‘Getting the right technology’ imperative for new digitised auto finance marketplace.
The car buying process is an increasingly online process, both for traditional manufacturers and also because of new online challengers ranging from Rockar to global internet shopping giant Amazon.
Lenders shouldn’t delay because they are trying to pick a single winner in the technology platform race, according to Richard Jones, managing director of Black Horse, who was recently named chairman of the UK Finance and Leasing Association.
Instead, auto finance companies should embrace open API technologies that allow a wide range of software used by industry suppliers and their customers to integrate with their own systems to start the finance process.
Jones made the comments during a presentation to delegates at the International Auto Finance Conference in May 2017.
Jones said: “Digitisation transforms a business, it transforms the basis of competition, it changes the dynamic and the relationship with the customer. It allows innovation and it provides an explosion in the amount of data that you suddenly acquire from your customers.
“All of these things are going to change our market. The key for me is to have the right technology platforms so I can deal with every single one of those if I needed to. “Open API technologies allow you to plug-and-play any part of your sales process and fundamentally change it. When you design an online car and car finance buying journey, it’s not the same as the physical one. You have to think about it quite differently.”
This includes completing online purchasing, carrying out identity checks and verification or dealing with queries, all without ever meeting the customer. This requires systems that operate seamlessly with dealer systems and any technology a customer is using.
Jones said: “Digital will transform. It will improve everything about our models, our commercial relationships, our customer relationships; it will change the operating models of our businesses and it will change the customer experience.
“None of this is possible if you haven’t got the right technology in the first place and as lenders this is something we’ve all got to get our heads around. It will lead to a lot more collaboration between lenders and software distribution businesses.”
Auto finance industry has regulators at the door
The auto finance industry must focus on generating positive messages as it endures a flurry of negative publicity and the growing attention of regulators.
That was the message from industry leaders who recently reviewed the potential impact of an official review of the industry in the UK.
Asset Finance Policy consultancy director Julian Rose explained that concerns were focused on the fact that UK household indebtedness remains high by historical standards.
Regulators also want to know whether there is any sign of weaker underwriting standards that would cause a risk to lenders.
Industry experts responded during a panel debate at the International Auto Finance Conference, in London.
Black Horse managing director Richard Jones said the industry should respond to concerns with a strong, positive message.
He said: “The big thing that will drive their concern is ‘how responsive is the market?’. If we go to them with a sense of, here’s how we want to keep improving this market, here’s how we want to see reform, and we go to them with solutions and work with them, I think their concerns will be far lessened.”
RCI Financial Services commercial director Malcolm Banfield argued that the industry is careful to ensure that consumers are protected by offering clear advice and information about finance.
He said: “The level of information available to consumers, particularly online today through videos, means that information is communicated, I think, in a clear and unambiguous fashion.
“My personal view is that I think we can be reasonably confident, but that’s not to say that we should be complacent.”
His view was supported by David Betteley, global financial services director at Jaguar Land Rover, who said: “I think quiet diplomacy, making sure that we’ve got our house in order, would be the way to deal with this.”
Adrian Dally, head of motor finance at the Finance & Leasing Association, also called for regulators to ensure support of the auto finance market by ensuring they were ‘looking at the bigger picture’.
He said: “That is absolutely the spirit in which this review is being carried out. So yes, at a high level, do we expect the FCA to find that this is a market that works well in the interests of consumers? Yes. But are there areas the industry, as always, should be working on to keep it that way? Also, yes.”