Tim Hammond is the founder of automotive technology firm Driver1, an established player in the market that is set to release Driverifi, a digital credit score application aimed at younger demographics and already adopted by industry leaders such as Close Brothers and Alphera. Chris Lemmon asks him about his ambitions for the company, and the changing nature the industry.
Motor Finance: What is the story behind the foundation of Driver1 and Driverifi?
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Tim Hammond: The company was born out of a change in consumer behaviour. Generation Rent means that many people aren’t building a credit score in the old-fashioned way, and from this Driver1 identified a new approach to the industry.
In the current 18-35-year-old demographic, people are using their mobile phones for their banking and wider financial activities. With all this in mind, Driver1 felt this was the right time for a mobile application such as Driverifi.
Many motor finance providers are asking themselves questions, such as how can they bring the car dealership online, and how can the car finance journey be improved. There are the likes of Oodle and others, which are making this process as easy as possible for the consumer. However, each company still has that big hurdle: customers having to fill in an overlong form that simply can’t be done on a mobile phone.
The partnerships Driver1 has with the likes of Yodlee has enabled a product together that can onboard any driver in three clicks, the scan of a driving licence, and the click through to their bank account.
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By GlobalDataThe data that you get from that onboarding process is good enough to do a soft credit check. In line with the FCA’s remit on treating customers fairly, there is little desire to put people through a full credit application, or even a soft credit check that can leave a footprint.
Relatively little data is required from the app: it’s simply about proving the salary, proving the income and expenditure, and creating affordability for the customer.
The ultimate mission of this application is to help customers not just onboard on the mobile app, but actually get cheaper car finance than they would from more traditional credit checking options that are less appreciative of their fluctuating circumstances in both residency and employment.
MF: Talk me through the ‘three click’ process.
TH: The time it takes to go through that process and Open Banking takes up to 60 seconds. So it is about 30 seconds for the driver licence verification, and then up to 60 seconds for the Open Banking.
The initial launch in September presented customers with a soft credit check, much like a quotation search that you would get online. That’s the first phase; the next will be a showcase of the actual lenders on the platform. Driver1 is in the process of getting lenders on board for that.
The mission of Driverifi is not to get everyone into finance. If a customer doesn’t fit the criteria, they are not going to be put into subprime, as that is not the model. There are negotiations with a number of car dealer website providers to look at embedding this app in their customer onboarding process.
MF: Would businesses be integrating the solution into their product, or would the customer still need the Driverifi app?
TH: At this stage, it’s not those lenders pushing it out to all their clients simply for us. If a customer uses the Driverifi app, they would then be shown the rates from the likes of Close Brothers and Alphera.
This integration is a part of why Driverifi could be so appealing to young drivers. If customers want to get a car through finance, whether it’s HP or PCP, they could use the app first and get the best rate possible. With the likes of Alphera and Close Brothers, there are very good rates.
Take the example of a 19-year-old that has had a job for six months. They would need a joint hirer on that car finance agreement. Through the Driverifi app, the young adult can see that they can afford the payments, but they would need to add a parent as joint hirer in order to get to get car finance.
Driver1 has been talking to and meeting with the lenders that are better for people within credit. This is the beginning of a journey that could take two or three years to start getting all the lenders on, because each risk appetite is different.
Although the industry is changing, it is comparable to a massive oil tanker: it will take time to shift the way it is facing. Right now, customers can use the Driverifi app to get approved for car finance from lenders such as Close or Alphera. Moving forward, we are looking at adding more lenders to the app.
MF: What data does Driverifi retain from the customer application?
TH: The simple desire from Driverifi is to do a check as to whether a vehicle is affordable for a customer. There are also certain things that can be done with Open Banking where it is less onerous on the user. The Open Banking APIs Driverifi is using are in collaboration with a company called Yapily – probably one of the leaders in bank APIs. It is an approved information service provider that allows Driver1 legitimate access to that data.
Yapily brings back the information, and then the system disseminates that and creates a profile of the user. That can include the customer employer’s name, but it is not required by the system in order to show that the customer has got at least six months’ worth of salaries coming in from that particular account.
This does prevent fraud. By doing that employer check, Driverifi can also cover the anti-money laundering checks. This is only done if there is something potentially suspect, which is why the credit score application takes up to 60 seconds.
MF: Driverifi is the product of the Driver1 Labs. What other projects are being developed there?
TH: The next one being looked at is a car subscription product. Driver1 was very vocal early on that people don’t want to buy, they don’t want to own, but they do want to have.
Car subscription should be more affordable. We’ve seen the first wave of this model with companies like Drover, Jaguar Land Rover’s CarPay, and others. However the subscriptions have been far too expensive.
The lab is all about inventing solutions that are adapting to consumer behaviour. The first one is about credit scoring, because clearly the current system is broken. The second one is about a proper car subscription model for under-25s, the great underserved demographic of our industry.
They don’t want to be in old bangers anymore, because they want to have cars that reflect their devices, with proper connectivity.
One of Driver1’s partners is First Car magazine, which gets its magazines out to 2.5 million learner drivers every year. It is our biggest route to market, and the Driver1 partnership with them will enable young drivers to get a proof of finance, even while they are just learning to drive.
Most young drivers will have a learner car, which they can’t then drive once they’ve passed. You can drive the car to the instructor and to the exam, but you can’t drive it away. It’s mad.
MF: What else is Driverifi looking to achieve?
Driver1 is opening Driverifi up to all the lenders to say that if you really want to go online, the reality is that you have to think mobile. You’re talking online because that’s seen as the next gold rush, but lenders can actually jump over that and be mobile first.
If you’re focused on website, website, website, you’ll hit those 35-50-year-olds, but you’re going to miss the younger generation. Driverifi is a shortcut to that.
