"The next 12 months should see commercial finance mature into an even more sustainable and trustworthy option for businesses looking to secure funding. "
Open Banking will take centre stage
January 2018 saw the introduction of Open Banking. An initiative designed to encourage competition in financial services. The new rules allow consumers to consent to third parties accessing their information in a secure way.
Whilst news on the Open Banking front remained slow in the first half of the year, late 2018 saw a number of high profile partnerships between traditional banks and newer lenders go public. By November, cases of businesses securing finance through Open Banking in less than two hours had hit trade press. With such a quick turnaround it’s only a matter of time before the commercial finance industry takes full advantage.
The convenience of Open Banking is sure to spread throughout the industry, encouraging further collaboration in the near future. After educating consumers in the benefits and building their trust we should see an uptake in businesses consenting to share their data. 2019 is set to be the year the industry fully embraces Open Banking.
Year of the ‘super broker’
2018 saw the emergence of the ‘super broker’. Intermediaries unhappy limiting their portfolio to one speciality. Mortgage brokers looking to add value for their client by securing working capital, asset based brokers looking to compliment their services with an unsecured product. The list is ever growing. It isn’t something we’ve only noticed at Spotcap, but it's a wider trend. A recent survey from Investec Asset Finance Group shows that 57% of asset finance brokers are aiming to expand into new sectors.
The time saved by adopting new and efficient technology, Open Banking being a perfect example, will give brokers more time to broaden their knowledge. Relationship driven brokers are keen to offer the complete package to their clients, whilst also looking to add to their potential revenue streams.
The best brokers will be those with knowledge spanning a wide range of products, whilst maintaining a high standard of service for their clients. 2019 could be the year that the specialist finance broker becomes the minority.
Partnerships will take pole position
Initially they were labelled ‘disruptors’, then came the term ‘alternative finance’ providers. As commercial finance matures so does the way in which the finance world regards the newcomers. Partnerships between traditional banks and younger lenders have cropped up throughout the last year and with good reason. With speed and convenience luring consumers towards newcomers, banks are at danger of losing custom. The banks however, have the trust of consumers that the new players can only dream about. Collaboration makes sense and 2018 saw plenty of it.
I wouldn’t be surprised to see an increasing number of service providers looking to forge partnerships. These partnerships won’t only bring together the traditional with the new, but younger companies with each other. Whether it’s a lending as a service model, or simply sharing data through Open Banking, those that champion collaboration are sure to benefit greatly. By the end of 2019, business lenders will sit alongside traditional lenders as a ‘go-to’ finance option.
If 2018 is anything to go by, the next 12 months should see commercial finance mature into an even more sustainable and trustworthy option for businesses looking to secure funding. A step in the right direction towards perfect 2020 vision in just over a year’s time.
