Author: Kevin Phillips
Is the motor finance industry ignoring consumer demand for digital finance platform options?
In spite of the huge opportunities offered by digital finance technology, the motor finance industry is stuck in the pre-digital age. A sector that has traditionally been associated with lengthy processes and time-intensive paperwork, it’s one of the few that hasn’t been able to keep up with growing consumer demand for digital services.
According to our research however, we found consumer demand for digitisation is so high that it can no longer be ignored. The survey revealed that more than half (56 per cent) of consumers who have previously bought a car on finance would like to manage their plans online. Reasons for this include wanting more visibility of their online finances (51 per cent) and being able to pay their car off quicker (44 per cent).
Is the motor finance industry ignoring consumer demand for digital options?
Despite the demand, a separate survey of senior decision-makers within the retail motor finance industry revealed that only a quarter (25 per cent) have started to digitise finance applications originated by the customer.
Additionally, industry decision-makers are in agreement about the benefits of digitising the process, with close to three quarters (74 per cent) saying that they see increased digital engagement as being a significant factor in encouraging purchases of new vehicles at the end of the initial agreement.
However, factors cited when asked about what is causing the lack of digital progress included a lack of internal resources (48 per cent), followed closely by back office legacy technology issues (45 per cent) and the costs involved (43 per cent).
The US drive to improve online automotive finance choices
Whilst the UK automotive industry stagnates, the sector in the U.S. is powering ahead. Several digital-only players like Carvana, an online dealership disrupting the market by cutting out what they call the hassle of paperwork, have popped up in recent months. This, coupled with recent stats by Google, which show that almost three quarters (73 per cent) of car buyers are more likely to purchase finance in a dealership after getting information online, points to a change in car researching and buying behaviour towards the digital channel.
The UK motor finance industry needs to move quickly into the digital age to meet consumer demand, especially if it hopes to keep up with the growth of new, innovative competitors. There is a huge opportunity in the market for digitisation, but sadly the traditional providers risk losing out if they don’t prioritise and adopt digital quickly enough.
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