The Great Equalizer
Technological advances have spurred demand from customers for a faster and easier experience, said Doug Nottage, chief technology officer at CarFinance.
“The automotive finance industry is in a ‘space race,’” Nottage said. “Those [lenders] delivering a great customer experience can tilt the market in their favor significantly.”
To that end, lenders are seeking fresh alliances. “Organizations are scrambling to make sure they are partnering with the most likely winners to retain their market position,” Nottage said, noting that fintech partnerships have the ability to pull a lot of weight.
Volvo Financial, for one, is eyeing consumers’ fancy for online retail. “What we are seeing is that consumer expectation is being built by interactions with e-commerce with mobility applications,” Atchley said.
Yet, the sheer number of tech companies in the marketplace can have lenders feeling overwhelmed, struggling to adopt startups’ technology to their legacy systems or even choose the right company to partner with, said Craig Lamp, president of Citizens Auto Finance. “Part of the problem is we don’t know how many tech companies are [capable of being part of auto finance],” he said.
However, technology — such as artificial intelligence and blockchain — are “productagnostic,” Lamp said, which bodes well for the auto finance industry. “A lot of these [fintechs] will end up consolidating into larger efforts,” due to the fact that small startups have difficulty scaling.
CarFinance’s Nottage believes that established organizations are always looking for new ideas that offer better strategies. “The acquirer or investor wants the ideas [of startups] to become part of their products and operations, and also prevent other companies from acquiring the technology,” Nottage said. “As one great idea gets acquired, the demand to grab up startups with similar ideas escalates.”
But, deciphering technologies to reach certain goals is only one challenge lenders face. Incorporating that technology is paramount.
“Technology is not the end-all, be-all,” Western Funding’s Murray said. “It’s the enabler.”
