The leasing industry – especially in Poland – has been experiencing the most exciting period in its history. With constant, dynamic growth over the last 25 years, one can see the effectiveness of proven solutions, and thus understand the reluctance to change a well-organized and highly-functioning market. Conversely, innovative pioneers understand that proactive measures, such as investing in new technologies and employing a continuous process of optimization, will increase the chances of staying at the top of the market.
Additionally, the needs of other market participants, whether customers, agents and leasing agents, remain unfulfilled. This is an opening not only for the leasing industry, but also for partners providing insurance, after-sales and IT services.
Despite the favorable data (an average of 19% annual growth over the last quarter century) and promising trends, it is crucial to examine challenges in the IT and leasing industries that need to be overcome if such growth is to continue.
1. Competition in the IT specialists’ market affects the time and costs of implementing new IT solutions
Looking at the labor market over the last few years, one can see a continuous drain of IT resources (from analysts, programmers, testers, architects to project managers) not only by existing and emerging companies from the IT sector, but also from other sectors, particularly the financial industry. Competition between these entities influences the increase of the costs of creating and maintaining business applications.
The financial industry, including leasing, wishing to attract IT specialists to work in their structures, fights mainly with financial arguments. This raises, indirectly, the costs of at least two aspects of a budget:
- Increased budgetary requirements for IT department projects related to business applications
- Higher salaries software providers are forced to pay to their teams so that they do not move to other companies or sectors of the economy.
2. Resistance among some leasing companies to use agile project management methodologies, which affects their effectiveness and competitiveness on the market
Even if we believe that the creation and employment of IT teams will be the right direction, another challenge arises here, involving the cooperation of these teams within the organization and their collaboration with other business departments.
As technology has evolved, the methodologies for conducting IT projects have also evolved, changing the way business applications are created and developed in these projects. But SCRUM is still a method for many people who “will not work with us”.
In terms of enhancing the efficiency of running IT projects, more emphasis should be placed on increasing the competence of managing projects with agile methods by leasing company employees. Since agile methodologies have already been able to prove their value in many industries and projects, the leasing industry should adopt them to the widest extent possible. It would help to liaise with both business and software suppliers, as well as allow faster and more effective delivery of solutions to the end customer.
Summarizing the aforementioned points, and looking long-term, leasing companies should focus on their primary responsibilities while increasing their competences in project management teams. Then they will be able to transfer business solutions to fintech industry suppliers who can subsequently implement them in their organizations as well.
3. Sluggish integration of the leasing environment
The need to integrate leasing companies even further should be added to the approach described above – which was clearly emphasized during the celebration of the 25th anniversary of the Polish Leasing Association (PLA). Indeed, this is a very encouraging sign, because joint action presents opportunities to increase the competitive position of new entities appearing on the market. For now, however, these are individual initiatives and it is hoped that it will only be a matter of time until there will be more and more of them, which will significantly affect not only individual leasing companies, but the entire industry.
Otherwise, ZPL members acting alone will find it much more difficult to face new players on the market. Their advantage will be that they will enter the mature market, which, through dependence on the banking sector and strict internal regulations, will not be flexible enough to be able to adapt to the changing requirements of the modern, ever-evolving competition.
As the largest players in the GAFA technology market think about banking (Google, Amazon, Facebook, Apple) and have already begun to offer some aspects of this type of service, it is a matter of time before they see the potential of the fixed asset financing industry. Moreover, high capital intensity, which is required for financing in the leasing industry, is not likely to be a problem for them.
Elements common for the entire industry, allowing consolidation of the market and preparing it for new players, could be joint applications that meet fast technological changes and needs. A good prognosis for the future is that one of the initiatives of the digitization group operating at ZPL is to establish a common standard for sending invoices only in a structured form, which will optimize the purchasing process for leasing companies and asset providers. There are many more areas where one can achieve great benefits while working together for a common goal. Signature digital and one standard of lease payments in e-commerce – these are just examples of initiatives without which it would be difficult for leasing companies to compete with fintechs.
4. An innovative approach to new products in the IT industry
Looking at these challenges, another important task, faced by IT vendors, is providing adequate software. They should analyze their approach to these changes and, within their organizations, switch from a software provider model to a strictly service model. This will facilitate a faster response time in addressing the needs of current and future market participants.
As an organization closely related to the leasing industry, Ailleron sees that active, engaged participation in technological changes will help further develop the entire industry and raise the bar for potential new players. This is why Ailleron strives to lead the way in developing cutting-edge solutions that draw on the expertise of various sectors, utilize vast experience and translate groundbreaking visions into reality.