Car Financing
What does the auto financing experience of the future entail?
(e.g. educating the consumer, offering new solutions, making finance integral and not an afterthought, offering options to customers etc)
Terje Kjøs: It is always hard to predict the future, but in Banqsoft we expect the future auto financing experience to be significantly simplified for the consumer. New products may be based on subscription models with ‘all inclusive’ when it comes to service. The services can include more than what is related to the car itself, to cover the consumers total need of mobility services. Making it simpler for the customer will make it more complex for the finance company offering the service, since the services need to be integrated with multiple 3rd parties to offer one view for the consumer. When it comes to solutions, we believe that the solutions offering an open API who can interface with all the relevant parties in the auto eco-system, will be the winners. Digital automated processes will be a must, and the user experience focus on the product (the car) and the services. The financing will be fully integrated and not a separate process, as we see it.
How can lenders and dealers offer a better customer driven experience?
Terje Kjøs: Lenders and dealers can offer a better customer experience by integrating the financing to the buying process better than today. My experience is that consumers like simple and intuitive pricing models, so the focus should be on the monthly price, and not focusing on complex details that potentially affect the price. By integrating the finance solution with the sales process this will simplify the customer experience, and give the customer more predictability and safety which in my mind always is a good condition for a successful deal. Lenders must remember that the loan or lease itself is not what the customer wants to buy – they buy the car, and the financing part is an enabler.
Customers don’t like paperwork but they also seek clarity. How can this seeming dichotomy be overcome?
Terje Kjøs: This is an important area that many of Banqsoft’s customers has solved very well due to a system with good integrations with 3rd party providers that makes the process fully digital. In Europe it is now quite common to have good national systems for digital identity. With digital identity and digital signatures easily available on your mobile phone, consumers can find the car, calculate the finance offer based on automatic scoring and sign the finance contract digitally online. This is done in a minute or two, and gives in my opinion an excellent user experience that again increases sales. The papers are still there, but in a pdf format, and the consumer has access to the papers in a secure digital mailbox through the whole lifecycle of the finance contract, and that gives more clarity and safety than the traditional solutions with papers that are both slow, expensive and less secure.
Borrowers may not have the appropriate context to know if they are getting a good deal. That at least is how it is often viewed by customers. How can this be changed?
Terje Kjøs: I think there are different views on how simple the dealers and lenders would like to do it for the borrowers. From my point of view, it need to be simplified with less details, making it easier for the consumer to know what it will cost over the years, and easier to compare. This is possible today, and in some of the countries in Europe there is also demands from the authorities to e.g. always show effective pricing etc. on the price tag to make it possible to compare. This will always be a challenging area, but I think borrowers will earn on having simple and comparable models, since the modern consumer also consider the convenience and user experience and not only the cost.
There is a lot of talk about dealership reductions and increases in car purchases online, especially through mobile. What are your predictions for today’s car dealerships?
Terje Kjøs: We already see a trend where there are less new large dealerships being built up. My prediction is that sales of new cars will change to be an online process, where the dealerships are used more as a showroom. There will also pop up new and smaller showrooms in the cities where you can meet the dealer and test the car. The existing large dealer will, in addition to be a showroom, focus on the aftermarket with service and used cars which can be a very profitable business. I also think that the car manufacturers together with their finance companies will take a larger role and control over the dealers, which might change the structure of dealerships. The finance companies will play an important role, and captives will have an advantage with their integration with the car manufacturer and the trend going from owning to leasing/hire as I see it.
It is important to see the difference between new and used cars sale. For used cars, the change will be slower, and the dealerships seem to keep the control of that market.
Will car buying ever be as easy as upgrading a cell phone?
Terje Kjøs: A car is a large investment compared to a cell phone, but buying a new car can be as simple as buying a cell phone. As soon as you have done your research of what car you would like to buy, there is no reason why it should be more complex to buy the car. Digital solutions, integrated financing and digital id’s and signatures makes it today possible to buy a new car from your sofa in less than 15 minutes. The delivery process is probably the next that need to be improved, since the current delivery process of new cars is very time consuming.
Fleet Management
Banqsoft offers a solution for efficient management of fleet contracts in different channels. How do you see fleet management changing over the next 5 years?
There is a global focus on big data, AI and IoT. How will this impact fleet management?
Environmental concerns, including changes in government policy like the recent move to ban new petrol and diesel cars and vans by 2040, will inevitably affect the car finance industry. How do you see this panning out in the near future?
What are the key things that fleet managers should be considering this year?
Terje Kjøs: I think the traditional fleet management will turn into new flavours also reaching the private market with private leasing products including services that normally only have been available in fleet agreements. This will as I see it lead to a growth for fleet management offerings. I also expect the offering to include more mobility services, and car sharing etc. will be potential offerings on the fleet to answer the environmental concerns and the urbanisation that makes it more complex to own your own car in the larger cities. We see offerings of car sharing or car hire subscription of electric cars popping up in some larger cities, and I think that is only the start of what we will see coming.
Big data, and Internet of Things will make it possible to improve and extend the offering and value of the car. The car will know a lot about the driver’s behaviour, and this can be used for insurance companies, marketing etc. There are more or less no limits of what is possible, but we must expect regulations to come. Behind the scene you will need complicated integrations to make it user friendly and efficient for the consumer. Again, the finance company can have huge opportunities here as owner of the cars.
On a personal level, will you be an early adopter of autonomous cars when they become available?
Terje Kjøs: Yes, I am following that closely. I drive an electric car with some level of autopilot features already, so I am looking forward to new products on the market.
About Chief Executive Officer Terje Kjøs
CEO Terje Kjøs has been working within the Banking IT area for more than 15 years. With background from EVRY and Santander, Terje has long experience with bank and finance software implementations in the European market. Terje joined Banqsoft in 2010 and has filled various management positions, most recently as Head of the Financial Solutions area, focusing on product development. Terje took over as CEO in January 2018.