The world of leasing and asset finance descended on the Spanish city of Barcelona in November for the 15th annual Leasing Life Conference. Experts from across the European leasing industry gave insightful talks and took part in panel discussions on the issues and trends affecting the present and future of the market. Chris Lemmon reports.
The sun-soaked city offered some welcome respite from the miserable English weather in November, and provided the perfect backdrop for the industry conference that ran throughout the day.
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Technological and digital innovation dominated conversation during the conference, with the industry on a clear path to an online-led future.
“What we’re going through is a cultural transformation, enabled by technology,” asserted Lindsay Town, chief executive at IAA-Advisory. “As opposed to a technology transformation, which needs the culture to catch up.”
This sentiment was echoed throughout the day, with speakers outlining the importance of moving processes into the digital age.
“If we don’t do it, someone will come along and usurp us,” said Ben Sher, managing director of EMEA at Cloud Lending. “Technology is the future and we need to be thinking about it now. A core requirement for businesses is the ability to react to change efficiently, and the introduction of technology will undoubtedly bring opportunities to the asset finance market.”
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Companies must manage the digitisation process with the customer in mind, however. Jochen Jehmlich, chief executive at Société Générale Equipment Finance (SGEF), stressed the importance of making investments at the right scale with customer need at the heart of each decision.
“For customers it is very important they have someone they can call and who cares for them,” he said.
“Human relations are the strongest driver in our industry. This has to be maintained. Some simpler processes can be completed by the customer, but as soon as it gets more complicated, human intervention is key. Digital is an enabler to do more business, but personal experience remains relevant to the customer.”
Being in Barcelona, it was merely a matter of time before someone used a football metaphor to describe the leasing market. When considering investments in digital channels, John Rees, co-chief commercial officer at SGEF, considered what makes Barcelona star Lionel Messi stand out from other footballers.
“He’s not the biggest and he’s not the fastest – it’s about his balance,” he noted. “And companies need to be careful of finding the right balance between their digital and physical offering.”
Drawing comparisons between a company’s investment plans and a professional footballer may seem odd – but Rees made a valid point. It is important that businesses do not get carried away with the digitisation hype, and do not lose sight of the real needs of their customers.
The Green Future
“The world is changing,” stated Olivier Ouazana, chief international officer at GreenFlex, a company committed to sustainable resources in the leasing industry.
“From governments around the world to the consumer, change is happening. Some 20 years ago there were only 80 laws across the whole world designed to fight climate change. Now there are more than 1,200.
“Consumers are more willing to buy sustainable products than they were in the past. Two years ago, for the first time, consumers ranked health above price when considering a purchase.”
In a separate talk, Carmen Ene, chief executive at 3stepIT, discussed the impact of electronic waste, which is the biggest growing type of waste globally.
“IT waste now accounts for 50 megatonnes annually in the world,” she explained. “It’s the equivalent of 5,000 Eiffel Towers per year of waste – 14.2 towers daily.”
To combat this growing issue, Ene proposed greater consideration to a circular economy.
“The circular economy offers real business,” she stated. “Economic output has reached the trillions in the circular economy space, with companies now able to recycle up to 97% of their IT equipment. Companies will also have to pay more attention to sustainability as there are a lot of regulations coming up regarding the ethics of the supply chain.
“There is a long way to go for true sustainability,” concluded Ene. “It’s not just in the environment, it’s in the business side and the social side – it’s in everything we do. Business-wide transformation is key to achieving this.”
However, Egbert De Jong, global head of asset management and advanced solutions at DLL, highlighted the youthfulness of the circular economy movement.
“Just 9% of the world is currently circular. That means that 91% of the materials that are produced, taken from the Earth and put into equipment and financed are wasted at the end of their lifecycle. This shows that despite all the good ambitions that the industry has, there is still a long way to go.”
DLL’s head of pay-per-use solutions, Europe and Asia-Pacific, Lee Thompson, added that the desire for a sustainable industry is there, but nobody is willing to pay for it yet. One solution to this, explained Thompson, is a move to pay-per-use or usage-based procurement, which he believes will be the next major shift in the leasing world.
“It’s the customer wanting to procure an asset, but only paying for when they use it,” he stated. “We are starting to see it in the car industry – with the introduction of subscription-based services.
“Customers no longer want to buy or lease a car for four years. During that period, a customer has different needs. With subscription models, the customer can have an SUV or a 4×4 one weekend, and a sports car the next.”
Thompson continued: “If customers can demonstrate that they are paying for assets on a usage basis, and using those in an optimal way, this also helps with their sustainability targets.”
New Blood
A recurring theme throughout the day’s conference was the attractiveness of the industry to young talent. Who better to help navigate the waters of digitisation than the younger generation who use technology in every aspect of their day-to-day lives?
The sustainability drive across the leasing space will encourage younger people to choose our sector as a career choice, according to Rees.
“When I was in my 20s, I am not sure sustainability was at the forefront of my decision to join the leasing industry, but it is now a really strong card to play for younger people,” he stated.
The idea that a green focus serves to attract younger employees is one that has some legs. Ouazana noted that over two-thirds of millennials now consider the corporate social responsibility policy as a key factor when considering a job opportunity.
Chris Sullivan, non-executive director at Alfa, added that the industry needs to believe in itself to help draw people to leasing rather than other opportunities.
“If we don’t think we are attractive, if we don’t think we are exciting, if we think we’re boring, what chance have we got of persuading the youngsters of today to come to our industry?” he asked. “Because we are going to need them.”
Meeting Expectations
The gaze of the industry is undoubtedly focused on the smooth transition to the digital future. With the introduction of new technologies and methods of business, it is a truly exciting time to be a part of the leasing industry.
It is now up to businesses within the industry to keep the pace with technological developments, reacting to trends accordingly and ensuring that their offerings meet the changing expectations of the customer.
Town, who deservedly picked up the Lifetime Achievement Award in Barcelona for his services to the leasing industry, said in his acceptance speech: “We as an industry are enablers, and not financiers. We work in an industry that has financed just about every capital asset on the planet, from satellites to submarines – and everything in-between. That’s a true reflection of what we are: the enabler to the world’s business.”
Town stressed the point of attracting new and diverse talent to the leasing world, and the market’s need to be more open and accessible.
He concluded: “We work in an industry that needs to start looking outwards for once, and not inwards.”
