Why tech platform investment in Asset-Based Finance delivers ROI

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Asset-Based Finance (ABF) is growing fast, and so is its complexity. More borrowers, more diverse asset classes, and more regulatory scrutiny mean that managing these portfolios the traditional way simply won’t cut it anymore. Yet, some firms still hesitate to invest in the right technology.

The real question isn’t whether firms should invest in better tech - it’s whether they can afford not to. The ones that embrace innovation today will be the ones leading the ABF market tomorrow. Those that don’t? They’ll be left dealing with inefficiencies, compliance risks, and a slow erosion of investor confidence.

The Cost of Doing Nothing

It’s easy to think of technology as just another expense, but failing to modernise comes with a much higher price tag. Without the right tools, firms face unnecessary risks—miscalculations, compliance breaches, and the kind of operational bottlenecks that lead to costly errors. Managing growing portfolios with outdated spreadsheets and disconnected systems isn’t just inefficient; it’s a liability.

Data integrity issues alone can cause significant disruptions to borrowing base calculations, leading to mispriced loans or funding decisions based on outdated information. Compliance presents another major challenge. With global regulations tightening, missing a key reporting requirement or failing to track eligibility criteria in real-time could result in fines and damaged credibility. And then there’s investor confidence - if reports are delayed or inaccurate, trust erodes quickly, and once it’s gone, it’s hard to win back.

How Tech Delivers Real ROI

The right technology doesn’t just help firms avoid major setbacks; it actively improves profitability. AI-powered analytics, cloud-based platforms, and automation tools are transforming ABF, making it easier to scale without adding unnecessary costs. 

Take credit risk assessment, for example. Traditional methods rely on static borrower data, but AI can analyse thousands of data points in real-time, offering deep insights into borrower behaviour, asset performance, and potential default risks. This leads to better-informed lending decisions, better portfolio segmentation, and more accurate borrowing base calculations.

Automation is another transformative force. Instead of spending hours—or days (we have examples of weeks for large datasets!) —manually reconciling loan and collateral data, fintech platforms can handle this in minutes, drastically reducing errors and freeing up teams to focus on higher-value tasks. Compliance becomes less of a headache, too. With automated monitoring and audit-ready reporting, firms can adapt to new regulations instantly instead of rushing to meet last-minute deadlines.

Scaling Doesn't Always Mean Hiring

One of the biggest advantages of investing in ABF technology is that it allows firms to scale without dramatically increasing operational costs. Traditional lending models require more people to handle more deals, but technology changes that equation. Automated workflows make onboarding new asset types and loan structures seamless, while cloud-based solutions ensure that firms can expand without costly infrastructure upgrades.

Data-driven decision-making also becomes a competitive advantage. Instead of relying on historical trends and instinct, firms can access real-time insights that help them adjust lending strategies, optimise funding decisions, and react quickly to market changes. The result? Higher returns, lower risk, and a more resilient business model.

The Future of ABF: Tech First or Left Behind?

ABF is at a turning point. As the industry scales, firms that embrace technology will move faster. Those who resist change will find themselves struggling to keep up, dealing with inefficiencies that competitors have already solved. This isn’t just about cost-cutting or automation. The firms that act now won’t just save money; they’ll set themselves up to lead the future of ABF. 

Sophisticated LPs recognise the transformative potential of ABF technology and are leveraging it to drive strategic change at the Investment Manager level. Meanwhile, forward-thinking GPs are already embracing this innovation, positioning themselves as industry frontrunners in the next era of Alternatives Investment Management. 

By Tim Ferguson, Global Head of Sales at CARDO AI

Download your free copy of the latest Financial Technologist magazine here.