What are the top automotive finance innovations? Jim Houston, Managing Director of Consumer Lending and Automotive Finance Intelligence at J.D. Power shares his perspectives on innovations and borrower experience in the AutoFi sector.
Q. When you think about auto lenders in the past 5 and 10 years, what are the top 3 innovations that have had the greatest benefit to consumer experience?
The top 3 innovations that have had the greatest benefit to CX are Electronic Contracting, Auto-decisioning and Expansion of payment option.
Q. Do you have a short list of likely 3-5 innovations that will transform experience in the next 5 to 10 years?
The following will transform experience in the coming years:
- Full circle digital experience
- Real-time Payment data and ability to pay on demand
- Full-service finance options that include insurance and vehicle servicing ( still too expensive today)
- Alternate financing options that support and embrace the current non-financing population
Q. Who are some of the key people at which lenders that are driving these initiatives to deliver improvements?
These activities are being driven by technology and innovation teams, plus the appropriate marketing teams to support the digital wants and needs. AI and Cloud based opportunities are green space in AutoFI given the conservative nature of the business from a risk perspective.
Auto Fi portfolios now exceed $1.2 Trillion dollars, and the industry would be hard pressed to point to anything in the last ten years that could be consider transformational. The current next big thing will be the direct to consumer model expansion, but while the everyone (auto lenders) agree that it’s inevitable, most still rely on the dealer to select them, thus little drive to change rapidly.
One of the biggest issues facing auto lenders is the platforms they service their portfolios on, and the limitations that those systems present. Many are reluctant to make the large dollar investments necessary to upgrade/rebuild given the compressed margins they are faced with today
