Transform Digitally In The Evolving Auto Financing Landscape

The global trend of Industry 4.0 has motivated many organizations to transform and adopt a more agile and innovative way to run their businesses. As the industry evolves, many opportunities are made available to the market with the new emerging business models to meet consumers’ needs today.The automotive industry sees a fair share of digital disruption; Mobility-as-a-service (MaaS) has become the automotive industry’s future, giving consumers an alternative beyond car ownership’s economic setbacks. Peer-to-peer car-sharing and vehicle subscription models are mushrooming, providing consumers with an array of choices on how to get around. The commonality of ride-hailing Uber and Grab have even made it a verb (e.g., “let’s Grab to the restaurant”). Today, MaaS enabled by digital channels allows consumers to plan, book, use, and pay for only what they need, when they need it. As the Millennial group becoming the upcoming market, the market’s demand shifted to a more flexible and fast-to-market purchasing trend.
The disruptive megatrends that are driving digital transformation in Automotive Financing
The disruptive megatrends that are driving digital transformation in Automotive Financing

True Digital Transformation In Automotive Financing

Most potential customers have already started researching their shopping process online to select cars and auto financing options before ever visiting a dealership. As a result, automotive lenders and dealers who do not have an effective digital strategy will be left behind the curve. Particularly in the current COVID-19 pandemic may prove to be the make-or-break time for true digitization in financing.

True Digital Transformation In Automotive Financing

Thus, lenders and dealers will need to rethink their business models and engagements with the different stakeholders or personas of the ecosystem, with digital technologies underpinned by data analytics, focusing on the few key areas below which will bring their business to new gameplay:

Dealers –

For customers, dealer efficiency is of core importance as the largest contributing factor to a higher Customer Satisfaction Index (CSI) score. As consumers sway towards more flexible mobility options, dealers are hard-pressed to meet those demands and provide hassle-free experiences to remain competitive. Dealer groups and large individual dealerships should consider building their own digital direct-to-consumer sales channels and team up with aggregator platforms to get them more qualified leads – 24/7 fast, convenient, and efficient online shopping solutions.

The automation on customer services with AI and NLP, for instance, Chatbots, RoboAdvisor, can recommend financing plans and car models automatically and proactively based on customer behavior and profiling. Infusing with AI and automation, the capabilities of Optical Character Recognition (OCR) to automate data entry and real-time submission, dealers will be equipped with mobility to reach out to new markets easily. Reduce paperwork but spending more time with customers.

Customers –

Elevate your customer journey by providing a single digital channel to enable them to prequalify and personalize their auto financing in minutes on various financing or subscriptions plan, car selections with even the Virtual Reality (VR), or simulations of car models plan. Business owners shall create a more interactive engagement with your customers to allow them to apply via a self-service, multichannel approach that links the manufacturer, dealer, and bank/lender together with fast pre-qualification and credit decisions.

Lenders –

Acquiring a digital loan origination management system allows a more direct digital capture of applicant information. It ensures flexibility to support the changing processes and different products, providing a smoother digital onboarding and lending experience.

Vehicle and Fleet Operators –

The new technologies from the 4th industrial revolution, e.g., AI and IoT, have provided sophisticated features and improved driver functionalities, giving great business opportunities and changing customer behaviors. Harnessing the Telematics technologies enables better management and administration to both users and companies, especially for the Subscription-based plan. Armed with telematics data, the service provider can easily manage all their fleet management with a comprehensive dashboard, such as automating insurance and driving license renewal, routine maintenance, and monitoring driving behaviors. Insurers can even improve their risk-based pricing based on drivers’ true risk profile and create reward-based programs based on driving behaviors using telematics data.

Strategic Business & Management –

Actionable insights are essential for a business owner. Obtain total visibility of your business performance with an AI-enabled performance dashboard, together with predictive and prescriptive analytics, will boost your abilities to plan and strategize your business towards your targeted KPI goals set.

Creating Value From Data With AI

Business owners and lenders who reimagine the customer journey through advanced analytics and digital platforms to connect with customers can be powerful combinations.

Banks and lenders can more effectively leverage their assets to increase profits with the help of AI in extending credit to more worthy borrowers. Besides, enabling the pre-approval and even instant approval to reduce the turnaround time, resulting in a faster decision-making process. The use of AI in the credit scoring and loan origination system reduces the likelihood of human error in processing a loan application or overlooking critical factors in whether a borrower will default on a loan. Indication of a customer that may be close to or completely defaulting on the debt can be hinted at with the adoption of AI in the loan management system. The ability to reduce those risks and result in more efficient transactions with the rise of AI has enabled the lenders to create value in the financing process.

For business owners and banks who also have more data and a better view of customers who have used other products, they have a better avenue to develop a deeper understanding of their customers. With sufficient analytic capabilities, they can analyze patterns to identify follow-on and cross-selling opportunities at the right place with the right offer to increase their new business volume and improve efficiencies. This data might also allow banks and lenders to offer more customized pricing on the loans.

Besides, setting up automotive platforms or marketplaces through API integrations connects customers with different services providers, such as auto accessories dealers, car servicing agents, insurance agents, and many more, in one platform by providing visibility into financing offers from competitors and further enhance the customer journey.

A New Position In The New World of Auto Finance

Digital and analytics interventions can drive new business growth and improve efficiencies at every stage of the process. Whether it is focused on loans, car leasing, fleet management, floor stocking financing, rental subscription, or used cars, we’re likely to see digital innovations proliferating throughout the auto finance ecosystem. Schedule a chat with us today to discover more.

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