<ul> <li data-leveltext="" data-font="Symbol" data-listid="10" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1">Best practices for tracking defaults and repos</li> </ul> <ul> <li data-leveltext="" data-font="Symbol" data-listid="10" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1">Innovations in collection practice and technology</li> <li data-leveltext="" data-font="Symbol" data-listid="10" aria-setsize="-1" data-aria-posinset="2" data-aria-level="1">Overcoming regional pockets of acute economic recession</li> </ul> [toggle title="TRANSCRIPT"] <div class="transcript-scroll-box">00:10Okay, hello, everyone. Hope everyone had a great lunch, join the Excellence Awards, when I welcome everyone to this session sponsored by Linux sponsor here has a few opening remarks. I'll turn the mic over to him and then we'll get the session started. 00:35 Thank you, William. Well, my name is Andy Ivankovich and I'm the CEO of Island x. There's a nice little flyer on everybody's desk. Hopefully, coming back from lunch, kind of look through it. One of the key contacts that we have in there if you want to text any one of our team members and you have questions about direct strategies or how to go direct specially from a bank perspective, feel free to reach out by One of the interesting things as we, I think, can lay claim that we finally did it. We talked to JJ over the past couple of years. We did a little bit of direct stuff. I think we had Navy fed speak last year. But this is our first time that we're actually going to really deep dive into direct lending. 10 years ago, I had more hair with a couple of groups here that we were developing products while I was at USA, what would become probably known as the first direct lending program. That was all digital, we didn't have branches. We're trying to focus on the member, which is what USA is founded on. In the concept of going to a dealer. And we all know those surveys. I think there's always those great surveys that we talked about, was the worst experience going to a dealership in a dentist's chair keeps on being repeated over and over. And at the time at USA we're looking at this and saying could we compete in an indirect world. The past 10 years, USA now I think very publicly does close to 45 to 50,000 Auto Loans a year, we birthed truecar. And kind of lead the way. But as we would come to Fs, as a young executive, no one would talk about direct, it'd be the smallest Snickers. So fast forward. Now we're at here talking, where we have Bank of America. We have Wells Fargo, we have ally, in statefarm, talking specifically about this movement, I think that you probably would say that that were emerging there. A lot of the technology has changed a lot before for banks, and our, I guess from our bank lens, we've been struggling with the concept of digital technology, and we're beginning to embrace it. And so when we're looking at either TransUnion or Experian coming up with pre qualification, this concept Where a customer can go to your bank website when they're online doing mobile banking, looking at checking accounts, getting pre approved off or getting pre qualified offer a low rate especially to your best customers walking into a dealership and doing this for up to $50,000 and letting them choose and the cost of I guess acquisition goes down to just a couple hundred bucks. The reality is that you can actually do this and we're seeing that more and more was led a lot by the bank owned ensures we got like even triple A that's in here that founded a bank is doing this very process, the credit unions were leading into it, and now the bigger bank so if you're a small bank, and community bank, this is probably the best and most exciting time to be talking and listening to these guys. So want to welcome everybody want to welcome the team here and Williams is going to kick off with the actually our panel here and just want to welcome you guys to the probably the best session at AFM. So, 04:00 talk to you soon. Couldn't agree more thanks to those marks. Very excited this afternoon to moderate direct lending panel titled How to attract consumers in a crowded online marketplace. The definition of direct lending has drastically changed with the advent of online originations. And we'll be talking about that. But I sort of wanted to open with taking a step back and sort of setting up a elementary understanding of what a traditional model of direct lending is. So we're sort of all on the same page here. Each of these three companies will have very different models of how they approached direct lending today. But, you know, a traditional indirect lending deal is sort of the process of the vast majority of Americans go through when shopping for a car, they go to the dealership, they pick out a car and work out the financing, they're on site, a traditional direct deal sort of reverse that whole process, consumers go to their local bank, apply for financing and only then do they go to the dealer shop for a car that falls within the approved amount. So everyone on stage here provides direct lending but with through the internet and mobile applications, it's now pretty far from those early days of your traditional local bank giving a direct lending deal. So here to discuss the transition and the benefits of direct model over indirect. We have Jeff danford, Senior Vice President of auto finance for Allied financial, David holodecks, Senior Vice President product and pricing executive consumer, the vehicle lending Bank of America, and chez Roscoe, Director of vehicle lending at State Farm bank. Let's give them around applause. So I wanted to start by going down the line and asking each of you to sort of describe what you're doing in the direct lending realm and sort of how it differs from other players in the marketplace right now. Jeff, can we start with you? 05:56 Sure. I think there's a couple of things When you look at what makes us unique, and first of all, we define direct lending as a consumer coming directly to the lender presenting themselves filling out an application, then ultimately contracting with them. It's a two party contract versus an indirect contract point of sale being assigned to a lender. The couple things that we do that I think are becoming more common, but we're unique when we started is we have a pre qual process to where we do it on a soft poll. And so we pre qualify a consumer for a given loan in advance of doing a hard poll. And if they don't qualify, then there's no inquiry on their credit, or more importantly, no degradation of their credit score. And that's really the number one request that we have from our customers is can I see how much I qualify for before I have any kind of hard inquiries on my credit? And then the second thing that I think from the panelists appear that we're a little bit different, is we are a multi lender platform. So why ally is As a lender on our platform that clearly platform which I run, they are just one of multiple lenders on that platform. So we we bring a customer in, based on their credit score, we determine which lending program or programs fit them the past. And then we present those offers to a consumer. Again, again, they could have multiple offers from three different lenders ally being one of them, but it may not be an ally loan at all. So that's the one area where we're a little bit unique. 07:31 And background on that, too, is that it was brought about by the acquisition of blue yield, correct? That's correct. Ally 07:37 a little over a year ago acquired a company called Blue yo. And that was a multi lender, direct to consumer platform. Great and we've maintained that multi lender, platform post acquisition great, David. 07:55 So it, it Bank of America, our product is multi delivery channel multi product offer. So for delivery from an application perspective we allow our, our clients and our customers to choose from our digital assets. It bank America comm or nearly 5000 financial centers, we still have a lot of people who are more comfortable still applying in person across from somebody versus a digital space and even on a call center and applying over a telephone. So optionality on how they want to interact with us on the front end of this process, from the from a product perspective, also multi product. So we have the traditional non dealer products refinance, lease, buyout, private seller financing, and then we have our dealer purchase business. And I know we're talking about direct lending here, but we see direct lending and indirect lending really merging together into a single and a seamless process so, so in our deal or purchase product, consumers can apply directly to us be pre approved. Recently, we've just launched our online mobile shopping experience, where consumers can actually search and investigate actual dealer vehicle inventory and then either choose to apply for a specific vehicle at a specific dealer or to apply for $1 amount and then go shop at the dealer of their choice. So in our dealer purchase space, that transaction depending on which dealer they go to, may end up as a traditional to party direct transaction or it could turn into an indirect transaction at a dealer we do business with on an indirect basis, allowing the dealer to then take control and fulfill that transaction with the consumer. 10:00 Good. I'm Chaz Roscoe at State Farm bank. And as you will know, state farms, a large insurance company, they are the number one insure of homes and automobiles in America. And they've held that position for a couple of decades. We're in 30 million households. State Farm bank is a much smaller subsidiary of State Farm Mutual Insurance Company. And we deploy a direct strategy direct only. And we have 18,000 agents sprinkled out through the United States, and that is our only distribution channel. And what's interesting about that is they are all independently owned just like dealerships. And a lot of the success depends on that distribution channel. There are four things unique about statefarm bank that we do to get direct loans. Number one is we have an in book strategy. So we do a lot of bundling. If people have a home or car insurance with us where they have life insurance with us. We entertained in book Enter giving them an auto loan or invitation to apply for an auto loan. We also offer free gap insurance. It's actually debt cancellation provision. So if a consumer finances their automobile with us, it comes with our own brand called payoff protector. 11:16 I think 11:16 we're the only one in the United States offers that for free. We're a heavy refi shop. So that means we have a long LTV pretty liberal loan to value ratio because we are taking out line five. So we almost have to, we counterbalance that with pretty strict credit requirements, our average credit scores 760 and my colleague, Miran Valero is in the audience there and we work 10 feet from each other. And we talk every week about that right balance of frequency and severity of loss. The fifth thing that we do that distinguishes us a bit as we just launched a venture with Edmunds so statefarm.edmunds.com To make that vehicle ownership experience a little bit more connected, and that launched about three months ago. 12:07 Right? Well, so David sort of touched on this a little bit in his opening remarks there, that this idea that indirect and director blending, you know, as average consumer, doesn't really matter if I'm going to make America or ally or State Farm to take out a loan first, when I just want to finance a car, you know, I want to get the best deal. I don't care which channel is going through, I want the best experience, right? And whether that's direct or indirect, it might not matter to the consumer. So how do you sort of, you know, deal with that, that paradigm in the environment right now, and what are some of the challenges with that, David, may we start with you? Sure. 12:50 Well, I think a large part of about it in the way we've designed our model is every consumer doesn't want the same thing. Right. Some consumers want to know, can I get approved for how much can I get approved for, at what rate and they want that in their back pocket before they go into the dealership and start shopping. I mean, we like to say on our website, you know, before you go, other consumers would rather start the process, shopping for a car and then thinking about financing later. So, so our thoughts around the question you asked is, is really one where if the consumer wants to go to the dealer, that's fine, you know, we're happy to service the dealer and try to win that business from the dealer. If the consumer wants to start the process outside the dealership and is interested in the value propositions we offer. Which I said recently, we can allow shopping for real vehicles as well as getting approved for financing. We're going to let them make that choice and so then it all becomes around the customer experience. And so what what we spent a lot of time on and continuing to spend a lot of time on, is how do you start the consumer in one space, integrate into the dealer space, and have that as a very seamless experience for both the consumer, but also for the dealer. And so that involves, you know, the ability to be able to transmit information around the consumer the credit application, they've taken, the approval, stipulations, the rate. So they when they arrive at the dealership, the dealer has everything that they need, they don't have to take another credit application from the consumer. They know what the deal structure is, they can move quickly into the purchase transaction, and then obviously, manage the clothes within the f&i office, offer their their back end products and whatnot, and do a typical closeout from that perspective. So So Again, it's all about how do you bridge that gap and make it seamless and easy for every party? 15:08 has maybe thoughts on the blending of indirect and direct? 15:12 Yeah, I think we're like bank America in that we have this thing called credit line assignment. So if somebody applies for an auto loan, let's say it's $20,000, we'll give a call back that says you're also good perhaps for $37,000. A lot of people aren't sure what they can afford up front when they go out shopping, and given that there's 18,000 agents out there State Farm agents that's, that's ironically, approximately the number of franchise dealerships are in America thinks a little over 17,000. I think the two major distinctions between indirect and direct lending is the cost of acquisition of a customer. Everybody that's in direct lending knows it's anywhere from six to $900 per loan, direct direct lines, about a third of that. So for about 200 bucks alone to acquire the customer and The other big distinction is the credit performance. And I think Experian automotives report, their quarterly report shows clearly at delinquency and loss is a little bit more favorable on the direct lending side. And when you're taking an app directly for a consumer instead of an intermediary kind of expected, isn't it? 16:18 Yeah, I think similar to what David said, we see this as a merging or blending process. Ally has a large number of dealer partners and obviously built its business around that. So we think that the right customer experiences for those that are seeking transparency have financial interest rates and solutions online. They're there for a reason. But ultimately, sending them into a dealership where there might be an adversarial relationship with a direct loan is not the right path. So what we call follow and it's very similar to when I heard David said as we call it, the hybrid process where a direct customer comes and applies and can receive Kind of transparency of a pre qualification interest rate, but then they go into the dealership for the traditional fulfillment of that loan and including the contracting of the loan. And we think that that is both most respectful of the dealer for these purchase customers, and also delivers a better experience. for customers outside of that we talked about I think all of us mentioned refinance. Obviously, that's different. That's a direct product no dealership involved in that involves kind of a lender and a customer consummating alone, that's a different market altogether. I want 17:35 to follow up on that. Just want to remind the audience that you can submit questions to the app. If you have any questions for the panel up here. We'll we'll get to that in the later part of the panel. There's sort of been this idea like as you were saying, there can be a sort of an adversarial sort of relationship with direct lending and dealer sometimes is that improved at all as these things have become more prevalent in the market? 17:58 I think for us it has because we're Not taking a position of eliminating the finance and insurance revenue that a dealership would have. And I think that's what leads to a less than optimum experience for both the customer and the dealer. Well, I think the notion that customers are on the internet looking for Financial Solutions is not lost on dealers. They're fully aware of that. So I think the, what they're concerned about is, what's the experience, as I heard David mentioned, when the customer comes in, is it a seamless experience? Or is it a disjointed experience? And we're definitely looking to have a seamless experience with the dealer? 18:38 Yeah, I think dealers are certainly welcome the leads, particularly when when the originator can push the lead to them and they can engage with the consumer to bring them into the dealership. So I think that's a real big plus, I'd say the adverset adversarial nature is certainly To Jeff's point, come down a lot. But but at the same time, the consumer wants the best deal. The dealer wants the best deal for themselves. Everybody wants to make the right amount of money in this transaction. So, so however we start the process on the front end, when the consumer still gets to the dealership, a lot can happen. And I wouldn't call it adversarial, I'd say, people are continuing to negotiate. And it's not uncommon that a consumer could start a process with one of us get approved, go into the dealership, not even tell the dealership that they're pre approved, they want to see what the dealer's got to offer first. And if the dealer can beat the offer, they probably don't even mention if they can't they pull out and you know, here's what I have. And here's, you know, you got to beat this or, you know, I want this offer so, so there's I think there's a lot of moving parts and in you can't take that aspect out of the process, and we can't control every single aspect of the process. 20:04 Right? I think there's also the at the point of sale, as David mentioned, so much changes, right? So they they could change cars downpayment, the amount of the trade. So there's a lot of variables that dealers are very accustomed to and experts at managing that makes that engagement at the dealer important, an important part of the process, whether you call it direct or indirect or hybrid, it's the same thing the dealer plays an important role that you can eliminate because it doesn't doesn't make any sense, frankly, 20:34 just what's statefarm his experience been sort of on that that dealer level or online? 20:40 Stay farms never dealt with any dealerships. So I'd also never been in direct lending, doesn't mean we might not someday, but today, it's 18. 20:48 Strictly direct, great degree, 20:50 strictly direct. Gotcha. 20:53 So now that we've established some of those differences between direct and indirect, maybe you can explain what the benefit is of direct line. Both to your organization to the consumer, with the recognition that you know, each of you serve a slightly different sort of consumer base along the credit spectrum. Chaz, maybe start with you? 21:11 Yeah. For us, it's being in 30 million households, again, with people's homes insured and their cars in short and life insurance. Most of our financial services products are meant to insulate that, that book of business and help use financial services to supplement that insurance business. And there are plans to grow it over the long run. But the core is promises made to those insurance policies and they've been deer this year, with all the cat catastrophic events we've seen in America this year. 21:45 David, well, I think the consumers is driving this. And we've seen the the transition over time from how they've used the internet to search cars and now how that's that's working into the finance space. I mean, our strategy is, is principally one of deepening with the clients that we have at Bank of America, we have over 50 million households that do business with us and in one form or another and, and our strategy is how do we how do we deepen with them across all the products and services that we provide it at the bank. And so a large part of what we do, from from a marketing perspective is awareness of what we have, you know, from an auto finance perspective, and letting them know how those processes work. How it can be seamless to the dealer if it is a dealer purchase versus a non dealer purchase. So, you know, I would say it's following the consumer trends, you know, more than anything, but it's getting that value proposition, right. That it that entices and encourages the consumer particularly for us to keep their business with us and the bank has a larger preferred rewards program. Ram which rewards our clients for doing more and more business with us. And so that that also enhances our value proposition and and gives them encouragement to to start the process with us. 23:14 So I think it depends on the product. If it's a refinance that I know Chaz mentioned is a big driver of his business. No, David does that. On our site, average consumer sends saves $105 a month on a refinance loan. So that's very tangible, very meaning full savings for a consumer right. So that kind of drives Why would they do it? On the purchase side, I think I would agree that they're looking for some transparency. They're used to Amazon calm where they can go and do direct business with any you know, any manufacturer that's out there these days, whether it's mattresses or any TVs, or whatever it might be. So I think the advantages that they get, at a minimum some education Where they might fit in the credit spectrum, however they fulfill at the dealership and whether they go with that loan or not there are more educated consumer when they go into purchase, in our opinion, 24:11 now ally is the sort of standout one on the panel here because you guys are the multi lender. Clear lane platform here, as opposed to the others, which is the single lender. Can you explain a little bit about the the thinking that went behind you making this a multi plat no multi lender platform, especially with the recognition that, you know, you might be giving up competition to other people that are on the platform, you know, why? Why go down that route? 24:39 Sure. So we acquire our customers through direct marketing initiatives to the internet marketing, internet relationships, direct mail, and that's expensive. And when you're out there direct to consumer and you don't have a dealer sitting in front of you, let's say a refinance transaction. You're going to see all The credit spectrum come to you because there's no filtering up front. And so for us, it made sense to have a roster of lenders sitting above ally, and sending below ally that offered the maximum number of approvals in the maximum number of interest rate variation. So we can serve a broader spectrum and amortize our cost of customer acquisition. That's really the thinking behind the multi lender platform. From a from an efficiency perspective, we also think there's a consumer benefit and that they can come to one place and get multiple offers from multiple different lenders and customers like choice. So there's a there's an experienced part of that as well. 25:40 And David on your part, you know, why stick with you know, just make America as the sole proprietor on that. 25:46 Yeah, no, it's a it's a great question. And, at least for us, you know, we're after that, that clients business and we have the balance sheet, to retain that, that that contract Shouldn't should we be able to win that client's business? But with Jeff points valid? I mean, we're, we're not offering a multi, you know, offer value proposition to the consumer. You know, there are consumers that simply don't fit within our credit, risk appetite. So there are consumers that, that we're not going to be able to service versus a multi lender that may be able to cover more than the credit spectrum. So, so So I think the models are different and clearly offer different value propositions, you know, across the space. And so I think, again, it leaves it up to the consumer, do they want to go? Do they want to go into an environment where their information is going to be shared across, you know, multiple lenders, you know, how do they feel about that, you know, particularly in light of, you know, the Equifax breach. You know, There is a level of comfort with with the consumer doing business with it with a large banking entity like Bank of America, there's more of a trust factor and in sharing their information with us, knowing that it's going to stay with us that is not going to be shared across other other players and other partners. So, so there's, you know, it's an interesting choice. And the models absolutely compete against each other. 27:29 And what was sort of state farms thinking on that, and especially to building up the resources to launch something like the program that you guys have done? 27:39 Yeah, for 27:40 us. I think David said it best you have to establish a channel that the consumer wants. And for 96 years, we've used this agent channel to distribute our products. And yet there's people that don't want to go visit a State Farm agent. So as we build out our digital channel, not unlike these fintechs have done I think that is what creates the experience is being at the channel of a customer's choice. 28:07 That actually brings me to my next question, which is 28:11 the difference between joining a direct lender like yourselves or to join an indirect FinTech that's out there. What are your thoughts about, you know, joining one of these platforms? I mean, the, the two that we see here often are auto gravity and auto fires are the big ones in the industry right now. But there are many others as well. What are your thoughts about joining a platform like that where you're a part of a multi lender system, indirect system, 28:38 you know, that I look at it is is, is both an opportunity is certainly as well as a competitive threat. And and so that that's the balance right that we have to make and, and so I think the question for us or the question for anybody who's, who's pondering that question is, you know, will will partnering into a fence Tech, like you mentioned, drive incremental business that we wouldn't have likely gotten otherwise, through the model that that, that we have, you know, under our own brand. And so that's the choice and and, you know, these companies are so new, it's going to be hard to tell whether whether we will or not, you know, I'm more inclined to, to likely try some of them and, and see how it works. But But the key then is, you know, can we integrate into those platforms in an efficient manner? You know, is the customer experience going to be as good, you know, or better is what we would expect from our own brand. Particularly if those fintechs are driving people to dealerships. You know, what's the what's the end of that experience look like, as well. And so, now you got multiple parties involved that you have To make sure the handoffs are there at seamless, like we talked about earlier, you know, some are consumer facing, some are going to be dealer centric. So it's very interesting times. And and I think they all have very interesting value propositions and, you know, we'll see which ones stick and which ones don't? 30:21 Well, I'll answer that question by answering asking everybody in the audience a question, what is the difference between a FinTech company and a lender with a great digital experience? It's nothing. Right? So I think these FinTech companies that have come out, I don't say I want to say they're a fad. But I don't know if it's a trend the trend is or a more remarkable experience by using the device of choice for the consumer. And they are pioneers. I think they've made a lot of lenders wake up to what the consumer wants, and pioneers will pick some real estate but also pioneers get slaughtered. So the primary difference between I think fintechs And other lenders is how you how you fund them and your capital. And if you take a look at the advantages that David has one of the greatest deposit gathering mechanisms in the country, 50 million households use it, that's a huge advantage, as opposed to relying on packaging your loans and turning them into debentures and bonds and selling them into the marketplace without a lot of track record. So it's, I think, the jury's out on fintechs. But I think a lot of lenders either need to build it, or buy it or partner with it, but you cannot stop technology. 31:35 And, and, and, you know, it's not just about the fintechs either. You can't, you can't forget about the dealer, right. The dealers are not sitting on their hands either, right. They're looking at their websites and their digital assets and their experience. And they're, they're incredible vendors in the in our space, that are a part of this conference that are bringing incredible technology solutions to bear That will, I think work across probably most of our models, but, but give the consumer more choice, more more of a seamless transaction. And so everybody's going to be taking advantage of that, and particularly the dealers So, so we can't rule the dealers out from continuing to be very competitive in this space and wanting to continue to control the ownership of the consumer. 32:27 So from our perspective, we've been cautious on it, if you look at it, if they're like a carvanha, or a tread, for example, ally has made the decision will support those digital initiatives. The two mentioned here today, we're not currently on their platform, although we're watching how they develop. From our perspective, we probably have the largest dealer network of any lender in the country. And so we're fiercely protective of those relationships. In that network, and we haven't just today, we haven't wanted to expose them in that way as of yet, but we look at it and talk about it all the time. 33:10 Women in our circles, we talk about some of these FinTech companies and, and they're admirable what they're doing. They're really disrupting as the word is that they use. And I reminds me of a Japanese proverb, I like to remind myself of to open a shop is easy to keep it open is difficult. And I think in our business, it's not about technology as it is controlling the credit loss expense. In my 35 year career history. I've seen more banks, I'm sorry, more lenders stub their toe right there than anything else. So I think credit loss expense is a little bit more important than the technology but you cannot certainly ignore the technology. 33:52 A couple questions from the audience I want to touch on. 33:56 Do you pay dealers differently for a direct or indirect loan? No. 34:03 Do you pay dealers any differently for a direct versus an indirect loan? 34:09 In our model, if the dealer is handling the fulfillment, then then then we believe they should get compensation for that. 34:19 Sort of along similar lines, you know, we talked about 34:25 what the credit risk looks like for these Direct Loans versus indirect loans. And my understanding is that, you know, the performance tends to be better on the direct side, having that direct control over it. Are you still seeing that play out with the platforms that you've launched recently? 34:40 For us, we see, again, we're multi lender, so we see across the lenders for their given credit spectrum, again comparing their desired credit spectrum with to direct versus indirect, we do see superior performance on the direct side, both in frequency and elevation. of loss. If you're comparing kind of pride and portfolio to nonprime it's obviously a different but for folio to portfolio we see direct performs better than indirect for us. 35:12 So we actually see the indirect the dealer business perform better. And there's a number of reasons for that. So in the, in the in the first off in the relationships we have with our dealers, we're very specific on the credit risk box that we're interested in. So so the dealers get that they control that they give us the the mix that we want. And when you're in the direct space, in you open your doors to anybody who can apply for you, you're going to get a different mix, and we're going to prove a part of that mix. So So from that perspective, there's a little bit more risk from the through the door perspective than you might get from the dealer. And then you know, a lot of things just simply rank order in our business so so the the direct pieces, the roof Finance, the lease buyout the private seller, right? We're talking about used cars. So used cars just simply perform, you know, a little bit worse than the new cars. So you get all of those different kind of aspects that are that are driving that comparison and performance between direct and indirect. 36:19 Gotcha. And Jeff, you know, ally, especially in recent years has really become sort of a full spectrum lender. So where are you, you know, placing your loans on the clear land platform versus you know, what the other lenders on the platform are picking up? 36:33 So from a credit spectrum, we're actually active with ally on the direct side, your question was on the direct side, right? Between 580 up but where there was the sweet spot of the vine is really going to be in that 600 to 700 range. When you start to look above 700. Then there's other more competitive interest rates. It's just not we're ally. And chooses to play today from a return. And so we'll place other lenders on top of that. And then if you get, you know, the 600 range and below, then we look at other lenders that are more specialized in that and more and know how to service that portfolio and are used to taking that risk. And so that's where we really see ally in the kind of near prime if you will spectrum for us. 37:25 And are the names of those lenders on platform public at this point. Are you able to tell us 37:30 they're not public now? 37:31 I had to ask how to try. 37:35 More questions from the audience here. 37:40 With the growth of CVC platforms such as blinker Do you see see the C space as growth opportunity? Maybe blinkers private party, I believe so right like private party transactions there. 37:56 We've looked we continue to look at that. We do have a private Party product. I think David mentioned that he does as well. It's very low volume for us. It's not something that we market actively. What we see is that, for us, the credit tends to be skewed towards the non prime. And the balances are really low. So it's, it's difficult to prove and difficult to make money off them. Because of relatively low balances. There's some new kind of p2p private party sites that have emerged that have more later model vehicles that they specialize in that we're looking at. One of them's called Carnival that's brand new into the marketplace that are looking to carve out a little bit different space and when we look at them all the time, but we don't have any current relationships with any of the private party providers today. 38:54 As Jeff said, I mean it's the space that we're in, we like the space we would like to see At grow, I think we'd rather see it grow organically with within our business versus partnering with some of those emerging companies at least that's that's our point of view. You know, it is a lower balance, it is a more expensive product to fulfill. There is there is a little bit more risk involved in those types of transactions that has to be accounted for as well. 39:30 Being a direct lender, do you prevent the dealer from flipping your loan? No. 39:39 I think you know, there are good valid reasons to flip the loan. As I said earlier, customer comes in and the structure of the loan is just fundamentally different. By the time you put in the you know, down payments and trade ins and man on products and things like that. So there could be captive programs where there's so then an interest rate, so there's a lot of Reasons to convert a customer that comes in to a different package. And, and so I don't think that there's anything we're going to do at ally to prohibit that, or anything that we actually try to do. We don't put guard rails in our approvals or in our dealer agreements or anything like that expecting that not to occur. So I think flipping it occurs in the direct business. And I've been doing direct loans since the late 90s, actually, at various companies. And I've always heard this as a barrier that you can't do a direct loan because it's going to be flipped at the dealer, and there is flipping at the dealer. But it's not it's not as 40:41 rapid as I think many people assume. 40:45 Customers will come ask for a direct loan and we'll go and fulfill that loan at a dealership. 40:50 Not yet. But when when you start approving the loan and you fund it, by putting the money in their DDA, their direct deposit account before they shop that might change that trend. And then they can go to the dealership and write a check. 41:04 Yeah, so we so we want the dealer or at least those dealers we do business with to fulfill. So I think there's an our view, there's a couple different ways to interpret flipping. So in our view, flipping alone means I didn't end up with that contract, they went went to a competitor, I sent the customer in with the pre approval, the dealer sent him somewhere else. So, you know, the other side of flipping is the dealer decided to start a new application in the in the truly indirect space, maybe shopped it around, maybe even shopped it back to us to see how we might look at it differently from the pre approval that we provided. So So our focus is number one, we just want to win our customer. So if that if that customer started with us and goes to the dealer, we want to make sure we get that contract from the dealer. What I mentioned earlier is how do we make that handoff to the dealer Are seamless. So the dealer construct stay within that process we've developed without having to feel compelled to create a new application potentially even shop that application. So, so that's more of the focus. But at the end of the day, if I'm winning my customers that are fulfilling at the dealer, whatever happens in between, then then that's a good thing. 42:22 Chaz, how do you each of you? How do you source the cars that you're putting up on the platform direct inventory, or is there other methods? Yeah, the question here was, how do you source cars that you show to your customers? 42:42 Well, maybe maybe that was directed my comment so So today, we're we're on this on this journey. For every single one of our dealers we do business with, to offer them to post their inventory on Bank of America calm so so we're We're live on that in 19 states, we expect will be fully rolled out nationally end of the year or shortly thereafter. And, and so it's it's every it's every vehicle the dealer has in their inventory. 43:15 Are there any added regulatory concerns that you have to contend with on direct lending side? 43:23 Well, I, direct lending is 43:27 regulated at a state level. So if you're, you can use a national banking charter to kind of eliminate that at ally. Even though we have a bank, we decided to go the more conservative route and we went and got licensed in every state as a direct lender. So that brings additional regulation associated with it, because you have every state that not only are they used to doing the kind of audits on an indirect basis, but they do separate audits on a direct basis, at least for us the way we're licensed 43:58 So being a national bank has advantages and so on a truly direct to party note we have the ability to, to pick a single state jurisdiction and export state law out from that jurisdiction regardless of where the consumer lives so so yes, we still have to create own manage that contract. But but we don't have to have contracts at every single state level. So that makes it easier from a national bank perspective. The other side of it from a purely direct standpoint, particularly from a marketing is, which we don't have in the in the indirect space is, is the advertising, particularly the rate advertising, and being compliant with the rules around how you advertise those rates, who gets those rates, how many people get those rates, and how you disclose them online. 44:55 want to touch on this before we end the panel to you know, credit unions that really gained market share largely driven by online originations. what lessons can be gained from that trend as you know, your larger institutions looking to do the same growing market share and online originations. 45:13 What's interesting is your way your own report, big wheels show that 49% of the top 100 Auto lenders in America are credit unions. And they've gained market share steadily, steadily over a couple of years now. And being in the banking world, we look at our UI and we look our efficiency ratios. And we're really wrapped up with compliance. And credit unions just seem to court their customers a bit more. I think that's admirable. They're less likely to see a customer applicant as a number. And as a person that has events that happened in their life. And I think that's why they're taking market share. 45:52 So I think from our perspective, we've and we have credit unions on our platform, so their business partners of ours so we You kind of embraced that ascension of credit unions into the automotive space. 46:05 I don't think I have anything to add to that. Right? 46:08 Well, I just wanted to, you know, sort of close on, you know, what, what sort of growth Are you guys seeing in the direct side? You know, especially, you know, it's still early for many of the platforms that you're launching here. But can you give us a sense of, you know, how that's growing at your company and sort of what your expectations are for the coming year. And we've 46:24 been experiencing double digit growth in that space for a number of years and, and frankly, would expect that to continue. Again, given the the client base that we have the penetrations we have today the penetrations we think we can achieve so so we think it's a it's a incredible growth opportunity for us. 46:43 And it almost has to grow if your costs originate and costs of service are part of your overall ROI and our legals and direct lending as a third of the cost to acquire customer it has to grow, doesn't it, especially as these costs come more transparent to the consumer through through technology. And I think eventually I'm not going to say indirect lending is going away by any means. But I think that dealer reserve or the dealer participation fee, certainly will probably go down over the next several years. 47:14 So I think similar the ally, obviously felt that there was a business opportunity and director they wouldn't have made the acquisition that they did. And we certainly expect similar to David that you'd see significant growth in direct. And even if, again, this notion of direct hybrid where they start direct, but then fulfill indirectly at a dealership, I think that's what you're gonna see that grow a lot over the next 12 to 24 months. Okay. Well, thanks 47:45 for joining us on stage. We really appreciate it Please give them a round of applause. 47:54 That concludes the operations track and the current sessions will be going back to the ballroom for fireside chat with honker. Please join them </div> [/toggle]
