Technological progress in financial services can be slow. When it comes to asset finance for new business, young business people’s higher expectations are keen, but the process is still complicated. What’s the simple solution?
Initiatives like Young Enterprise and Young Money are invaluable for helping to create future entrepreneurs. It seems like kids have a more fine-tuned experience of money, banking, and the role of an entrepreneur in helping the world go around. Statistics say yes. In my research around asset finance, I read that the adoption of business savings accounts was more popular (75%) among younger micro business owners (people aged 18-24). This was against company owners aged 55+ (36%).
Young people not only have respect for the importance of business savings, they’re also more likely to understand and adopt new technology and working practices. The advent and success of cloud computing has created fertile ground for business ideas. The pandemic may have stunted economic growth and hurt many organisations and their employees, but we’re starting to see its positive effects too. For instance, there’s evidence of a desire to be your own boss, choosing the work you do and where you do it. “One in 10” British employees responding to a FreeAgent survey said they will break out on their own this year. That’s a generous slice of entrepreneurial spirit right there!
The barrier to witnessing a rush of young entrepreneurs are of course the negative effects of the pandemic, as well as self belief. ClearView Research published findings mid-2021 that said: “Young people (18-30) in the EU were less likely than adults to feel they had the knowledge and skills for entrepreneurship, and 44.5% of young people in the EU viewed fear of failure as a barrier to entrepreneurship.”
There’s also the legacy complexity of business taxation, asset finance applications, GDPR and IR35, among many other complicated processes. We don’t make things easy, do we? The government is trying its best to go digital with the likes of Making Tax Digital, but its best isn’t quite good enough. It’s still complicated, and those FreeAgent survey respondents think so too: “Only 14% are confident about their understanding of the new legislation.”
What’s the simple solution to being complicated?
The solution to helping young entrepreneurs realise their dreams and ambitions is simple: make things uncomplicated. Fintech startups have made inroads into unravelling the complexity of legacy financial services, yet perhaps it’s those who made it complicated in the first place who should bear the brunt of responsibility. Fintech startups are often started by ex-bank people frustrated by having wanted to do more, and create more, and innovate more. We live in a world where many traditional FIs have fixated on solving their own problems rather than customers.
To break down the barriers to a successful future for our eager entrepreneurs, we should empower people and nurture their creative talent. The millennial generation laid the groundwork for Generation Z, which in turn is laying the groundwork for Generation Alpha. Instead of resisting change and adapting to new technologies and working practices, perhaps Generation X (and older) could be doing more to accept change. Incumbents hold the keys to “sacred” financial institutions, and guard many of its archaic practices, and remain blind to what the future looks like in banking, asset finance, mortgage provision, and so on.
This comes back to a recently published post called ’How digitally enabled asset finance providers can make the most of SME opportunities’. For asset finance providers in particular, the future looks incredible! There’s no shortage of willing and able business startups in need of capital to help them get going. That article underlined the importance of educating and providing help where help is most needed. Yet, as an asset finance provider, you need to help yourself before you can help others (the aircraft oxygen mask rule applies here). How can you provide a smooth, frictionless application process if you haven’t applied the fundamental technology to your back-end?
If we are to empower young entrepreneurs and show them how to fly, we need to be able to fly too. I like this quote from an article I read about embracing technology in finance: “Millennials like flexibility and the freedom to work when they like. The new generation wants to be empowered more than being told what to do. Salary is important to them but it is not their top priority. So I pretty much leave it to them to come up with ideas and carry out the tasks, but I will step in and take the lead when an emergency crops up to see how my experience can contribute.”
Humility over hubris wins every time.