The specialist lending sphere needs to stay true to the consumer need from which it was born and continue to do things differently
Taking some time to reflect recently, I could not help but feel the financial services sector (and society in general) has been playing it a bit safe of late and been too willing to take the easy option. I am not talking about attitudes to credit and risk but to innovation, entrepreneurship and M&A.
When I was growing up, the dot.com boom was in full swing. As someone fascinated by the world of business, I found it a heady time where those taking calculated risks seemed to be rewarded handsomely. There were some high-profile casualties when the new millennium arrived but we were also left with some of our biggest and boldest global companies, such as eBay, Amazon and Google.
Let us also not forget that 2015 is the year when Marty McFly travels forward in time in Back To The Future II.
As far as I am aware, we do not yet have flying cars, automatic shoelaces or Jaws 19. There are certain advances that have made life easier but it still feels like technology is not being fully embraced in the workplace and doing what it should be. When the most lauded of our achievements seems to be the ability to communicate in 140 characters, I cannot help but feel that an opportunity has been missed.
I do not completely exclude myself in terms of sometimes playing it safe but I think we have been bolder than most. When we acquired West One Loans last summer, eyebrows were raised in some quarters because a distributor buying a lender was an unusual move.
Fast-forward 12 months and those concerns have been allayed. Interestingly, a number of similar transactions have occurred recently but without the controversy that surrounded our acquisition.
Elsewhere in financial services, it feels like the only people not scared to think big are those backing the challenger banks. Aldermore and Metro Bank have come on in leaps and bounds since they launched and the latest raft of upstarts, including Atom Bank and Starling, seem determined to challenge the status quo. Such disruptive models refuse to accept that things need to be done as they always have been.
The specialist lending sphere needs to stay true to the consumer need from which it was born and continue to do things differently. It was understandable that organisations wanted to batten down the hatches during the financial crash and in the uncertain climate immediately afterwards but the economic outlook now is so much healthier that there is more room for dreaming big again.
The short-term finance sector has an opportunity to capitalise on at the moment given that bridging loans have been making global headlines. The handout to Greece from an EU-wide fund was widely described as a ‘bridging loan’ and, while the Greek powers-that-be may not be buying or developing property, the basic concept is the same: a temporary cashflow problem that requires an instant injection of funds.
There still seems to be a lack of understanding about exactly what bridging finance is and when it can be of use. All of us in the sector need to continue educating the swathes of brokers that have never processed a bridging loan or even thought about when it might be the most useful solution.
As the second charge market heads towards a new regulatory regime in the spring, large parts of the specialist lending sector are preoccupied with ensuring their house is in order ready for the changes. Many bridging lenders have already chosen to voluntarily seek approval for parts or all of their businesses. The changes are another juncture for short-term finance providers to take stock and evaluate how to be the best organisations possible.
We have weathered the economic storm and come out the other side with profitable, sustainable businesses. Now is the time to start thinking outside the box to be truly innovative and a bit bolder as an industry than we might have been in the past few years. It is time to think big.