While lenders, of course, have to focus on lending practices, compliance, and risk management to remain successful in this space, many business owners know employee operations and customer service are just as important.
There have been several operational moves among large lenders and shifts in customer service trends over the past year, and financial institutions have a lot to gain from learning from those successes and struggles.
Here are Auto Finance News’ list of the top six operational changes from this year, and lessons learned:
Pro-union groups are organizing employees at various financial institutions and have Santander Consumer USA in its sights. A July report claims that employees are working under a high-stress environment, which is overly reliant on computer software that often inaccurately analyzes tone of voice, ranks employees based on “artificial” performance metrics, and makes it harder to assist financially distressed borrowers.
“These assertions and mischaracterizations are yet another attempt by union organizers to unfairly discredit Santander to further their own agenda,” the company said in a statement provided to AFN. “Santander prides itself on having an employee-friendly workplace where our employees are respected and motivated and where direct, open, and frequent communication between employees and management is encouraged.”
The 25-page report features interviews with current and former Santander workers all employed through Fall 2016, and was conducted by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the National Employment Law Project, and the Committee for Better Banks.
One of the issues raised in the report is around the practice of “simple interest daily fees,” which is interest on top of a consumer’s existing interest payments once they fall behind on a loan. For one consumer that amounted to $310 a month once they fell behind.
However, the lender has already addressed a similar problem raised in the report regarding overburdensome daily $10 late fees that piled up for many consumers. Those fees were lowered or completely eliminated in many cases in January.
“We think that puts us in this virtuous cycle,” Former Chief Executive Jason Kulas told AFN in June. “Not only is it the right thing to do, but we think over time our customers have a better experience with us, they want to come back, they want to do more business with us. This ties into long-term success in shareholder value, even if in the short term there appears to be a cost to it if you are purely looking at the economics.”
2. Wells Fargo Collections Consolidation
Amid a fraught time for Wells Fargo Dealer Services as it deals with the fallout from its force-placed insurance scandal, the company is undergoing a consolidation of its collections centers.
In total, 57 regional collections centers are closing and will be consolidated in three locations in Irving, Texas; Chandler Ariz.; and Raleigh, N.C., over the next two to three quarters, a Wells Fargo spokeswoman confirmed to AFN.
Funding operations will be consolidated into two of those centers in Irving and Chandler. Dealership sales and relationships teams will remain at their current regional centers and over time will be moved into other existing Wells Fargo buildings. Additionally, credit underwriting teams will remain local in order to be closer to the dealers they serve and will work on both retail loan and commercial loan accounts.
All of that change has also led to the elimination of 57 executive positions across those various centers. Jerry Bowen, who previously served as head of commercial dealer services prior to assuming interim leadership of the indirect auto finance team in February following Bill Katafias’ departure, now serves as head of dealer relationships and production. Two executives have agreed to stay on and report to Bowen: Senior Vice President Wayne Dale will run the Eastern region, while Senior Vice President Phillip Forrest runs the Western division. A central division leader has yet to be named.
“After a critical look at the Dealer Services business structure, we are making changes designed to deliver better, more consistent service while also providing team members access to improved technology, training, and career progression,” the company said in a statement to AFN. “While our previous structure served us well for decades, Wells Fargo must adapt to changing expectations of dealers, consumers, and the marketplace.”
3. TCF Bank Layoffs
On TCF Bank’s first-quarter earnings call, Chief Executive Craig Dahl said the company is in “the seventh inning” of its auto finance restructuring efforts, but that also comes with some tough decisions.
During the same call, the company announced 200 layoffs across the organization as part of the restructuring efforts, which has resulted in a 41.9% decline in auto originations year over year.
“We grew the business more than tenfold in a matter of five years and what we are doing now is really improving quality and profitability, but as we look our organization and aligning to that originate-and-hold strategy, we needed to reduce the originations volume that we had,” Todd Pierson, president at Gateway One Lending and Finance, the auto arm of TCF Bank, told AFN earlier this year. “A reduction in staff kind of cascaded from that. If you have fewer dealers that you are doing business with, and fewer sales and credit people, it cascades to funding, our audit and control functions within the business, and ultimately loan servicing.”
Pierson took over as president in January and has worked to form a closer connection with the top-level executive team at the parent bank, he said.
“I still believe that our greatest asset is our employees, and the biggest thing I am doing is making sure I am leveraging a very strong executive team that I have — Craig Dahl and Mike Jones, who run consumer lending,” Pierson said. “It’s a team sport here, right? We can’t work as Mavericks. I’m building that three-year plan with a focus on quality, profitability, and our relationships.”
TD Auto Finance came up as the top non-captive lender in J.D. Power’s 2017 U.S. Dealer Financing Satisfaction Study driven by speed and a focus on the consumer, Andrew Stuart, chief executive and president, told AFN.
The four principles the company tries to keep front of mind are: acting like an owner, executing with speed, innovating with purpose, and developing colleagues.
While the company’s operations haven’t changed drastically in the past year, the company previously eliminated the use of voice mail and adjusted hours so that dealers are always talking with a human, he said. This is what landed the company high scores in the categories of underwriting, sales desk, and interactions with dealers, he added.
“TD has taken human approach to dealing with customers,” Stuart said. “We deliver customer experience that is very dealer centric, we also make sure that from a field operations point of view that our folks are listening to dealers and providing feedback.”
Mercedes-Benz Financial Services was the other big winner in the the J.D. Power survey results, as the company took home top honors in the captive-luxury category.
The biggest improvement the lender enacted was technological to speed funding to the dealer as well as improve communications.
“In 2016, to optimize service levels and in accordance with dealer feedback, we evaluated our sales team configuration and developed the Sales Force Effectiveness initiative, realigning all sales personnel to create a single point of contact for each dealer,” Geoff Robinson, vice president of Mercedes-Benz Financial Services, told AFN in a statement. “Since January of 2017, our dealers have experienced the optimized service and support this new structure aspires to offer. A major advantage of this new structure is that it reduces the number of dealers each representative supports, which enables them to spend more time addressing dealership needs.”
Mercedes-Benz Financial Services also tries to place an emphasis on taking feedback seriously and improving from it, Robinson said.
“We aren’t perfect,” he said. “Our dealers provide us with honest feedback that helps us develop and deliver improvements that benefit us, them, and our mutual customers.”
For the past few years, lenders and dealers alike have been focused on speed, but that might be changing, James Houston, senior director of auto finance at J.D. Power, told AFN.
“For several years, and understandably so, dealers have asked for speed,” he said. “I have a customer in my office, quickly approve my application, quickly decline it — whatever you’re going to do with that application — quickly make a decision so I can move on to the car-buying process.”
Now that most lenders have built for speed, everyone is performing adequately and the real differentiator will swing back to personal relationships, he said.
“Everybody is on par now,” Houston said. “What was lost in the last three to four years of quickly transacting was the underlying theme that it’s always been about relationships. Can you pick up the phone and say, ‘Can you fix this, can you explain that.’ As everyone rushed to be fast they lost track of it’s still a day-to-day, voice-to-voice, person-to-person relationship that drives satisfaction.”4 - Readers Like This Post