Author: David Webber
Car finance and automotive digital financial solutions
Car finance is a sector with a great attachment to tradition – the relationship between dealers and lenders is a fundamental part of the business, and the face-to-face forecourt transaction is deep in its DNA.
But despite tradition, you’d be mistaken to think this industry is unwilling to innovate or change.
Consumers are increasingly looking to make car purchases online – or at least involve the online channel more heavily in their buying process – and this goes for the finance they need to purchase vehicles, too. And where customers go, suppliers must follow.
If the car finance market is to continue its long recent run of growth without wavering into unsustainable pricing, it will need to start taking market share away from other ways consumers have of funding vehicles – primarily unsecured personal loans.
As part of doing this, car finance must win the war when it comes to providing the most convenient, flexible and appropriate channels for customer interaction – an area where arguably, loans providers now have the high ground.
Digital strategies in the car finance sector
As a company with expertise in digital payments, we are interested in how the car finance sector is looking at interacting with its customers online. As such, we recently worked with Credit Today to host a dinner for industry leaders, to find out more about their digital strategies.
For a start, we were overwhelmed by how open senior figures were between their respective organisations. It’s clear that, with finance penetration into new car sales at an all-time high, competition among lenders is intense. But while banks and manufacturers may be neck and neck on the forecourts in the push to provide the best rates and service, they’re a close-knit community when it comes to driving innovation.
No-one was afraid to be frank in their discussion of the challenges they face, and it was clear that digital financial solutions were on everyone’s agenda. Whether they were planning an in-house solution or considering an outsourced platform, it was a need everyone recognised. Still, it is to some extent early days for car finance providers, at least compared to retail banking.
In the slow lane: The need for new digital payment systems
It was apparent from the discussion over dinner that most organisations have begun to consider the benefit of digital strategies at the point of sale and application stages of the loan process. However, it seems few have yet evolved their plans to include digital channels in the servicing part of the product lifecycle.
Another area of development we are keen to watch is packaged offers for consumers. With some indications that consumers are interested in having finance, service, insurance and other costs bundled together in one agreement – and one instalment payment – this could be fertile ground for digital payment solutions.
Whatever course that changes in this market take over the next few years, it is worth remembering – as I’ve stated – that this is an industry with strong and tested traditions.
Driving deeper digital engagement
While the digital channel could be used better by the motor industry, showrooms and dealerships are still a fundamental part of its culture. The lenders leading the pack in serving dealers and consumers are those prepared to think creatively about how to blend the best parts of the old and the new.
Car finance providers can in fact create more innovative digital engagement than even the rest of the financial services sector. Their customers would relish augmented reality help in areas such as simple servicing, smart accident recording and push notification of serving. I see lenders coming up with exciting digital propositions, which will drive deeper digital engagement.
Orginally posted at Credit Today