Greatest Challenges for the Specialty Finance Industry in the Year Ahead

Early on during the COVID-19 pandemic, the Federal Reserve cut rates, Congress passed a major stimulus bill, and local and state governments enacted their own relief measures. Companies in the equipment and specialty finance industry, along with banks and other lenders, offered payment deferrals and other relief.

In the meantime, the economy ground to a halt in some areas and steamed ahead in others. Consumer demand plummeted and supply chains dried up. Now, several sectors are rebounding, but conditions continue to change and are simply not what they were pre-pandemic.

Against this backdrop, we can identify three main challenges for the finance industry in the year ahead.

1. Continued supply chain disruption. The supply chain will settle – and has begun to in many areas – but it may not fully reset itself for years to come. Demand continues to outpace supply. With semiconductors, in particular, we may be looking at a very long period of imbalance and uncertainty. And, whatever the timeframe, I suspect things won’t just fall back exactly the way they were. We will be looking at different pricing, delivery timeframes and material disruptions for a long time.
   
2. Disequilibrium in employment. Major changes in the makeup and movement of the workforce will create continued flux in the labor market. To start with, the definition of an “employer of choice” has changed, and will continue to change, substantially. Whereas salary and some relatively standard benefits stood as major incentives pre-pandemic, the year ahead will be filled with new criteria.
   
   Employees are making shifts between industries more, often lured by higher salaries as well as preferable workplace conditions. Finding skilled employees who meet specific job criteria will become even more challenging and expensive.
   
   The workplace environment will look very different. The ability to work from home has risen as a key benefit, and one that employers must pay attention to. Employers are learning that things they once thought were impossible are now routine; people are very adaptable, and remote work can be sustained. Here at Mitsubishi HC Capital America and Canada, for example, we plan to convert from work-from-home to a hybrid environment when we feel it is safe to do so. Like other companies, we’re figuring out how to enhance quality of life for all employees, how to maintain productivity and how to retain our position as an employer of choice – all while working to maintain and cultivate our unique culture.
   
   We remain cognizant about the risk that the country and world is sliding backward with new virus variants, stagnating vaccination rates and/or worsening conditions in other countries – all of which affect the worldwide employment picture.
   
3. Drive toward energy efficiency. Environmental, Social, and Governance (ESG) will move rapidly from an initiative to a mandate, regardless of the challenges listed above. Bringing the ability to convert to clean-technology equipment and operations to small and mid-sized enterprises will become critical across many industries worldwide. Finance companies like ours will need to help these businesses translate energy efficiency goals into bottom-line results, easing the fear with solid financing programs. Extending far beyond offering a good interest rate, leaders in the energy efficiency space will find that they need to listen to customers, anticipate their needs and offer fresh and original solutions quickly to help them meet their business goals.

To meet these challenges in the year ahead, it will be necessary for companies to think creatively and smartly. Mitsubishi HC Capital America and Canada is in a good place. As a modest, yet intensely innovative finance company sitting inside a vast international corporation, we have the resources we need, but work with an entrepreneurial spirit. We intend to continue leading the industry by solving complex problems with novel solutions. Our industry deserves no less.