Top Finance Inc. will tap into alternative data and automated processes, to fight competition from “deep-pocket” lenders with a tech upgrade of its own, President David Mandel told Auto Finance News.
In the first half of 2016, for instance, the finance company will launch a semi-automated scorecard that would integrate alternative data sources. “We are still learning how to deal with this, but a big part of it next year will be automating many of our manual processes, such as follow-up calls or manual underwriting,” he said.
Like other lenders, the Chatsworth, Calif.-based lender now gets over 90% of its business through web solutions providers like Dealertrack or RouteOne. “The downside is the lack of any loyalty or relationship with the dealer,” he said. As a result, Mandel said, dealers submit a lot of unqualified applications, and the credit union then spends resources to match a deal to those applications. Conversion rates at Top Finance have dropped to 7%, from 15% three years ago, he added.
“We are looking to fund about 250 contracts a month on average, but now instead of looking at 1,000 or 1,200 applications, we are having to look at 4,000 applications,” Mandel said. “It’s a combination of losing business to national lenders, who used to be prime, but now call themselves full-spectrum. But more so, it seems like losing business to nothing.”
