Asset finance for growth: Finding the opportunity in uncertainty
For even the most previously predictable markets, change and uncertainty is now too often the new normal.
At a time when nothing can be taken for granted, quickly adapting business models in response to market demand and environmental factors has proven to be essential for survival.
In part one of this article, James Rudolf, Chief Commercial Officer at Acquis, examines the office as an illustrative example of some of the biggest drivers of change affecting asset finance companies, explaining the implications and some of the best solutions for emerging stronger and with new revenue opportunities.
In part two, we’ve asked some of the leading figures in the European asset finance industry to express their views on how they are managing the changes currently affecting their leasing business whilst predicting and planning for the future.
James Rudolf, CCO, Acquis
What’s driving change for asset finance companies?
It’s important to consider the driving factors since these ultimately help shape where the new revenue opportunities lie:
Digitalisation is and has always been the game changer. It changes how people work, learn, relax, socialise and communicate. And it has knock-on consequences that directly and indirectly effect other sectors.
The office is just one worthy example for highlighting its recent impact. Ten years ago, high volume copiers were a common necessity. Yet, technological advances now mean copying is no longer as necessary or preferable as it used to be. Demand in this area, for example, is shrinking.
In addition to less demand for printed documents, digitalisation has enabled people to work from home, leaving some offices scarcely populated and therefore changing the dynamic in the quantity, use and location of once common office equipment.
- The Covid-19 pandemic
We all know how the Covid-19 pandemic is leaving deep scars and aftershocks that will be felt for many years to come. While its impact is immediate, it also has long term implications for cultural trends.
For the office, few have yet returned to what was normality. New research in the UK reveals 70% of workers predict they will never return to offices at the same rate, preferring to work from home either full-time or part-time. This is hugely significant since skeleton offices combined with remote meetings have big implications for asset finance companies, shaping demand for technology and much more.
- Importance of environmental, social and governance matters
Environmental, social and governance (ESG) matters are having a marked impact on businesses. Corporate decisions are increasingly influenced by factors including sustainability, diversity, corporate purpose and equality. ESG matters should not be underestimated since they have far reached implications for long-term corporate strategy and buying behaviour.
For the office, a policy of only printing/copying when necessary to reduce carbon footprint is widespread and should be encouraged but offers yet another challenge to traditional print technologies.
What are the implications of change for asset finance companies?
For many businesses, the rapid rate of change and volatility has made sharp changes to the asset mix essential in order to survive and thrive.
Innovation in product and delivery is essential. For the office, the demand for smaller machines and home office bundles to equip people to work from home is significant. Although the average ticket price for copiers is in decline, the demand for lower spec machines and laptops is increasing. Failing to identify and lead changes like these through new asset mixes can be a costly, not least because of the loss of recurring revenue opportunities associated with equipment renewal/upgrades.
The impact of the global pandemic at a time of rapid digitialisation and increasing ESG focus means many of the changes we have seen are likely to be an irreversible acceleration what was already inevitable.
It’s also important to consider that in some emerging markets, high spec office equipment has never made up a disproportionately high part of the asset mix. And as service-led digital delivery models grow in popularity, they may never do.
What’s the solution for thriving with change?
Acquis CEO James Rudolf’s advice is very clear: “Asset finance companies need to be prepared and willing to quickly adapt their asset mix to find new revenue streams. Speed and agility is of the essence, in order to keep pace with market demand. The ability to lead and deliver change through innovative finance products and solutions is paramount.”
For Acquis, this also means staying ahead of the curve by being open to insuring assets from new and emerging markets. James adds: “We’re willing and happy to quickly adopt new equipment types, markets and channels. We know how important it is for asset finance providers to secure an agile insurance partner to help facilitate these new revenue streams.
“As with everything, the first mover advantage is hugely important. Time is of the essence to not only mitigate the risk and pressure of faulting demand but to capitalise on early market opportunities.”
 BBC News. 2021. Most workers do not expect full-time office return, survey says. https://www.bbc.co.uk/news/business-58559179