The Asset Finance area is one that has seen significant growth over the past 5 years. With more and more flexible financial solution being provided by alternative lenders are we seeing a shift in the tide from the pillar banks?
The SME Lending sector is certainly booming and has been year on year since 2014. According to the Central Bank’s latest report on SME Lending, annual lending in Q1 2018 totalled €3.7 billion. As of Q1 2018, new lending is 2.7% higher than Q1 2017 and 31% higher than Q1 2016.
Looking a little further back this sector has risen from €2.4 billion to €3.7 billion from March 2011 – March 2018 a massive 54% increase in lending. While the sector as a whole has grown so has the choice for the consumer and options available to them with more and more SMEs choosing to go with alternative lenders instead of the traditional pillar banks.
Proof that asset-based finance is now a truly mainstream funding product and a vital source of funding for Irish companies can be seen from the Asset Based Finance Association (ABFA), the body representing the invoice finance industry in the UK and Ireland.
According to ABFA’s statistical report, between March 2015 – and June 2018 the amount of invoice finance advances against debt for example has risen by 17.8%, a significant increase in this period of time.
The ABFA states that as banks continue to be constrained in their traditional lending to SMEs, smaller businesses are increasingly seeing asset-based finance as a suitable way to unlock the value of a range of business assets to enable growth investment and free up working capital. As a sector, more and more alternative lenders have entered the market over the past 5 years with some exceptional success stories.
Companies such as Capital Flow have risen from start-up to over 70 staff-strong and have gained a significant stake hold of the market in this short space of time. Finance Ireland, Bibby Financial and First Citizen have also seen significant headcount growth in this time period also.
With these alternative lenders, to name but a few, such as Microfinance Ireland, available to SMEs, the credit situation is certainly brighter than it was in 2008 – but Ireland still has got a long way to match the UK, where small firms have between 50 and 60 lenders competing for their business.
The product suite also offered by alternative lenders and the flexibility of these products has seen an increase in market share from the banks. Products ranging from Invoice Finance, CRE Lending, SME Lending and Auto Finance among others have provided a one-stop shop for the SME customer.
From a recruitment point of view, what I am seeing is a growth in candidate requirements for this sector across the key regions of Dublin, Cork & Galway, with further growth expected in the south-east regions and midlands.
What we are also seeing is that candidates are now more receptive to making the jump and seeking a change from the pillar banks as many have gotten impatient at work restrictions and slow turnaround times and the “one box fits all” method of lending approval for SME customers, all of which has provided a frustration for candidates working for the pillar banks in this area.
With growth trends predicted to continue, it is certainly an exciting time for the Asset Finance area in Ireland and particularly the alternative lenders that operate within it.
Keith Walsh is an Associate Director in the Banking & Finance Division at Executive Connections. To discuss roles in these sectors, contact him on 01 703 88 22 or firstname.lastname@example.org