Conference season 2015 is now well and truly upon us, and by the time you read this, the Motor Finance editorial staff will have already attended a variety of autumnal to early winter events. Already we’ve been to a Sword Apak conference (see page 9), FrontLine’s F&I conference and Lendit’s London conference. Sadly the latter two took place too late in the production cycle to make it into this issue, so look out for coverage of those in November.
While all three conferences focused on very different elements of the finance world, there were similar threads interwoven throughout all of them. First among them is that the rise in digital technologies should be causing you to make major changes to the way you do business, because it’s fundamentally changing customer expectations and habits.
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There are a number of statistics which have been produced over the past month, which could all be ground down to the same basic point: customers are doing more and more of their research online before visiting a dealership, and as a result are visiting dealerships less and less.
The takeaway from this should be that, as finance providers, you should be looking to introduce the concept of finance into the web searching process, be it through yourself, your broker partners, or through helping dealers with their online offerings. While the larger dealer groups might be able to afford a dedicated website team, a number won’t.
Then, once the customer has decided to use finance, you should be considering how to make the process of buying finance as easy as possible. Karl Werner of MotoNovo made the point at the Sword Apak Wholesale Finance conference that if you wanted to get a personal loan for a car right now, you could do so easily from home, before setting foot in a dealership.
He’s not wrong. A quick Google search for ‘personal loans’ brings up a number of options, ranging from Zopa (which provides three-year loans with 4.8% APR), M&S personal bank (with APR starting at 3.5%) and Hitachi Personal Finance, with loans beginning at 3.8% APR.
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By GlobalDataI could easily apply for these to fund my car purchase, and if I get rejected I don’t have the embarrassment of being told by a dealer, and then having to leave the showroom potentially empty handed. As a so-called ‘millennial’, I’ve largely grown up expecting this to be the case in most walks of life.
Obviously these are unsecured loans, and lack some of the advantages of dedicated motor finance products, but the fact remains that if it’s easier to get a personal loan earlier in the process, some customers will opt for that, and that means there’s a market share which is not being satisfied with current point of sales methods.
Speakers at all the conferences were almost unanimous in this regard – you should be looking at how you operate with the customer, analysing ways of making buying finance more convenient for them, and implementing changes based on this research.
Changing business models along these lines are all easier said than done, but the past few months have seen some finance companies really grab the bull by the horns. For example in the summer Black Horse launched its SignIt digital POS system, removing paper from the process, while MotoNovo brought in an online system which also allows customers to go through most of the process of buying finance without input from the dealer.
But this is just the tip of the iceberg. A number of speakers also mentioned how the pace of technological adoption is increasing all the time.
As I sit here, typing away on a near obsolete company computer, I speak from the heart when I say once you’ve made the initial investment in technology, it’s important not to rest on your laurels but to keep investing and improving it.
Hopefully I’m preaching to the choir here, and digital thinking is at the forefront of most of the industry’s thoughts. Judging from the speakers at the various conferences, this appears to be the case, which can only be a good thing.
