Today’s auto finance environment requires executives to have a far greater breadth of economic, regulatory and technology knowledge and experience than ever before.
Total new-vehicle sales have slowed, yet used-vehicle sales remain healthy. Auto loan debt continues to climb, yet serious delinquency rates haven’t deviated from the norm. Trends like ridesharing, millennials becoming the largest U.S. age group, and economic uncertainty all affect today’s lending practices.
New financing technologies are transforming the industry. Auto finance skills that drove success five years ago don’t guarantee success today. There’s increased need for accelerated decisioning, even as the decisions get more complex. Auto execs must evaluate strategy while continuously assessing risk. What does it take to maximize current and future market opportunities? Based on our years of experience in the lending industry, we consider the following four characteristics essential for a successful auto finance executive.
1. Steeped in the industry
No one knows the industry as well as someone who grew up in the industry. That means hands-on, evolving responsibilities over the course of two or more decades, through multiple industry cycles and evergrowing regulations, contending with challenges, recovering from losses and maximizing opportunities. The best execs demonstrate maturity in pragmatically anticipating and responding to industry dynamics.
2. Understands every step of the lending cycle
The best execs understand the need for relentless and continuous improvement at every step of the lending cycle. They know that efficiency is the product of many factors, and they focus on those that can be modified or adjusted to continually improve productivity and profit. Whether it’s the loan-submission process, underwriter competence, credit policies, regulatory impact, workflows, funding, servicing, collections or recovery, astute executives know where and how cost-effective changes can be introduced.
3. Tech savvy, with an appetite for innovation
Tech-savvy executives understand the economic and operational value of technologies and aggressively adopt them. They consider fintech innovations such as the cloud, machine learning for fraud detection and risk management, automated calls to cloud-based services that offer a more detailed and accurate profile of applicants’ financial strength, and analytics to provide detailed insight into lending efficiency and portfolio profitability to improve decision quality, consistency and speed.
4. Focused on the bottom line
Today’s skilled auto finance executives know that every decision — whether strategic, tactical, technological or policy-related — has an inherent economic factor. Will those decisions improve the lender’s ability to successfully address current market needs and prepare for inevitable industry changes? How do you stack up compared to top auto execs? And how well are you positioned for the future?
With more than 20 years’ experience in the auto finance industry, Lana Johnson leads the charge to drive innovation as chief client officer at defi SOLUTIONS. defi SOLUTIONS is the Technology Partner of Auto Finance Excellence (AutoFinanceExcellence.org), a sister service of Auto Finance News.