COVID-19 has been an enormous disruptor for people and businesses everywhere. Amidst the pandemic, auto finance companies have been under a lot of pressure on several fronts:
- Steadily increasing losses and delinquencies
- Financially stressed customers with growing requests and inquiries
- Shortcomings in current processes and third-party partners coming to light
For auto lenders, this is a time for intense evaluation of current collections practices.
The pandemic has been a stress test on collections processes and systems. It’s caused auto financers to see more clearly how lagging digital infrastructure and underdeveloped omnichannel capabilities can create roadblocks to customers’ ability to “self-cure” and get on a rapid path to resolving any payment issues.
As more and more customers need additional help through this crisis, lenders who can deploy the tools and capabilities to enable customers to resolve their own payment issues will be ahead of the game. This can significantly relieve stress on contact center teams and help infuse cost efficiency for lenders while adding convenience and a sense of control for customers.
From deferred payment plans, extended loan terms, custom payment arrangements, “self-cure” strategies and other creative options, lenders need to make impacted customers feel they are fully supported with a wide range of workable options.
Example: A married couple is late on their auto loan payments and one is now out of work due to the pandemic — lowering their total monthly income. Traditionally, the couple would need to call an agent and talk through their options. If the lender is equipped with tools to be able to offer those options online, the customer can review those and self-initiate their new program after choosing the plan that best fits their needs — all without speaking to an agent. A payment plan that allows them to keep the car, but also make lower monthly payments will keep payments coming in while fostering good will with the customer.
Here are key attributes lenders can lean into as they look to stay strong and forge a successful path forward during tough times:
- Make agility and flexibility core elements of your strategy.
Rigid, slow, inflexible aspects of operations and business models need to be re-examined. How are systems and processes holding up now, and how will they hold up to a variety of potential future scenarios? - Leaner is better.
An adaptable cost structure builds stability for downside scenarios. Fixed costs make it hard to adjust to the changing shape of demand. The more your costs adapt with the scale of your business, the better prepared you will be to withstand impacts and take advantage of opportunities. - Get closer to your customers.
Businesses that know their customers best, win. This is increasingly true when the financial situation rapidly changes for those customers. Meeting them where they are with real solutions to their real problems fosters better connections and payment outcomes.
Learn much more in Conduent’s eBook, “Recovery in Action — Collections Solutions Lenders Need Right Now.”
