Tech trends shaping the future of asset finance

Summary

The AFC European Unconference, sponsored by Alfa, explored the technological trends shaping the future of asset finance. From the rise of artificial intelligence (AI) and the growing importance of cybersecurity to navigating tech regulations and transitioning from traditional to modern systems, the discussion highlighted both challenges and opportunities for the industry.

AI: From buzzword to business enabler

Artificial intelligence was a central focus of the conversation, with many agreeing that AI will be the biggest tech trend in 2025 as the “world is moving to a digital AI-centric place”.

Unconference participants agreed on its transformative potential across asset finance. AI applications in the industry are increasingly practical, with use cases such as workflow optimisation, credit decisioning, and intelligent document processing already making processes more efficient. However, deploying AI is not without its complexities.

Several unconference delegates emphasised the need for robust data quality and governance to unlock AI’s potential. Poor-quality data can hinder AI’s effectiveness, and organisations must invest in training to upskill employees and foster AI literacy. As one delegate observed: “AI is only as good as the user and the prompts”. This is particularly relevant as AI becomes integral in customer-facing and operational solutions, from predictive maintenance in equipment leasing to automating underwriting.

Despite its promise, AI adoption faces hurdles such as regulatory uncertainty, the high cost of implementation, and the need for skilled personnel. For example, compliance with the EU AI Act was highlighted as both a challenge and a potential enabler. By setting governance and ethical standards, regulations like this aim to ensure the responsible development and use of AI.

Cybersecurity: from risk to resilience

The rising prevalence of AI amplifies the need for increased cybersecurity. As AI-driven solutions become more pervasive, ensuring the security of systems and data is critical. Cybersecurity is now seen as one of the most significant operational risks for the asset finance industry, compounded by the increasing complexity of global regulatory landscapes.

Participants highlighted how cybersecurity regulations, such as the Cybersecurity Act and DORA (Digital Operational Resilience Act), are driving change. While compliance requirements are becoming more stringent, many viewed this as an opportunity to enhance resilience and provide customers with secure solutions.

Cisco’s acquisition of Splunk was cited as an example of how companies are integrating cybersecurity into their offerings. Cybersecurity is no longer a separate consideration but a core component of technology platforms. For many organisations, regulation is becoming a business opportunity to differentiate themselves and build trust.

Regulation: opportunity or burden?

Tech regulation was a recurring theme, with opinions divided on whether it is an enabler or a burden. Many participants noted the growing compliance burden on organisations, especially those operating across multiple regions with differing legislation. This is particularly relevant for tech providers who must deliver flexible and adaptable platforms to meet their clients’ regulatory needs.

Some saw regulation as an opportunity to streamline processes and improve operational resilience. By rationalising core systems and automating compliance tasks, organisations can not only meet regulatory demands but also enhance efficiency and customer satisfaction. One delegate agreed, noting that “regulation is an opportunity that will go hand-in-hand with investment, but it should bring the organisation to a higher level of efficiency and there is the gain”.

However, others cautioned against the cost implications, urging firms to prioritise investments that deliver long-term value.

Sustainability and evolving asset models

Sustainability continues to shape the asset finance landscape. The transition to electric vehicles (EVs) and other sustainable assets introduces new complexities, such as determining residual values for emerging technologies like hydrogen-powered equipment. Participants highlighted the challenges of creating secondary markets for these assets and adapting business models to align with outcome-based solutions and subscription services.

Technology plays a vital role in enabling these transitions. For example, tracking asset usage, predictive maintenance, and data sharing across ecosystems are critical for pay-per-use models and as-a-service offerings. “Technology needs to be an enabler for the lifecycle use of the asset,” noted one attendee.

While some tech solutions are already available, more development is needed to fully integrate these capabilities into asset finance operations.

The future: a complex but promising landscape

The overall outlook for 2025 and beyond is one of uncertainty. Factors such as geopolitical shifts, regulatory changes, and economic fluctuations add complexity to the tech trends shaping asset finance. Yet, the industry remains optimistic about leveraging AI, cybersecurity, and sustainability to drive innovation and growth.

Organisations must adopt a nimble approach, embracing collaboration and outsourcing to fill skill gaps and accelerate digital transformation. As one participant noted, “Humans won’t be replaced by AI, but they will be replaced by humans who use AI.”

The challenge for asset finance firms is to harness these technologies effectively, ensuring they are not only compliant but also competitive in an increasingly digital world.