offers to reflect customer-facing initiatives such as pre-paid services, maintenance, and technology rotation. Independents struggled with that model, because they want to keep the asset there forever. Our view is the value is not necessarily in the asset, but in what the customer does with that asset.”

O’Donohue reported 100% year-on-year growth since Dell set up its financing business, pointing out that finance specialists had been able to work closely with Dell sales teams to understand how the company goes to market and its culture.