In the ever-evolving world of secured lending, few voices resonate as deeply as Mike Scolaro, Group Head of Asset-Based Lending at BMO Commercial Bank. Recently featured on SFNet Presents In The Know with host Barry Bobrow, Scolaro, who has announced he will be retiring in the coming months, shared candid reflections on his career, the transformation of ABL, and what lies ahead for the industry.

For the full conversation, click here.

A Career Forged in Change

Scolaro’s journey began in 1981 at Continental Bank, where he witnessed firsthand the pitfalls of lending not grounded in cash flow or collateral. The collapse of Continental Bank in 1982 was a formative experience, steering him toward asset-based lending. “I fell into it, but developed a great passion for it,” Scolaro recalls, crediting mentors like Larry Marchello and Manny Darmanin for shaping his approach. Their lessons in balancing aggressive business development with prudent risk management became the foundation of his leadership style.

Technological Transformation and Product Evolution

Reflecting on the seismic shifts in ABL, Scolaro identifies technology as a key driver. In the 1980s, weekly reporting of receivables and inventory was a challenge; today, it’s a baseline expectation. This digital evolution has streamlined operations and enhanced transparency. Yet, perhaps the most profound change came in the early 1990s, when lenders shifted focus from rigid financial covenants to excess availability. “That was the biggest change in the history of asset-based lending,” Scolaro asserts. This borrower-friendly approach transformed ABL from holding the perception of being a last-resort solution to a mainstream corporate financing tool, unlocking strategic advantages for clients and lenders alike.

Scale and Integration: The Modern ABL Landscape

The scale of ABL has grown exponentially. Scolaro notes that billion-dollar deals, once unimaginable, are now commonplace, with nearly a hundred such transactions in the market. Retailers, once hesitant to pledge inventory, now routinely leverage ABL for financing, further expanding the industry’s reach. At BMO, Scolaro spearheaded a collaborative model, engaging the bank’s 46,000 employees as potential business development officers. This internal referral system now drives over 75% of BMO’s ABL business, fostering deep client relationships and portfolio growth.

Revenue Streams and Team Development

As ABL became embedded within banks, ancillary services like treasury and payment solutions gained prominence. Scolaro emphasizes that these offerings are now integral to transaction strategy, compensating for yield compression over the past three decades. But perhaps his greatest legacy is team development. “The biggest trick I’ve pulled off is convincing smart, young people that painting the fence is fun,” he jokes, referencing his Tom Sawyer approach. By embracing diversity of thought and empowering emerging leaders, Scolaro has cultivated a dynamic, resilient team—one that continues to drive innovation across BMO and beyond.

Looking Ahead: Predictions and AI’s Impact

Scolaro’s outlook for ABL is both pragmatic and visionary. He predicts that within five years, a major bank will acquire a private credit ABL shop, triggering a wave of consolidation and regulatory integration. Funding costs and client turnover will drive this shift, as banks seek new avenues for loan and revenue growth. On the technology front, artificial intelligence is poised to revolutionize underwriting, operations, origination, and legal processes. Scolaro cautions, however, that success will hinge on thoughtful analysis—not just data synthesis. “The smart people will be those who read, analyze, and understand how information fits into the total package,” he advises.

A Legacy of Collaboration and Excellence

As Scolaro prepares for retirement, he reflects with pride on the team he has built and the collaborative spirit that defines BMO’s ABL practice. “We were better together than we were individually,” he says. His commitment to mentorship and collective success echoes the ethos of leaders like Notre Dame’s Marcus Freeman—focusing on teamwork, hard work, and shared achievement.

In an industry marked by constant change, Scolaro’s insights offer both a roadmap and an inspiration. Asset-based lending will continue to evolve, shaped by technology, scale, and the leaders who champion its future.

This article is based on the SF Net Presents In The Know podcast featuring Mike Scolaro and Barry Bobrow, sponsored by Tiger Capital Group.