“We may be operating in an increasingly digital world, but too many asset finance businesses are falling short of embracing the true potential digitisation can deliver to their businesses. Addressing this is as much about the technology providers as it is about the asset finance businesses themselves,” Allen Jones, MD Copernicus.
Financial technology experts Copernicus has been analysing the move to digitisation (or lack of it) across financial services. Almost four in five businesses in larger financial services businesses fear disruption or displacement from more agile firms from the fintech sector. On the other hand, established SME finance businesses fear being marginalised from all sides because of their lack of scale and lack of IT capabilities or understanding.
Security, data management, compliance and productivity are just some of the areas where older or inappropriate technology is seen as a known risk. Arguably ahead of these is top-level lack of confidence surrounding technology.
Within asset finance, many smaller businesses continue to operate their loan portfolios using software developed in-house, or by using proprietary software such as Microsoft Excel and Access. In both instances, while a business may be comfortable with it, such technology often falls short of the needs of what is an increasingly digital landscape.
Jones cites the concerns expressed by many SME businesses in the run up to the Making Tax Digital’ (MTD) regime which launches on April 1st as representative of a broader challenge facing some businesses, noting;
“Many smaller asset finance businesses have neither a data/technology culture or the resources to embrace the opportunities afforded by digitisation. While it is true that many such businesses were founded on personal service, the ‘march of the millennials’ who are digital natives means that prospering in business today increasingly demands appropriate technology.”
Assessing, the reasons for not investing in new technology, Copernicus’ has established three key barriers:
- A fear of change and the accompanying disruption
- Cost concerns
- An ‘if it ain’t broke don’t fix’ it mentality
Jones concludes that these barriers, let alone the technology are the ones technology suppliers must address first if such businesses are to be helped, reflecting:“These are all deep-seated issues and point to a widescale fear of technology. As with MTD, it appears many SME companies’ digital developments are driven by a need to change, rather than desirable.
“The technology sector has a duty of care to help these companies to understand that change and cost need not be barriers and that new technology can create quick, tangible benefits. Technology companies need to be far more accessible and talk the language of the customer; it is not just businesses with old tech who must consider changing, so must the technology providers who can help them.”