Capital from investors is flowing towards tech startups looking to automate the origination process, putting traditional direct lenders in a “wait and see moment” for the industry, said Gerry Quinn, vice president of business development and business strategy at CarFinance.com.
Before direct lenders can attract more investment, they’re going to have to prove themselves in the digital space, Quinn said at the AFS 2016.
Joe Pendergast, assistant vice president of consumer lending at Navy Federal Credit Union, echoed that sentiment, and said most of the money right now is going to startups.
“I think it’s probably smart for any bank, financial institution or credit union to consider maybe an acqui-hire, or buying out a fintech so you can access their skills,” Pendergast said.
Appealing to millennials with new digital offering and building relationships with dealers to limit flipping, remain challenges in the direct lending space, Quinn and the other panelists agreed.
CarFinance, specifically, plans to address the dealer issue by leveraging the relationships it has with 10,500 franchise dealers under the Flagship Credit Acceptance brand, its indirect unit, Quinn said. By yearend, the company hopes its
efforts will reduce consumers flipped at the dealership.
