Invisible assets – Managing the rise of servitization in asset finance

The asset finance industry is changing as customers look to fund ‘invisible assets’ that fall outside traditional product boundaries.

Historically, the industry used the mantra ‘you can only finance it if it has wheels on the corner’ to identify assets that could be financed, but this is no longer the case.

A growing interest in servitization means companies are looking to fund access to products and services rather than owning assets themselves.

John Rees, Managing Director of Societe Generale Equipment Finance, said: “Start to think about the essential use of some of the assets. I would position to a risk committee that there is more value in a software licence than there is in a vehicle.

“Imagine if you went to your office tomorrow and your software didn’t start on your computer because your company hadn’t paid its subscription fee. But also imagine the complexity of finding the right product to go with the right asset.”

Solutions could include subscriptions, ‘as-a-service’ products and pay-per-use agreements.

Rees added: “The more you go into ‘as-a-service’, the more you have to understand the asset is flexible; changes within your business and support functions have to go with that.”

There are more insights into the development of the impact of servitization in this exclusive video.

Brendan Gleeson, Global CEO of White Clarke Group, commented: “The traditional view of financeable assets is changing as customers increasingly look to pay for services and solutions instead of owning assets in the traditional way.

“In some cases, there is no physical asset at all. Asset finance companies need to ensure they can adapt, with flexible teams and technology that enable new services to be developed and launched to meet changing customer needs.”

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