Where next for asset finance? Between a global pandemic, economic crises and the onward march of artificial intelligence, recent years have highlighted the pointlessness of prognosticating. It makes life tricky for firms who need to plan for the future now – and rely on ready access to asset financing to help them do so.

Asset finance experts Alfa believe they have the answer in the latest version of their industry-leading software, Alfa Systems 6. Alfa Head of Product Emily Hammond discusses the philosophy behind the latest rollout, how it can help a broad range of industries and how to unlock the future of asset financing.

Let’s begin with an overview of how Alfa Systems 6 works. What was the idea behind it, and how does it depart from previous versions of the software?

I’ve been at Alfa for 18 months now as Head of Product. I spent quite a lot of time talking to lots of different clients and really trying to understand what Alfa meant to them, their biggest pain points and crucially what we can do to be fit for the future. We’re not just looking at where we need to be as a software platform for the end of this year, but all the way to 2030. When we went from version four to version five, it was basically a new version of software; people are still upgrading now. This is much more incremental, with agile development in mind. We release things in two-week sprints and they’re available for clients every four weeks. We want to be solid, dependable and at the heart of businesses. We constantly asked ourselves what we needed to do to fulfil those criteria.

Tell me about the main pain points you came across when talking to asset financers, and how the new system addresses them.

From the business strategy side, there are all sorts of new things firms feel they’re supposed to be doing. New business models, for example, like subscription – everyone’s talking about, but some try it and find out that doesn’t necessarily work for them. Regulatory shifts are another consideration. The DORA [Digital Operation Resilience Act], for instance – if you’re using a platform like Alfa Systems, then it has to go through more privacy, security and robustness requirements. In the US, there are new capital requirements coming in for very large banks, so they’re having to make sure they can put more capital aside while making the same amount of money. And all firms want to reduce their operating costs, but they also want to continually boost their system performance – asset finance needs to be robust and available 24/7, because – especially in the US market – there are lots of dealers and they want a price in a matter of seconds. It also boils down to flexibility: being able to add additional products and knowing that your platform can do that.

Alfa Systems 6 is based on a “pillar” approach, structured around six distinctive releases. Could you talk me through this?

It’s a way of categorising the requirements of clients and the type of system they’d really want to have. First is efficiency – that’s what they really care about. They want to have very efficient processes all the way through. For example, low-code: every person in the workflow can create their own screen, so each group has the information they need to make their processes a lot quicker. And then there’s things like having proper case management dashboards as well, so caseworkers know what their priorities are throughout the day; these can be adjusted automatically or manually. Then is total capability. This sets us aside from other companies in the space. A lot of smaller players who might just do loans or might just do originations. But we try and do everything in an end-to-end process. So you’ll have a configuration out of the box, but adding and changing is easy – you might be doing loans now but want to move into leases, and version six offers that capability.  

What about the four remaining releases still to come?

Next up is sustainability. It’s a big theme at the conferences, but it’s difficult to tell whether it’s something that people are actually doing or whether it’s something for the future. So what we’re trying to do here is create a framework. What do we need to have that allows them to do Scope 3 reporting and understand the full asset lifecycle? The software needs to answer these kinds of questions. Fourth, scalability. Our clients are getting bigger and bigger. They need to be able to put enough contracts on the platform at once as necessary. We’re implementing the kind of architecture that ensures the system can cope.  Another pillar is our collaborative ecosystem. We can’t keep up with every tiny software development or beat the market leaders in things like intelligent document processing. But we don’t need to do that; we just need to integrate with someone who can. Making that integration as easy as possible is fundamental in the new software. Finally, intelligent automation. Research from our in-house AI group, Alfa iQ, is being integrated into the software to automate workflows with business rules, giving product owners another set of tools at their disposal – and that’s driven by the clients themselves.

Could you give case studies of clients and sectors that will benefit from the kind of novel asset financing solutions you’re talking about?

Automotive is a good example. It takes place on a massive scale, with millions of transactions coming through in short spaces of time. We’re launching a 24/7 module, which stops downtime – really useful when you’ve got that many contracts to deal with. Plus, for firms with service centres in other parts of the world, they can continue running that service centre while linking through to their own direct sales and lending, making scaling much easier. Other, more technical aspects deal with how data is transferred. Bulk processing and the user interface around it is something else we’ve fine-tuned; at the moment if you have 100,000 lines of invoices on a screen, it’s going to crash. So we’re implementing pre-built default filters so that when users come to that screen they only see the thing that they actually want to see. These are pain points that auto clients really care about.

What are some of the other opportunities available to users of next-generation asset finance softwares?

One would have to be around sustainable business models. Everyone is focussed on their Scope 3 emissions. People used to just get their energy straight from a supplier – but for an industry wanting to switch to clean tech, that doesn’t work anymore. They have to lease the infrastructure – for example solar panels and clean engines that you might have in a factory. New markets and new business models are opening up from leasing of these new assets. So we’re focussing on the “as-a-service” type business model, where you get everything included in one item and you’re not having to worry about it too much. But they need to be linked up with the attendant consumables – to maintain your assets you might need to add on the end the cost of the energy, for example. Moving to these kinds of subscription arrangements can boost efficiency, but businesses need the operation processes and the technology systems to be able to move forward. We can pull together organisations who are offering the right kind of technology and put it in one place so our users feel reassured.

What about the challenges that asset financers will have to content with? Can Alfa Systems 6 help futureproof them?

Reducing operating costs is always important. But the thing that everyone is talking about is AI. When you dig in, though, people are really struggling to find use cases with a good business model. I think it’s coming, which is why we’re looking to set the framework now then build upon it over the next few years. One way we’re thinking of this is in terms of enabling automation to make processes more efficient. For example, we’re introducing digital twins to Alfa Systems 6 by the end of the year;  these won’t necessarily use AI to make business’s decisions for them, but it will give them new intelligence to help inform strategies. That relates back to our sixth pillar, and there will be much more information on it towards the end of the year – rolled out gradually thanks to Alfa Systems 6’s agile setup.  

Lastly, I wanted to look at implementation of Alfa Systems 6 itself. What is your advice for customers who are yet to make the transition to Alfa as an asset finance software provider, or to those who are already using it but aren’t sure how to upgrade?

For prospects who are looking at Alfa Systems 6, we have various different approaches. One is our Alfa Start product. It’s mostly out of the box, something that you can just plug in. If you’re worried about the cost of a full implementation, then we have a ready-to-go product. The other thing I’d recommend is talking to us. We’re always very clear about what the costs are, what the benefits are and what you need to do before you actually commit to anything. For our existing customers, they get the big releases and functionality that enables incremental updating as well. We’re investing in the product all the time to bring forward things that we hope customers new and old will love.

Click here to learn more about Alfa Systems 6.