Lenders Going Mobile

One of my favorite parables involves a man who was sitting in his house one day, listening to the radio. An announcer interrupted the broadcast to let people know that a big storm was coming, and everyone should head to higher ground and find shelter. The man scoffed at the report, saying, “I’m a good man. I pray. I go to church. God will take care of me.”

The storm came upon him, and water started to flood his house. A man in a rowboat came by, offering to take the man to safety. Again, the man opted to stay in his house, saying, “I’m a good man. I pray. I go to church. God will take care of me.”

The water continued to rise until the man was forced onto his roof. A helicopter approached and hovered over his house. The pilot called down to the man, saying he would throw him a rope. The man said no, telling the pilot, “I’m a good man. I pray. I go to church. God will take care of me.”

Sure enough, the man drowned. And when he got to heaven and had his audience with God, he asked God why he didn’t take care of him.

“What do you mean I didn’t take care of you,” God asked. “I sent you a radio report, a man in a rowboat, and a helicopter. What more was I supposed to do?”

Auto lenders will tell you that while they seem to be servants to two masters, their ultimate customers are the car dealers — the intermediary who wields the power of recommending one lender’s loan over another when it comes time for a customer to become a buyer and a borrower. But I think that dynamic is slowly changing. The internet has created a new platform for lenders to originate directly to consumers. And the growth — in terms of technological advancements as well as usage — of smartphones and tablets is creating a permanent link between people and information. Lenders have to embrace this new paradigm or risk becoming extinct.

The signs are there.

More companies are entering the fight to control consumers’ virtual wallets. Square, a payments service started by Twitter founder Jack Dorsey, recently announced a search engine directory that users can access to find merchants based on their location or a particular product they are trying to find. The move is seen as another way to attract users to its Square Wallet service, which acts as a database, holding loyalty card and credit card information for purchases from merchants who accept Square.

I remember when my wife and I went to buy a new car a few years ago. We had decided on the make and model that we wanted, and we got my in-laws to come babysit our son so we could go buy it. We walked out of the house, got into the car, and then looked at each other and said, “OK, where are we going to buy it from?” We had to go back into the house to find the nearest dealer.

I’m sure this story isn’t that typical when it comes to consumers buying cars. But lenders need to embrace this technological revolution or risk being consumed by some new hot startup that sees the gaping holes that are ripe to be filled in the marketplace. And if that happens, someone is going to stop those lenders and say, “I sent you all those signs. What more was I supposed to do?”