A community of brokers and lenders came together yesterday at the Home of Cricket, Lords, for the launch of FXE Technologies’ (FXET) SmartFinance Hub solution for the asset finance market. Connecting the ecosystem of brokers and funders, FXET’s SmartFinance Hub provides an intelligent, efficient and compliant proposal management solution.

Working with brokers and funders since 2021, FXET has been assessing lending proposals for prominent funders in the asset finance industry. Working closely with their white-label clients, FXET has been able to transform the efficiency and effectiveness of assessing proposals, doubling underwriting capacity, cutting the time to decisions to hours, and reducing the need for documentation by 50%.

The SmartFinance Hub is now being made available to brokers and funders to connect seamlessly. According to Katrin Herrling (pictured), CEO and Co-Founder of FXET, “the solution gives brokers a single portal to connect to funders and get instant feedback on fit of a proposal with appetite, whilst giving funders the tools to manage their broker channel efficiently, providing faster decisions and gaining comfort that compliant processes are being followed.”

Unlike decisioning platforms, SmartFinance Hub puts both brokers and underwriters at the centre of the decision-making for deals: recognising the nuanced decisions that are often required in the asset finance space, the platform creates instant visibility on ‘fit’ to brokers and funders but leaves decisions in the hands of experienced professionals.

At the centre of the platform is FXET’s triage engine that instantly assesses proposals against appetite across a funder panel. Funders can use more than 300 characteristics to pre-qualify proposals – providing brokers with an instant indication of fit.

Challenges facing the UK asset finance market

The UK asset finance market is currently facing a number of challenges including rising inflation and interest rates, in addition to increasing costs and risk from regulation and compliance, for example. A collaboration of funders, brokers and trade associations will need to tackle these issues together for the sector to continue to thrive and grow.

Technology is seen by many as an enabler for the broker-lender channel to address these issues, with the SmartFinance Hub able to deliver business efficiency and simplified compliance in a single digital platform, leading to better customer outcomes.

Address noise and inefficiency introduced by ‘first wave’ of digitalisation: The ‘first wave’ of digitalisation in the asset finance market disenfranchised brokers and funders while failing to deliver many of the benefits that digitalisation typically delivers.

Funders voice frustration with the rise of multi-propping as digital introductions have made it ‘too easy’ to send a proposal to ten funders. As a result, funders have seen an increase in poor quality proposals, and a decline in approved-to-funded ratios.

Brokers voice frustration with the need to log-into multiple funder portals that have different expectations on documentation, compliance, etc.

The SmartFinance Hub has proven to deliver ‘intelligent digitalisation’ that reduces noise by providing a single journey to deliver instant assessment outcomes across a panel of funders, creating transparency on multi-propping, and tracking/reporting on look-to-book ratios

Supporting access to funding for independent brokers: Independent, regional brokers have traditionally played an important role in connecting local businesses with funders. Today, independent brokers are finding it increasingly difficult to invest in the systems and processes that are expected by funders to evidence compliance and maintain funding lines.

SmartFinance Hub provides brokers with digital tools that allow them to not just maintain funding lines but deliver access to the best funding solutions.

Providing comfort on compliance: The sector been under scrutiny even prior to the introduction of Consumer Duty obligations earlier this year – with a focus on ensuring good outcomes for clients who are using brokers to access financing solutions.

Both the FLA and NACFB have recognised the need to tackle these obligations as a sector, e.g., through an industry-wide code of practices and audit standards. FXET believe that good practices, based on an agreed code, can be efficiently delivered by their SmartFinance platform, for example, by capturing the needs of customers or the source of an introduction for every proposal.

By building compliant processes, SmartFinance Hub can evidence for every single proposal that compliant processes have been followed. Critically, digital technology enables this process to happen without increasing administration or time wasted on paperwork.

Tech goes hand-in-hand with human interaction

Operating in the complex commercial funding ecosystem for more than eight years, FXET has always put the human interaction at the centre and seen digital technology as a supporting system that can reduce the administrative workload and address compliance challenges, freeing up humans to deal with personal interaction.

FXET’s Herrling believes that the use of a tech platform can streamline many aspects of the broker's business, allowing them to focus more on building and maintaining relationships with clients: “While technology can improve efficiency, the personal touch in client relationships remains essential for brokers. A well-designed platform should complement, not replace, the human element in the broker-client relationship.”

For technology platforms to be effective and successful in facilitating interactions between funders and brokers, FXET believes that trust as well as demonstrated value-add is central. By working collaboratively with all industry players to solve key pain points, FXET recognises that transformation can be slow moving – as change without advocacy from all involved stakeholders is likely to fail.

Compliance

Coming at digitalisation in commercial finance with a risk and compliance mindset is essential. In fact, Katrin Herrling sees digitalisation as the “only way” to sensibly address increasing oversight requirements and align with regulators’ expectations to evidence how interactions with brokers/clients are delivering against core principles like ‘suitability’ of products and ‘not causing harm.’

A principle-based approach that is codified and therefore evidences the digital engagement and records outcomes makes the traditional ‘tick-box’ exercise redundant: costly processes that capture actions by brokers (or frontline staff) are replaced by a system that automatically ensures that the customer has received the right information. Even as regulation or requirements change, rule sets can be updated at any time without necessarily incurring the retraining, processes changes, controls that are today required to ensure adherence to changed policies.

To bring this to life, in commercial lending, the capturing of customer needs and assessment of a customer’s profile against all available lending solutions allows the broker to record not just the suitable solutions that have been offered to the customer – but also record why certain solutions were not suitable – evidencing the reason or reasons why these solutions were deemed unsuitable based on a consistent set of assessment criteria.

According to Herrling, “digital triage does not just protect customers from harm but surfaces suitable solutions that a broker might not have considered.”

Benefits for brokers and funders

The SmartFinance Hub enables funders and brokers to collaborate more effectively enabling efficient, compliant processes and freeing up time to build deep client relationships.

Brokers are fully in control of progressing with any of the funders on their panel – creating a high-quality proposal and using the initial appetite assessment to have the right dialog with funders:

• Instant feedback on fit with lenders’ appetite: single point of access for brokers to screen proposals in minutes and gain instant insights into the profile of clients without a hard credit search.
• More deals in less time: digital packaging of proposals drives high quality, consistent submissions that leverage background data to substantially increases look-to-book ratios.
• Less admin and greater comfort on compliance: evidence of compliant processes and adherence of industry’s code of conduct through an audit trail of compliant processes from capture of customer needs to confirming relevant consents.

For the funder, the solution delivers effective engagement with brokers while transforming underwriting processes:

• Removing 20-30% of proposals that are outside of appetite: screening out proposals that are not in appetite before the proposals are ‘touched’ by frontline or underwriter.
• Reducing time needed to assess a proposal by 60% and transforming time-to-decision: decisions in hours as instant pre-assessment against the appetite set out by the lender.
• Reducing needs for documentation by 50%: visualisation of cash balances, cashflow, use of overdraft, rejected payments, debt profile, repayment on third party debt reduces need for documents by up to 50%.
• Driving higher conversion rates: delivering faster decisions translates into higher approved-to-funded rates.

For more information on FXE Technologies and the Smart Finance Hub, visit https://fxe-technologies.co.uk/smartfinance-hub/