Simply Asset Finance chief executive officer Mike Randall and chief financial officer Stefan Wolvaardt speak to Leasing Life about setting up their business, preparation for a potential market correction, and how their blank-canvas approach to technology has allowed them to build processes around the customer journey.
Simply Asset Finance (SAF) was founded in April 2017, and received funding from Cabot Square Capital.
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After operating under an appointed representative status with White Oak UK, SAF started offering its own finance provisions at the start of 2018.
Chief executive officer Mike Randall explains that in that time: “SAF secured enough funding from the British Business Bank and others to ensure the business was adequately funded to help its customers now and in the future. In all that time we’ve had people joining the business on a monthly basis.”
In fact, SAF began with four people in a room and little over twelve months later now employs over fifty people, with office space at its Waterloo headquarters. Some of the early challenges for SAF revolved around the sheer amount of process involved in starting a new asset finance company free of any bank, and the fight for recognition.
Chief financial officer Stefan Wolvaardt says some funders do not lend to start-up businesses under two years old or have other lending criteria that have been inherited from a parent bank or funder.
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By GlobalDataSimply had both the benefit and challenge of a “blank canvas”, explains Wolvaardt. The early months of ‘plate spinning,’ in the words of Randall, appears to have paid off. The FCA application for SAF was submitted in December 2017, and was approved in mid-August this year Randall and the team coined the name Simply Asset Finance to convey the ease of communication with the customer.
Randall is able to give an overarching idea of what this customer experience entails: “We’ve done a lot of work over the years in terms of what customers expect. We’ve worked to ensure the customer gets a good experience.
“What we’re trying to couple together is the personal relationship out in the field with the customer, with the tools and the agility to actually be able to give a customer a credit decision within a couple of hours. SAF will actually be able to gather the data that we need to make that decision in a far easier way than from copying paper and asking customers to do all manner of things which can be a nightmare. With the tools we bought, that’s exactly what we’ll start achieving.”
Wolvaardt says SAF’s strategy involves focusing on its strengths and not straying off into areas where they do not have expertise.
Randall is also clear that the recent start of the business can be a strength for SAF moving forward: “Our vision was that customers are not getting the treatment that they deserve, or the experience they deserve in the industry. We have an ability because we have no legacy to build something around the customer, with today’s technology and some the best people in the industry.”
The current SAF loan book is already ‘north of £50m’, according to Randall. He also believes the company can establish a book ‘in the region of £600m-£700m’ in the next five years.
CONSISTENCY IN APPROACH
Randall and Wolvaardt also agree that there is a correction on its way and SAF are well positioned to help their customers through that part of the cycle.
As to why this correction is coming, through their time at Close Brothers both Randall and Wolvaardt have been through the boom-bust cycle and can spot the warning signs. Wolvaardt says: “What we’re seeing as well is there’s real competition on price; once again, in our opinion, we don’t think risk is being priced appropriately.”
In addition to pricing and risk, both Randall and Wolvaardt see Brexit as potentially contributing to a coming correction.
According to Randall: “We have lived in a false economy for the last 10 years because of low interest rates. It could be that the media grab hold of Brexit and scare the hell out of everyone, thinking the world is going to end so people batten down the hatches and they don’t go buying assets to help grow their businesses.
“Confidence in the market plays a large part in the SME sector and the confusion of no deal, some deal, any deal or who-knows-what deal could affect confidence. No one actually knows the impact Brexit is going to have.”
Randall expands further on the effect a correction could have on asset finance: “There are a lot of new innovative products in the market that were not there pre-2008. These products have not been tested around the full cycle yet, so it remains to be seen what the impact could be.”
The low-price and low-margin market could lead to a reduced choice for consumers. “In addition, with a price war emerging, lenders will have to manage their portfolios and fix their issues, and contemplate, in some cases, what they have done in the past. In normal circumstances, business appetite slims down in this process, which ultimately is not good for customers,” notes Randall.
If this correction is to happen, SAF believes it is well positioned to continue its work with UK SMEs. Wolvaardt explains: “We’ll be staying in the market in exactly the way we are now; we won’t be exiting.
“If you look back at some of the companies that grew significantly post-credit crunch, like the challenger banks, they had the advantage of being in the market, having appropriately priced risk and not looking to withdraw during that time. They didn’t change their products, they didn’t change how much they priced at, they just carried on doing what they were doing and because everybody else was withdrawing they grew.”
TECHNOLOGY, INTERACTION
Key to the SAF model is a combination of new technologies with the strength of highly trained expert staff who have built their worlds around long-lasting relationships with the customer.
Randall says: “We have a sales force today of around 25 people here to serve customer and brokers to get deals over the line.
“We have built our systems on today’s technology and the customer journey is the same whether they come in directly or via our broker partners.”
As for eliminating paper to speed the process, Wolvaardt goes into further detail: “Why would we want to manually go and do searches if they can be automated? We’re not talking about automating underwriting, but making sure the underwriters have all they need in front of them, so you don’t have the back and forth, to-ing and fro-ing.
All of that makes the process slower and makes the experience worse for the customer. “Open banking is going to be interesting and I don’t think anybody totally understands or is utilising that yet.
“But it’ll be the same thing, instead of asking the customer to email bank statements or send us electronic bank statements there might be a point in the future where through open banking you’ll be able to look at that directly like you do information from Companies House, Experian, cap hpi, etc. But that I think is still a couple of years away.”
ENSURING THE FUTURE
Randall is clear on the need for the industry to become more accessible, more open to a younger generation entering the field and learning of the industry’s potential.
“Most people don’t leave school or university saying: ‘I want to work in the asset finance industry.’ At SAF we’re trying to change that. We’ve brought in 10-12 sales support members who are all post-grads.
“This is a £30bn-40bn-a-year industry, and we feel there needs to be more intergenerational awareness of it.”
