Pandemic, inflation, rising prices, product shortages, supply chain issues and regulatory compliance — these challenges affect all industries, and automotive finance is no exception.
All successful auto finance business leaders know they must continue to grow through change and business disruption to remain competitive. Our research found that before the COVID-19 pandemic, leaders in technology adoption and innovation were growing two times faster than those with an aversion to change. That rate increased to five times faster during the pandemic.
Market leaders understand that disruption cannot limit their ability to adapt, and that technology can help transform challenges into opportunities. But where to start?
Here are the top five ways to accelerate your automotive finance business with technology to quickly adjust to change as a result of business opportunity or external factors:
1. Go digital
The first and most obvious step is to make a commitment to go digital. As we all know, digital transformation accelerated greatly in the auto finance industry over the past two years.
Many lenders that used paper and manual processes pre-pandemic were forced to go digital. And most have accepted that digitization is here to stay. While auto finance lenders possess various levels of digital maturity, we’re still seeing far too many manual processes that could benefit from automated technology. Going digital optimizes workflows, mitigates risk, saves time and money, and enhances the customer experience.
2. Stick with standards
While customized technology may have been a differentiator in the past, that legacy technology will hold you back competitively today and in the future.
Rapid changes in the industry, business models, customer behavior and technology place critical demands on data infrastructure and highly customized legacy technology. You can solve those problems by modernizing technology. Platforms are the vehicle to modernization as they are designed for standardization.
Common platforms you use regularly may include Salesforce, Amazon, Microsoft 365 and Apple. Essentially, a platform provides a set of standard infrastructure deployed in a consistent manner across all applications operating on that platform.
Think of a platform as a community of homes that all had different customized designs and build approaches to core foundational elements. And think of homes built with standardized foundational elements. Both are configured in different ways; however, the ones that are standardized are easier to maintain with the ability to swap out components and enhance much faster and easier.
Like building a house, a platform serves as a foundation that you build on. In the auto finance industry, you can build and run business applications on the platform in a smooth, secure and scalable fashion. A platform makes everything easy to use and enables customers of any size to transform operations, start businesses, expand into new markets, integrate portfolios and leverage emerging technology.
3. Adopt evergreen IT
Evergreen IT means your technology is never out of date or obsolete; it is continuously changing and evolving.
A good example is the cell phone operating system. When cell phones first came out for the mass market a couple of decades ago, you never really upgraded your phone. Phone manufacturers at the time weren’t really focused on an upgrade path.
Today, that’s a different story. Whether you use an iPhone or an Android device, you receive quick updates every few weeks.
Continual updates are something you should expect from your fintech software partner.
For example, you’ll want to ensure your auto finance software partner embraces evergreen IT, which updates your technology products frequently and seamlessly — monthly if not daily — for some functionality. Annual releases of upgrades won’t keep you on the forefront of constant change.
4. Move to the cloud and SaaS
Our next recommendation is to grow your business through technology is moving to cloud and software-as-a-service (SaaS) technology. It’s important to understand the difference; cloud and SaaS are not the same.
In a cloud-hosted model, the vendor is only responsible for building and deploying the infrastructure and technology. Then, you are responsible for maintaining the software, implementing the upgrades, testing, security, etc. The vendor builds it and then you manage the rest.
A true SaaS provider takes care of the security, redundancy, backups, disaster recovery, governance and changes.
SaaS is also is suitable for all company sizes, from small startups using spreadsheets to large national organizations moving from on-prem IT systems. Smaller companies often think they don’t have the technical expertise, staffing or revenue to benefit from the value of a SaaS cloud-based platform while larger companies wonder if SaaS can meet their needs when it comes to scalability, performance and complexity.
SaaS is perfect for all auto finance lenders, regardless of size, sales volume or digital maturity. And you only pay for what you use.
5. Harness data
The final recommendation is to harness data to guard your future. We’re more connected now than any other time in history, and this trend is expected to grow exponentially as connectivity and performance data matures and becomes more widely available.
Experts predict that by 2030, 95% of all new vehicles sold globally will be connected. Access to in-vehicle data sets the stage for additional revenue opportunities such as remote diagnostics, online service scheduling, and over-the-air (OTA) purchasing that allows software improvements to occur via the internet.
Access to real-time data with connected vehicles will also accelerate the shift to predicted financing models, such as moving away from traditional ownership to pay-for-use or shared-ownership financing models.
Ray Wizbowski is the Chief Marketing Officer for Solifi.