Caroline Béguin: Now, let’s tackle some of the big ideas floating around about specialized finance. I will throw out some common assumptions about specialized finance, and you tell me, myth or reality?
James Powell: Okay.
Caroline Béguin: And why?
James Powell: Okay.
Caroline Béguin: First one: specialized finance is just traditional lending with a fancy name.
James Powell: Myth. Definitely a myth. The reason for that is that a lot of types of lending, let’s take just general consumer lending, personal loans, you’re not lending against an asset, or you may be, but the asset is not right at the front. Whereas specialized finance is really about lending against an asset. That’s what financing is. And that means it’s very different because the asset becomes very important, and that’s about understanding that asset in detail and then even tracking that asset, making sure that it’s not deteriorating in value. So, that makes it quite different, but fundamentally, it’s the same.
Caroline Béguin: Okay. Fintechs are disrupting the space, but banks will always dominate.
James Powell: Oh, that’s a good one. I think I’m gonna call it a myth and the reason I’m gonna call it a myth is because the banks will always play a role. In my opinion, they have some distinct advantages around scale and safety. When we give our money to people, we want it to be safe. I think I would also say the Fintechs are gonna continue to play a huge role and probably grow and will take a portion of the wallet that the banks already have. So the banks will potentially continue to dominate, but Fintechs may take a bigger portion of the wallet.
Caroline Béguin: AI and automation will make specialized finance irrelevant.
James Powell: Myth, definitely. And the reason behind my answer is, I think, as with any other business really, loan, lending or finance or banking, people will leverage AI and automation to give better customer journey, customer experience, and also to do things more efficiently. So the good lenders in this case, I think, will do that. So I don’t think it will remove the need for specialized finance. It will enhance it potentially.
Caroline Béguin: SaaS platforms can never fully replace traditional financial services in specialized finance.
James Powell: Can you guess my answer?
Caroline Béguin: Myth?
James Powell: Yeah, absolutely. You’ve heard me talk about this before, it’s a question of time for me. What we need to be thinking about is how quickly it can be adopted and how we move beyond SaaS, how we start to go beyond SaaS, because that’s the big topic for me, is how AI is changing even the need for SaaS. But I think, I personally feel the work that we’re doing right now with SaaS becomes table stakes. SaaS, cloud, AI becomes table stakes, and by that I mean, without it, you won’t survive. So I think the things that we’re doing important now around our transformation are gonna set us for the future in terms of being more agile, do things quickly with data at the heart of it, and those things are gonna become essential.
Caroline Béguin: Last one, the specialized finance is only relevant for large enterprises, not SMEs or startups.
James Powell: That’s a myth, definitely and we’ve already proved that. If you look at our customer base, we deal with large entities like tier one banks and large global manufacturer captives, where we’re working with them in multiple countries. And we also deal with small startups, where we’re helping them to grow their business because they’ve just got to the point where they need a system to manage it. And both of those have their places, they both have their niches in the market and they’re both gonna be relevant in that space for a long time to come, unless something fundamental changes that we don’t know about at this moment in time.
Caroline Béguin: Okay, so that would be a full myth.
James Powell: Myth across the board, apart from one where it was kind of in the middle.