Legacy systems remain a significant roadblock to technology innovations in the auto finance industry as consumers demand more digital capabilities.
“The consumer views [car buying] as a transaction, and they always view it end-to-end. In order to fulfill that, it’s a multiparty system; it’s not a closed ecosystem,” John Castle, vice president of consumer finance at Vroom, said during the Auto Finance Innovation Summit today.
“The more [the industry thinks] of car-buying as a singular process, end-to-end with the consumer in mind, that’s where we can really start to accelerate the adoptions,” Castle noted.
Even Vroom, whose e-commerce platform was built for seamless digital retailing, often must overcome the challenges of working with partners that use older systems, Castle said.
“There are certainly legacy technology issues between different parties,” Castle noted. “We’re lucky from the standpoint that we started off with a clean slate, but we’re working with large-scale partners that aren’t necessarily working with a clean slate of technology.”
Toyota Financial Services, for one, opted to build a new platform when the company launched the private label Mazda Financial Services in April 2020, said Kathie Holt, business information officer for lending, insurance and banking products at the captive.
“When we were looking at onboarding a new private brand, we realized it would be better to implement a new platform than to try to modify some of the legacies that plagued the industry at the beginning,” Holt said, noting that the platform had to be modern, cloud-based and API-enabled.
Chase Auto, too, has built a digital-first financing platform with electric vehicle manufacturer Rivian Financial Services, said Jagdeep Dayal, head of the lender’s captive finance business. “That whole experience is predominantly digital, from the entire car buying experience, to the financing, to the signing of documents,” Dayal said, noting that the pandemic has accelerated the digitization of buying and financing a car.
That sentiment was echoed in an Auto Finance News survey of conference attendees ahead of the summit. Participants cited “improving existing technologies” as an urgent need. Some auto lenders, for example, are working with core banking systems that need to be upgraded in order to provide the end-to-end digital experience that consumers expect.