Going Automatic: Exploring Technology Trends in ABL

By its very nature, technology is constantly evolving, meaning what was cutting edge last year may be commonplace today. In the asset-based lending industry, the last year has led to greater adoption of APIs and software-as-a-service solutions, but what has brought about this trend, where could the industry stand to improve and where will it go next?

In a roundtable hosted by ABF Journal, technology experts from across the ABL arena discussed the most recent trends, including real-time data sharing, artificial intelligence and software-as-a-service solutions. Below are the responses from Lendscape CEO, Kevin Day.


What have been the most important technological developments in the asset-based lending space in the last year, whether that be new product launches, greater adoption of established solutions or anything else?

Kevin Day: We see continued use of data extraction technology, such as our open accounting application, to streamline the digital experience for clients, many of which are already following the trend and are using cloud accounting packages. Many more banks are moving their lending technology to the cloud. The direction of micro-service architectures, API, cloud and “headless” architectures (MACH) will enable lenders to have more control on how they assemble solutions and more of a blend of off-the-shelf standard software vs. highly personalized user journeys.


How have newer technologies, specifically ones related to automation and cybersecurity, allowed asset-based lenders to survive and thrive through the economic turbulence of 2022?

KD: Embedded workflows and straight through processing are now key to business optimization. Highly engaging customer portals which focus on user experience encourage self-service, which in turn increases efficiency and customer satisfaction. Fraud prevention is always a consideration, even more so as we experience more economic uncertainty. Again, technology can signal where transactions appear suspect and require more manual scrutiny.



Are there certain technological tools that can help lenders and borrowers best weather the broken supply chain and increasing inflation?

KD: Borrowers need cash-flow certainty, which asset-based financing provides. However, tools can be made available to provide predictions on cash needs and smart rules can optimize the amount of cash available against assets. To take it a stage further, tools such as Lendscape can allow the funding of sales orders borrowers have received and fund inventory and purchase orders issued to suppliers.



What is one area of the ABL process ripe for technological improvement, whether that be business development, underwriting, operations, asset management or anything else? Why?

KD: An area of increasing need is to be able to fund inventory in this “just in case” world. Technology could be improved to provide lenders with more certainty that inventory is legitimate, for example, through Internet of Things (IOT), inventory data extractions, verification via smart-phone devices, etc.



How have your expectations about the future of ABL technology changed in the last year?

KD: During economic uncertainty, it is easy to hold back on technology investments, but this is a high-risk strategy in a fast-moving world where technology creates advantages but is also defensive. Having said that, we are very busy with a number of lenders around the world. In particular, we see a trend of lenders switching away from in-house systems and moving to cloud-based technology, which should provide cost savings and operational efficiency as well as compliant and secure environments. We expect to see continued activity and investment.


First appeared on: ABF Journal