Wolters Kluwer, a software, information and professional services provider, has released its fourth-quarter analysis from the Equipment Lease Finance Digital Transformation Index, which tracks the rate at which equipment lessors and service providers are shifting from paper-based finance to digital.
Digital contracting adoption rose 6% in Q4, following a 23% drop in Q3, according to a Jan. 28 release. The index increased 31% year over year in Q4. A broader, four-year analysis shows a sustained growth trend of 26% in digital adoption since Q4 2020.
The uptick in digital transformation aligns with a broader resurgence in business investments. Findings from the Equipment Leasing and Finance Association’s (ELFA) 2024 Survey of Equipment Finance Activity indicate an 8% rise in new business volume for large-ticket transactions and a 7.2% increase in the small-ticket segment. Plus, the ELFA’s confidence index climbed to 67.5 in November, marking its highest level since August 2021.
Securitization Market Trends
Despite the overall positive momentum, the digital adoption rate in the securitization segment of the equipment finance industry showed mixed results. While digital loan volume decreased 10% in Q4, the YoY adoption rate still rose 25% in Q4. Over the past four years, digital adoption in securitization has grown by 23%.
The equipment finance industry as a whole expanded to an estimated $1.34 trillion in 2023, with 82% of end-users leveraging some form of financing for equipment and software acquisitions. These trends suggest that while fluctuations persist, the long-term trajectory for digital transformation remains strong, the release states.
Industry experts expect further advancements in technology adoption to streamline transactions and improve access to capital in the coming years.
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