Allica Bank, a UK-based SME lender, has revealed the launch of a new asset finance division to unlock up to £250,000 in finance, with an advance of up to 100% and a maximum term of seven years.
Available through the Bank’s network of brokers across the UK, the asset finance offering will provide vital access to capital for SMEs purchasing equipment in a post-pandemic market. Small and medium-sized businesses have been recognised as one of the worst-hit segments of the economy during the pandemic, and its recovery is central to the future economic health of the UK.
To find out more about the newly formed asset finance proposition, Asset Finance International sat down with Richard Cameron (pictured above), head of asset finance at Allica Bank.
Cameron explained that all brokers and partners would have access to a dedicated relationship manager and would be able to speak directly to Allica’s underwriters and operations teams. Furthermore, customers can expect a credit response within 24 hours and same-day pay-out.
He said: “The asset finance division is new, so it’s an incredibly exciting time for us. After building the foundations of the business for the last 18 months or so, I’m so pleased to be talking about customers and actually having them coming through the door. It’s been incredibly rewarding for the entire team.”
How does it differ from other asset finance offerings?
“Over the course of the asset finance market’s existence, the products have evolved to be pretty complex. It’s this inherently high level of complexity that we wanted to strip away. We’ve created a key product that is easy to understand, there’s no hidden charges and the customers will be able to know what they’ve got and what their options are.
“Also, over the last few years a lot of funders have been focused on efficiency – getting that credit decision back as quickly as possible etc. – and I think we’ve got a competitive advantage on that.
“Whilst we have only just opened for business, not having any legacy architecture has also been a real benefit.”
Fuelled by people
With 138 employees, Allica hired an additional 83 people since the start of the first lockdown in March 2020.
Cameron continued: “The bank has grown exponentially since we began. One of the most enjoyable things we’ve accomplished over the past few months has been recruiting people, many of whom had lost their previous jobs as a result of the pandemic. It was nice to be part of the growth story.
“So far, we’ve recruited three underwriters, three business development managers and three operational staff. Over the next 12 months, we’ve got a growth strategy to push this further.
“We don’t have a direct sales team at the moment. Using brokers allows us to get access to the market quickly and without fixed costs, which makes it quite straightforward. Whilst we do have plans to look at a direct proposition, brokers will always be a key part of our distribution and a priority for Allica.”
A healthy kick
Based out of two central offices in London and Milton Keynes, the asset finance team, like the rest of the market, experienced a fairly quiet start to the year. However, Cameron explained that they did have a number of applications come in, which helped to kickstart the division’s operations.“As we began building market awareness and bringing in more brokers, we saw a marked increase in the number of inquiries” he said. “This week alone, we've had five times as many inquiries which is really pushing us in a healthy way. We've been building our policies and processes for a long time now, so this push in demand is allowing us to execute on what we've been practicing.”
The announcement of the new asset finance division comes after a strong year for the Bank, which has continued to support UK businesses throughout the pandemic and is currently averaging more than £30 million per month in committed loan offers to support established SMEs.
Furthermore, Allica recently announced that it would be growing its business relationship management team by more than 50% to help service the surge in demand from brokers and their clients.
With more than 25 years of experience in the financial services industry, Cameron has held a variety of postings with some of the biggest names in finance. He started his career in 1990 with Lloyds Banking Group, where he held commercial finance roles.
Then, in 2002, Cameron moved to NatWest as an area business manager, responsible for a team of 12 senior business managers serving and supporting SME trading businesses.
After three years with NatWest, Cameron went on to spend the next 11 years with Lombard in a variety of roles including director of asset finance, head of origination UK, sales director, and head of green and wholesale finance.
Prior to joining Allica Bank in June 2019, Cameron was the head of asset finance products at the Royal Bank of Scotland. Here, he was responsible for the design and development of asset finance products and led a team that oversaw the commercial and operational performance of existing products within and outside of the UK. In addition to this, he was responsible for defining pricing frameworks and strategies as well as ensuring regulatory compliance across the product suite.
When asked what drew him to Allica Bank from such a senior position at the Royal Bank of Scotland, Cameron explained: “The chance to build an asset finance division from scratch is a once in a lifetime career opportunity! I’m a big advocate of continuously educating yourself, and from an experience point of view, I’ve learnt more in the last 18 months than if I’d worked anywhere else.”
The greatest challenges
“There were two main challenges that stood out for me. The first one was the lack of asset finance knowledge in the bank when I joined, and so educating people about the complexities of asset finance was a challenge.
“The other main challenge appeared when COVID hit the UK. It arrived at a crucial stage in our build process. We were faced with the fact that if a project runs late, it runs over budget, so maintaining momentum while working from home was a huge challenge.
“Up until now, the most complex thing I had ever built at home was a Lego kit with my 10-year-old son! So, to have released the beta version of our asset finance proposition in November on-time and under-budget was a huge achievement for our entire team.”
Backed by technology
“Everyone has become accustomed to using the best mobile banking app, or the high customer service levels of Amazon, and they will compare these services to what you’re able to offer as an asset finance provider. So, for us, we’re very keen to adopt straight-through processing, process automation, automated communications out to customers through different mediums, etc. We’ve laid the foundations to adopt these technologies because we want to be compared to some of the best-in-class tech companies.”
Cameron also detailed the assets available via Allica’s new proposition, including manufacturing equipment, production equipment, transportation, plant and machinery, materials handling equipment and agriculture.
He said: “We’re open to all viable businesses in England, Scotland and Wales across a broad range of sectors, industries and assets. We are more of a traditional asset financier at the present time, mainly offering hire purchase on hard assets because our first transactions can’t be on soft assets with the risk that if one of them goes wrong, it’s straight off our bottom line.
“If one of our brokers is met with an asset that doesn’t tick every box, we ask them to give us a call and we can assess the suitability of the asset for our funding options. Being small gives us that flexibility.”
Future opportunities and challenges
Looking to the future, Cameron suggested that Brexit can represent a significant opportunity for all asset finance providers, Allica Bank included.
He explained that a series of small operational and logistical pain points have begun to appear across the economy as a result of the recent deal. This range of irritations will pose a question to large corporates; ‘does it make more sense to move more of your global supply chain within the UK to remove those pain points?’
Cameron concluded: “I think that one of the opportunities we’ll see will come about through the re-onshoring of large manufacturer supply chains. Here in the UK, we’ve got the right skills, the right economy and the right tax environment. If these large corporates move more of their supply chain into the UK, they will need physical locations and equipment to run the plants and warehouses. Therefore, I don’t think it’s unreasonable to assume that the asset finance market would play a critical part in the provision of capital and liquidity to support that.”