Motor Finance Technology Special Report
Questionnaire respondent Richard Carter, Director of icenet Limited for Motor Finance magazine, March 2008

At icenet we believe that, at a high level, overall systems needs have remained generally unchanged for a number of years now, though changing economic cycles and competitive pressures mean that certain requirements become more prominent.  For example all businesses have been seeking to maximise efficiency by increasing integration with business partners whether they be funders, dealers, introducers or customers and then applying balanced scorecards to provide risk based pricing and better profiling of customers.  This leads to increased emphasis on effective customer management and CRM in general and arrears management.

 In recent months, the economic climate, particularly surrounding implications in the sub-prime sector have forced risk management to the forefront of lenders’ minds, though it would be wrong to say that they weren’t important to them in the first place.

Over recent years there has been increased understanding between software companies and customers, particularly in this sector where both have a better understanding of how the other operates and how to get the most from the relationship.  As a result the number of consistent, significant misconceptions has dropped dramatically.

In common with previous years icenet continues to believe that organisations should select their software partners on the basis of the ‘whole product’, i.e. not just the software functionality, but supplier credibility and financial stability, ability to implement, ongoing support, commitment to R&D etc as a combine package where each element has an equal rating.  It is no good finding a highly functional product if it is difficult to implement and subsequently to use.

icenet broker allows brokers to accept finance applications online or though other sources, profile them automatically and submit to a panel of lenders using direct systems links.  Funder decisions and documentation is then communicated back to the broker and onwards to the introducer.

 icenet lender supports a finance lender from the point of managing introducers, accepting applications and processing through underwriting, documentation and payout.  Thereafter, the agreement is managed in the core lending system, which controls accounting, customer servicing and debt collection with full reporting services.

Very often this is due to a poorly defined definition of the project.  Typically this comes from customer believing that the system will support various functions as they consider them to be ‘standard’ for the industry when in fact they are broadly standard, but partially specific to that customer.  Similarly, the software company often doesn’t probe enough into the customer’s business and hence understand the complexities before they become an issue.

 A further complexity with implementations is the requirement to covert data from the legacy system to the new one.  Typically one of the drivers for a new system will be a requirement to support new financial products that the legacy system is unable to support effectively.  In practice this problem only comes to light after the broker or lender has tried to “shoehorn” the product into the legacy system which then makes the data conversion more complex.

 icenet’s R&D investment continues to focus on achieving rapid delivery of functionality, part of which has been to remove the technical infrastructure element from the customer’s critical path through the provision of a fully hosted system.  This allows icenet to deliver a fully working system within 4 weeks of contract, enabling the customer to achieve a rapid return on investment in both monetary and performance terms.

icenet’s customer base in this sector is broadly split 65% broker, 20% motor lender and 15% retail lender.

icenet is based in the UK, though supports portfolios managed in 11 European countries.

No new countries were added during 2007   

Number of UK staff and international staff (if applicable) 

icenet currently employs 20 staff in the UK, though utilises a series of third party development services companies to assist in larger scale development.  This approach allows the business to retain a sound financial platform from which to support the customer base whilst also providing scaleability where required.

icenet has recently recruited a team of resources from a number of different businesses which share the icenet’s business ethos and plans for changing the motor finance software market.  Where additional staff are required, then in common with other vendors, icenet tends to recruit direct from university or searches for staff who have appropriate skills, though perhaps from a different industry.

 Critical to icenet’s success is keeping staff numbers small which ensures all staff are fully involved in the business and hence staff attrition is low.  icenet’s business model is such that its future growth and profitability is not predicated on a significant increase in staff numbers. 

Good staff are very difficult to find and hence significant emphasis has to be placed on training and supervision.

This forms part of the R&D budget which amounts to 25% of icenet’s turnover

£1,950,000 with £140k profit.

Over 50 fully supported users

Without a doubt, 2008 will be a defining year for the markets icenet serves.  The lack of liquidity will impact on broker’s and lender’s own businesses and hence will affect their ability and desire to engage in discretionary projects.  Additionally, there are likely to be some instances where consolidation is forced through business failures which in turn affect revenues for systems suppliers.  icenet’s business model is based on recurring revenues, so although we may experience a drop in revenues, we anticipate this to be measured rather than a dramatic fall-off.

 On the plus side, certain businesses will need to enhance their systems to accommodate improved risk management and this will involve incremental spending.  Additionally, there when one finance company closes or slows down, there is often a broker created from a disaffected sales team, so in that respect a new customer opportunity opens up.

As indicated above, 2008 will be a defining year in our markets and our challenge will how to best take advantage of the shifts and developments.

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