Is specialisation the key to better returns in asset finance?

Summary

In an era of tightening margins and increasing regulatory scrutiny, asset finance lenders are exploring every avenue to boost returns, one of which is asset specialisation. The recent webcast hosted by Asset Finance Connect, sponsored by NETSOL Technologies, tackled this very question: Is increased asset specialisation the way to improve returns for asset finance lenders?

Moderated by David Betteley, Head of Content at Asset Finance Connect, the panel brought together a mix of perspectives from across the lending landscape – bank-owned, independent, captive, and technology provider.

Specialisation: a strategic advantage or a risky bet?

At the heart of the discussion was the notion that assets define asset finance, and therefore, knowing the asset well is critical. But is deeper specialisation always better?

Steve Bolton, Managing Director UK at PEAC Solutions, thinks so – up to a point. “It’s about focus and driving value for all parties around that focus,” he said. For Bolton, specialisation isn’t just about knowing the asset; it’s about understanding the customer’s business model and building tailored solutions that endure economic cycles. “Start with higher residual values (RVs), yes, but they must be grounded in reality. Expertise must go deep into the customer’s world and be broad enough to understand macroeconomic impact over time.”

However, as David Betteley pointed out, specialisation comes with costs and risks. Overcommitting to a niche can limit scalability and expose lenders to concentration risk, especially in volatile industries.

The captive perspective: deep knowledge as differentiator

Ed Thompson, General Sales Manager at John Deere Financial, presented the captive’s view, where specialisation is more than a strategy, it’s an identity. “We’re committed to those who are linked to the land,” he said. Specialisation at John Deere goes beyond finance, it’s about IoT-enabled services, working closely with farmers to boost yields and maintain brand loyalty.

Yet even with such intimate market knowledge, captives face challenges in valuing residuals. “There’s no RV guidebook for tractors,” Ed admitted, noting the importance of dealer networks as both sales and disposal agents. “Deep customer understanding is vital – knowing what kind of farming, the seasonality, when to pull out the asset. Tech can support, but knowledge and experience are essential.”

A live poll during the webcast found that 86% of the audience agreed that manufacturer captives enjoy a significant advantage thanks to their alignment with the parent brand. “All internal teams, including finance, align to one goal – to sell more John Deere equipment and services,” said Ed. This creates a clear, simple proposition for the customer that independents and brokers struggle to replicate.

Tech as an enabler, not a replacement

From the technology perspective, Jason Hurwitz, Sales Director Europe at NETSOL Technologies, reinforced the idea that while platforms can scale specialisation, they can’t replace human insight. “Tech can help predict RVs, but that’s only part of the solution. You still need the people who understand the asset, the market, and the customer. Until data becomes reliable and widely available, human expertise remains crucial.”

Jason also emphasized how highly configurable tech allows lenders to build multiple specialised customer journeys on a single platform, ideal for balancing depth with scalability. “It’s relatively easy to run a low-volume specialism, but to scale profitably, you need efficient tech and the human knowledge and expertise to tell it what to do.”

Generalist lenders with specialist divisions

Graham Lines, Head of Product at Novuna Business Finance, straddled the middle ground. “My first answer would be that Novuna is a generalist, but specialism means different things to different people,” he noted. Novuna operates with dedicated teams within business lines, building sector-specific knowledge without losing the benefits of scale. “You must have the right people, not just the right tech. Without that, your proposition weakens.”

He also warned that broker expertise is at risk. “As experienced brokers leave the market, we face dilution of specialisation and increased risk.” Still, he acknowledged that brokers play an important role, especially in understanding specific markets and assets, even if they can’t compete with captives on rate or return.

Regulation: a specialism of its own?

An interesting twist came from the regulatory angle, particularly in light of the recent Court of Appeal ruling and Supreme Court hearing. “Providing regulated business is a specialism these days,” Graham quipped, referring to its rising cost and complexity. Steve Bolton agreed, adding, “We carry cost with every regulated deal; we’re being asked, ‘why are you doing it?’” For John Deere, Ed Thompson stressed the need to maintain regulated offerings for those customers who still want it and to protect the brand globally, even if it’s not the most profitable route.

Final thoughts

The panel concluded that specialisation and generalisation aren’t binary choices. Instead, they exist on a spectrum where each lender must find their sweet spot based on asset types, customer base, operational scale, and tech capability.

As Jason Hurwitz neatly summed up: “Specialisation creates a premium service customers will pay for. But you need the tech to scale it – and the expertise to make it real.”

The webcast made it clear that in asset finance, understanding the asset – and the customer – is still king. Technology can amplify that knowledge, but it can’t replace it.

Watch the webcast in full here.