Does the auto finance space lag behind others in the industry when it comes to the availability of innovative mobile payment options?
Eric Leiserson, a senior research analyst at Fiserv, Inc., seems to think so.
He says the auto finance industry has been slow to recognize just how much people view their lives through four-and eight-inch screens.
“I was blown away by how little companies thought about the function of billing and payment,” Leiserson said in a session at the 2014 American Financial Service Committee’s Vehicle Finance Conference and Exposition in New Orleans this past January.
To illustrate the dependence the masses have on technology, Leiserson showed the crowd two photos – one of the crowds at the Vatican when Benedict XVI became the pope in 2005, and one when Francis become pontiff in 2013. Both photographs were taken from the same spot and by the same photographer. The difference? In 2005, one flip-phone was visible. In 2013, the entire crowd seemed to be awash in blue light from smart phones and tablets.
Leiserson said mobile payments could prove beneficial to the auto finance industry, in particular for auto loans. Some in the industry have taken the mobile leap while others are working on getting the technology in place.
Toyota Financial Services launched its mobile payment application in October 2011, but it hasn’t yet seen a tremendous rise in its use. The 900,000 payments from mobile devices last year totaling $800 million represent about 2% of the captive lender’s total payments for 2013.
“We launched it, it was sort of very small to begin with, and now what we’re seeing is sort of a steady increase as people come across the app,” said TFS President Mike Groff.
After a TFS customer registers at the company’s website, they can make payments or set up a recurring payment schedule. Customers can also see payoff and online history from their mobile device.
But Groff also said payments should only be one part of a broader mobile strategy.
“I don’t think it’s just about payments. It’s also about lease customers, for example, whose leases are maturing,” he said.
After[SP6] all, he said they either have to buy the car they’re in or they have to turn it in and get another car. I think we’re going to see more of that business moving online and moving to mobile.
TD Auto Finance hasn’t launched its mobile payment app yet. President Paul Clark told AFN that he’d like to have the mobile option app available for customers soon, but, he wants it to be done correctly. He said it’s important for the technology to create a bond between the consumer and the lender in the same way that a face-to-face interaction does.
Clark used his teenage son as an example, noting that TD Bank’s first consumer banking mobile app had failed to make a connection with the tech-savvy teen, but its second really did. He hasn’t seen that in an auto lending payment app yet.
“If you can find a way to build that, that’s a huge win. And I haven’t seen anybody come up with anything yet,” Clark said.
Clark doesn’t have a firm date for when he wants to go to market with an app, and also says that there isn’t an “urgency” to get it to market ASAP.
“Putting it in the market wouldn’t necessarily fill a massive gap in terms of expectations,” says Clark.
Leiserson, though, thinks that promoting greater use of mobile platforms could lead to higher retention and reduced costs. He also believes it’s important to communicate billing and payment strategies to consumers through modern methods such as social media.