As the European securitisation market looks for its next chapter, speciality finance is fast becoming one of its most active and strategically important sectors.

At Barcelona’s Global ABS 2025, leading capital markets participants gathered to explore how non-bank lenders, institutional capital, and new structuring tools are helping fund assets that fall outside the traditional banking model, from SME loans and buy-to-let mortgages to infrastructure and esoteric portfolios.

LendInvest’s Capital Markets Director, Tammy Bromet, joined the panel to offer an originator and lender’s perspective, alongside representatives from Goldman Sachs, KKR, Legance, PwC. Here’s a deep dive into what was discussed, and what it means for the future of speciality finance in the UK and across Europe.

What is Speciality Finance – and Why Does it Matter Now?

In short, speciality finance refers to funding solutions that serve borrowers or asset types underserved by banks. That may be due to complexity, cost-to-serve, regulatory capital treatment, or underwriting inefficiencies, but the result is the same: a growing market where non-bank lenders can step in.

Tammy framed the recent success and growth of the sector as a direct outcome of the post-2008 banking reforms. As banks retrenched from certain forms of lending, such as lending to portfolio landlords, SMEs, and other ‘niche’ asset classes, space opened up for specialist lenders to offer tailored products often supported by more agile technology, data and underwriting infrastructure.

Panel consensus was clear: speciality finance is now a mainstream component of the funding ecosystem, not a niche sideline. From structured fleet leases and data centres, to warehouse inventory lending,  long-term fixed rate mortgages and renewable infrastructure, the sector spans a wide range of credit opportunities.

The Long-Term Asset Conundrum: Attractive Demand, Structural Friction

A major focus of the session was on how to fund long-duration assets, those with fixed cashflows over 10, 20 or even 30 years. These include fixed-rate residential mortgages, lifetime mortgages, infrastructure loans, and project finance.

Institutional investors, particularly insurers and pension funds, are hungry for these assets. Their long-term liability structures make them natural buyers of predictable, stable credit streams, and many are actively looking for new forms of long-dated private credit.

The problem? Originating these assets at a sufficient scale and funding them efficiently to critical mass remains a significant challenge.

Tammy addressed the issue head-on. She explained that in the UK mortgage market, while products may be structured as long-term, borrower behaviour tends to cut duration short, with most refinancing after two to five years. That creates a duration mismatch, making it harder to attract long-term capital in the absence of finding a party willing to absorb the prepayment risk.

Culturally, she added, the idea of locking in a 30-year fixed-rate mortgage is still unfamiliar for many UK borrowers, even though such products could have proven highly valuable during recent rate hikes.

Why Banks Hold Back – and How Non-Banks Step In

A recurring question from the audience: why don’t banks just do more of this lending?

The panel offered a clear answer. Funding by way of short term savings and current accounts, capital charges, risk-weighting, stress testing, and hedging costs all combine to make certain assets, particularly those with high duration sensitivity or operational complexity, unattractive for banks to hold.

Even when banks are interested in supporting the asset class, they’re increasingly likely to fund non-bank originators, rather than lend directly. It’s here that specialist lenders, including platforms like LendInvest, offer real value.

As Tammy put it, non-bank lenders are “set up to underwrite complexity at scale.” With automation, API integrations, and real-time data feeds, underwriting small or non-standard tickets becomes efficient, something most banks are simply not built to do.

This advantage extends across asset classes, from SME credit to more bespoke residential segments like shared ownership, equity release, and rent-to-own, many of which are underserved despite rising demand.

The Role of Private ABS/ABF: Flexibility and Transition

One of the most practical discussions centred around the use of private securitisation and warehouse structures.

While public securitisation remains a key objective for many originators, bringing better pricing and broader investor access, the panel stressed the importance of private ABS in supporting early-stage or specialist lenders. These structures offer more flexible documentation, investor dialogue, and deal terms, making them better suited for platforms still building scale.

Tammy noted that private ABS has been instrumental in helping LendInvest scale and diversify funding, particularly when you’re taking assets from £50m to £250m, the cusp of when public issuance becomes viable. “You need certainty of funding,” she said. “You can’t originate confidently if your capital partner disappears at the first market wobble.”

A strong private ABS partnership forms the bridge to long-term, repeat public market issuance.

Matching Supply and Demand: Insurers are ready, are we?

Perhaps the most striking insight from the panel was the degree of institutional appetite for long-dated credit — and the relative lack of origination to meet it.

One panellist described long-duration UK mortgage assets as “gold dust”, ideal for matching adjustment strategies and insurer portfolios, yet rarely available at the volumes or packaging needed for execution.

Tammy acknowledged this as a key opportunity for the sector, but one that comes with significant hurdles. To access long-term insurance capital, originators need to demonstrate scale, robust governance, and a regulatory-compliant asset pool. That creates a high bar for entry, but one worth clearing.

As the UK market evolves, there may be scope to develop new forward flow structures, insurer partnerships, or even explore models similar to Dutch NHG-wrapped bonds. But regulation needs to go further, we need continual investment in distribution, and arguably most importantly, a cultural shift away from short-dated fixes across the supply chain, if we are to see demand for such products increase.

Jurisdiction Matters: a European Patchwork

Another important point was the variability in specialty finance development across Europe.

Jurisdictions with well-established securitisation frameworks, including the UK, Netherlands, and Italy,  are seeing more non-bank activity and investor access. Elsewhere, limitations such as lending licence restrictions, fronting requirements, or a lack of structural and commercial precedents are holding markets back.

Several panellists pointed to emerging regions such as the Middle East, where securitisation is gaining traction but remains at a very early stage. Regulatory clarity and investor education will be critical if specialty finance is to scale globally.

Looking Ahead: Scale, Consolidation, and System Relevance

The final word from the panel? Expect consolidation. With more lenders entering the market, and scale increasingly required to access deep capital pools, mergers, acquisitions and  portfolio sales are likely. At the same time, regulatory focus on shadow banking and systemic risk is expected to increase, especially as non-bank lending becomes a larger part of the European credit mix.

For lenders like LendInvest, the message is clear: being technology-led, capital-markets fluent, and regulatory-ready is no longer optional, it’s the foundation for long-term growth in specialty finance.