Jonathan Minter talks to HPI’s MD Neil Hodson on his plans to match the US motor finance market


Considering the first iPhone came to the UK towards the end of 2007, it’s strange to think how quickly mobile technology has completely changed our lives in such a short period of time. Less than a decade ago, the idea of carrying around a device on which you could conduct your finances, track your fitness, watch the latest films and do almost whatever you want seemed fairly far-fetched.

For the world of business, this has presented both an opportunity and a challenge. On the one hand, consumers are demanding more data than ever before from companies. On the other hand, rapid technological development has allowed businesses not only to meet this new demand, but to use the data themselves to create additional products, and make more accurate business predictions and decisions.

It is in this space that companies such as HPI have been able to move to the forefront of things. Reflecting the growing technological revolution going on in motor finance, HPI recently rebranded itself from calling itself a vehicle information provider and now describes itself as a software solutions provider.

To that end, the company brought in Neil Hodson as managing director in 2014. Speaking to Motor Finance he says: "I was originally in the provenance market at Experian, so I started off in the market in the mid-90s. I then went over to Manheim in its remarketing business. I was there for a long time, and a lot of that was around the digital revolution in the auction industry – so cars being videoed, the video streams, data and data collection. So when I was brought back into this it was very much about evolving this market."

US ahead

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Hodson was talking having returned from San Francisco just a few days earlier. America has traditionally been ahead of the UK for motor finance in a number of ways, for example the widespread use of PCP in the US predates its spread in the UK. According to Hodson, though, the big difference is now in customer retention.

He says: "A lot of the big companies over there were saying you don’t just sell customers a product today, you need to think about how you’re going to manage that consumer through a life cycle, and how you are going to interact with them three, four or five different times."

"So if you finance a vehicle for me today, what interaction do I have with you over the next three or four years? If I have none, then at the end of it I will go to a dealer and change cars, and probably go to someone else for my finance. And that’s the one thing that they’re talking about in the States. You have to find a way to interact with me, and offer me value through that interaction. And I think technology and all these devices are able to do that."

In addition, he says: "In the US, there’s an openness in the data, while we’re not quite there yet. So it’s really easy to get a settlement figure and it’s really easy to get a lot more data than we’ve got.

There’s growing awareness of these topics in the UK, however, speaking from his own experience, Hodson says when he’s got a loan or finance for a car, he’s not heard back from the lender until he contacts them for a settlement figure.

This is an area HPI has identified as a potential market for itself in the near future, and is currently looking to increase its motor finance presence. To that end, at the end of 2014, the company released a tool designed for motor finance companies to track assets and monitor changes called React.

Describing the problem React seeks to solve, and how it does so, Hodson says: "A finance house will have a number of vehicle agreements that are registered. Some of them might have the wrong vehicle registration mark to the vehicle identification number, which would make it an unenforceable agreement; some might be the wrong vehicle description because there is an error, which would be another unenforceable agreement. With some it might be that another finance company has got an interest in the vehicle at the same time because it’s in a period of settlement and you’ll want to see who actually owns the asset because of titling issues.

Although the pilot for React launched in November, HPI made some significant changes to the product over January based on consumer feedback before relaunching as a full version.

Hodson continues: "This is just the first real product we’ve put in the financial services sector, and we’ve got more to come. We see it as important."

Market trends

Looking back on 2014, Hodson highlights a number of trends he describes as significant. One is the continuing emergence of brands into the marketplace. This is something set to continue, he says, as there’s still significant growth in the market.

These emerging brands, as well as existing but growing ones including Autotrader and Gumtree, present HPI with an opportunity to expand. Hodson says: "Just through the types of press and media, consumers are now more aware of the challenge of buying a used vehicle than they’ve ever been. There’s probably more TV programmes about risk than there have been before."

This leads into another of the trends he identifies, that both consumers and the market in general are much more tech savvy, and constantly demanding more and more data. Hodson is aware how this presents HPI with an opportunity and a challenge.

He says: "So for us, we’ve just got MOT data from the DVLA, which we’re putting out in our check. Consumers want service records and service data, as do dealers and as do lenders. And we’re actively in the market trying to look at what additional data we can get our hands on that adds value. Recall data, service data, MOT data – we should have a lot more of the history of a motor vehicle than we currently have today.

"We’ve got some ideas around better insurance products, MOT data, mileage data, service data, recall data that we’re progressing."
In respect to obtaining more data, HPI will no doubt be helped by parent company Solera’s recent acquisition of vehicle valuer CAP, however Hodson is keen to emphasise the two will operate independently, with a Chinese wall between the two.

Another trend identified is the adoption of customer relationship management (CRM) systems by dealers, manufacturers and industry bodies. "The ability to manage customers in a far more effective way and really understand a lot more about the customer using CRM tools is far more prevalent today than it was before," he says.

However the key trend for Hodson was the ever-increasing adoption of mobile devise. He says: "Even if you take just the motor industry, just look at things like Uber and some of the technologies that have come. The fact I could sit here, connect myself to a taxi, walk out in two minutes and its there. That’s such a revolution in terms of technology."

HPI itself experienced this growth after releasing mobile trade and consumer apps on mobile devices. Despite HPI not particularly promoting the apps, they’ve been downloaded over 2,000 times, with 1,000 regular users of the app.

The company has observed these mobile users are more likely to use HPI product Speck Check than their home computer brethren, which Hodson credits to the simplicity of the app: "On a PC, you’re on a screen, so it’s a tab here, a tab here, a tab here. So you’ve got to go through and click on what you want, whereas with the portable device, we’ve only put three features in, and made Speck the main feature, so we’ve seen an uplift in click through to Speck.

"I think the way it’s displayed on a mobile device is really nice, whereas on the PC there are a hundred and one things for you to do. So there is maybe a lesson to be learned from that, to make it easier for people."

Speck Check itself received a substantial amount of work in 2014, having launched in 2013. The challenge with the tool is that every manufacturer has a number of options for each of its models, and these options are changed and updated constantly. So HPI spent much of the year on its database looking at specific vehicles trying to figure out what options would have actually been included in the various option packs.

Technology driving evolution

Hodson sees technologies such as these and mobile apps as the future of the industry. He says: "Technology will drive evolution, and it will allow people to transact in an entirely different way. I think if you’re not investing in technology to enable you, then you’re at risk in the future. I think the strong get stronger and invest in better ways to do things. In the lender world I want to be able to walk in, be pre-screened, have my loan set up, and have my documents there because I want to sign and go."

While technology will enable companies to compete along these lines, Hodson warns those that fall behind may increasingly encounter difficulties: "If you’re not enabling me to work in this way, you’re going to struggle to compete in the modern world because that’s exactly what consumers want – they don’t want to have to send their application off and wait five days for an answer."

Beyond this Hodson says he’s observed that PCP is growing rapidly within an already fast-growing industry. This could cause issues, he says: "PCP is definitely the lead product in that, although that does give you problems, maybe in another 18 months’ time, about how they are going to be defleeted and how they are going to be valued."

PCP also brings Hodson back to the issue of increasing communication with customers: "It’s no good getting to the end of a PCP agreement and then telling me that my mileage is 10,000 over and I owe you loads of money. Maybe you need to start thinking about how you’re going to interact with that consumer throughout the life cycle so that you’re managing the expectation a bit more. Could you give them a flag warning to say the customer might be heading towards excess mileage.

"That’s something lenders need to think about – because if you get to a problem with a consumer then it’s more difficult to refinance and maintain a relationship with them because, in today’s market, they’ll ask why no one ever told them, or phoned or emailed them."
Looking ahead, Hodson says HPI is looking to launch a number of products in the future for dealers and funders.

Specifically on the topic of finance he says: "We need to be providing more information that’s relevant to the vehicle assets. We should be providing more history around the car, more around the service records and accountability of the car. We should be talking more about the pricing and residual values of cars. We should be showing more things like MOTs.

He adds: "The finance sector is a critical sector to HPI. We actively want to contribute to it, and use our data smartly in the future. I actively want to be a part of that in the future." n