Wolters Kluwer, a global company in professional information, software solutions and services, released new Q4/24 analysis from its Equipment Lease Finance Digital Transformation Index, a resource that tracks the rate at which equipment lessors and service providers are seeing growth in the evolution from paper-based finance back-office processes to digital.
According to the index, the rate of adoption for digital contracting in Q4/24 increased 6% following a decrease of 23% last quarter. The index increased 31% compared to Q4/23, and it is also important to note that the moving, four-year trend continues to show digital adoption growth at 26% dating back to Q4/20.
This trend of increasing adoption correlates to overall business investment also gaining momentum according to ELFA’s 2024 Survey of Equipment Finance Activity. New business volume rose 8.0% in the large ticket segment and 7.2% in the small ticket segment. What’s more, the foundation’s confidence index in the equipment finance market reached 67.5 in November, up from the October index of 61.8, and the highest level since August 2021.
“The recent uptick in confidence for equipment leasing and business investments is driving a sustained push toward digital transformation in back-office operations,” Eric Capehart, associate director of market strategy for Wolters Kluwer’s Digital Lending Solutions, said. “This trend reflects the industry’s recognition that modernizing contracting, documentation and workflow processes is imperative for enhancing efficiency and competitiveness in today’s market. As businesses rebound and equipment leasing surges forward, eSignatures and digital documentation are becoming the new standard, enabling faster transactions and improved access to capital.”
The digital ELF loan volume in securitization markets decreased 10% in Q4/24, yet the year-over-year adoption rate increased 25% compared with Q4/23. Over the last four years, the trend in digital adoption for securitization is up 23%, showing a continued positive adoption rate over that period.
The securitized markets and asset-backed securities (ABS) in the equipment finance industry showed mixed trends with an eye toward growth over the last twelve months. The equipment finance industry expanded to an estimated $1.34 trillion in 2023, with 82% of end-users using some form of financing for their equipment and software acquisitions.
