As more banks and financial institutions move online, there may be an opportunity for small and midsized banks to offer wealth management and direct financing on a slew of lessees who are coming off of three-year terms soon, Christine Pratt, senior analyst at Aite Group, told Auto Finance News.
Leasing volume hit a high of 31.4% in the second quarter according to Experian, and Pratt believes more banks may take advantage of the existing data they have on this record number of borrowers to offer more expensive vehicles that consumers may not realize they can afford or help them keep the car they already have.
“The banks have access to the information if they want to be in that business,” she said. “They could easily mount a program — if they decided that they wanted to — to target their customers who are leasing more expensive cars. If they are two years into a three year lease, try targeting them and see if they want to either roll over the lease or maybe they’d want to be approved for a $100,000 loan for no collateral if they wanted to go out and buy another vehicle.”
Luxury vehicles are of particular importance because in 2016 these vehicles were more likely to be leased than bought, she said.
For banks that already have a wealth management division, there may be a cross sell opportunity to put the borrower in a vehicle that better matches their economic status, she added.
While it is not Ally Financial’s strategy, the company did acquire the wealth management company TradeKing Group earlier this year, said President of Auto Finance, Tim Russi. “There is obviously cross sell opportunities,” he said. “If our wealth management customers have auto financing or refinancing needs, we’d like to provide a solution.”
