Angle Auto Finance, a leading player in the car finance market, has released a white paper called Auto 25 designed to help its dealer customers prepare for emerging trends in a wide range of auto finance practices.
The Auto 25 white paper acknowledges that the way we apply for financial products has already changed.
“From visiting a bank and having an appointment with the bank manager to applying and being assessed instantly online, this process continues to evolve rapidly. What’s more, the time between finance application, approval and settlement has reduced.
The Auto 25 white paper, said that these new efficiencies in the loan application process have been “largely enabled by digital processing and credit scoring through artificial intelligence and automation”.
“Automation can certainly enhance the customer purchase experience,” the report said.
“Current data from Deloitte reveals that the biggest bugbear for customers when getting finance is having to complete paper-based forms, with 28 per cent of customers rating it as the most disliked part of the process.
“In fact, paper forms rated higher than lack of control, transparency or finance jargon.
Waiting for approval was not seen as annoying as the other pain points but, at 25 per cent, “it is still a significant thorn in the side of many customers”.
The paper said that automation does not solve every part of the finance process with 22 per cent of respondents rating this activity as the worst part of the process.
“The reality is that a smart online form can revolutionise a customer experience – but isn’t a panacea for everyone.”
The white paper said that finance initiatives headed for the Australian market would enhance the customer experience here.
“Based on international market evidence, credit scores are forecast to play a greater role in car financing credit assessment and decisions. They will provide a better risk adjusted customer interest rate and a more objective and trusted determination. This will in turn enhance the customer experience.”
The Auto 25 report acknowledges that “there is still a way to go in smoothing the friction in the finance process for customers” but predicted that “new products, structures and marketing hooks, each helping to differentiate in a largely commoditised and highly competitive market” would smooth up the process.
“Some recent innovations are also giving us a glimpse into the future of finance.”
Matthew Wiesner, managing director Retail Australia, Sime Darby Motors, is quoted in the Auto 25 report: “We are 100 percent heading in that direction of taking the sales process online. Quite frankly it’s non-negotiable.”
Sime Darby Motors (SDM) is the automotive arm of Sime Darby Berhad. SDM Australia has 10 retail sites across Queensland and New South Wales.
Mr Wiesner says that the company wants to give its customers the ability to transact online if they wish and that is why SDM is collaborating with Angle Auto Finance to create “an end-to-end digital finance solution for used car customers”.
“The new solution provides customers with the flexibility to conduct the whole finance process digitally if they prefer. It looks set to be a game-changer in terms of convenience and flexibility.
“It enables customers to effectively do everything on a handheld device – as they expect to now, when buying other goods and services.
“It means that our customers can go to the SDM site, pick a vehicle, put a deposit down on it, apply for their finance and have it approved – all from their living room if they want.
“The solution also provides an omni-channel experience, giving customers the option to complete some of the purchase online and some in the showroom if that’s what they want.”
Mr Wiesner added that this flexibility would enable dealers to create better relationships with customers by allowing them to drive what they want – when they want.
“For the financial services world, the challenge will be working out how to best manage the asset,” he said.
Meanwhile the report also looked at how dealers are creating opportunity out of change.
It said: “The dealers we spoke to are focused on building strong, satisfying customer relationships to create repeat business and advocacy.
“They’re aware that this will be increasingly important as more customers move online – and the competition for those who prefer a face-to-face experience becomes more intense.
“One way to build these relationships is through personalised finance solutions and omni-channel experiences.
“Leading global auto financiers are helping by improving the product offers, features and the experience that they offer their customers. Examples across the world include guaranteed future value for new and used vehicles, variable rate products and deferred payments.
According to leading auto retailer Wade von Bibra of the Gold Coast-based von Bibra Group, rather than attempt to compete with banks on interest rates, finance companies and dealer groups should look for innovative ways to differentiate themselves from these institutions and their offers.
Wade von Bibra suggested the bundled services model, pioneered by fast food chains and insurance companies, to establish a point of difference.
“Let’s say a customer is taking out a loan with a three-year term. We could tell them: your finance includes three years’ worth of servicing, maintenance and maybe your motor vehicle insurance too. Also we offer a guaranteed future value – or just hand the car back to us and we’ll roll you into the latest and greatest model. This could really stand us apart. ”
The Auto 25 report said that other dealers are taking a leaf from the big tech playbook by offering subscription models, where subscribers pay one periodic payment for a vehicle of their choice for a set time period.
“Typically, the payment covers other associated costs such as registration, servicing and insurance.
“New market entrants like Simplr, which only offers a subscription model, are leading the way – but more traditional dealerships are jumping on board too.
Mr Wiesner says the dealership is already playing in this space, offering customers flexible ways to attain a vehicle. In his view, subscription is here to stay and will only have a larger presence in the automotive space as time goes on.
“In the subscription model you’re not actually selling something – you’re helping people with their mobility requirements,” Wiesner said, “And that’s a very different discussion.”
The Auto 25 report said that another potential benefit of bundling products and payments is that it would enhance the dealer’s data set relating to customers.
“Already finance partners are building rich customer profiles and sharing key lifecycle moments with dealers, helping them to build more fruitful customer engagement.
“With this data at their fingertips and paired together, dealers and financiers in partnership can better engage with prospects and customers throughout their lifecycle.
“They can also better tailor their marketing by targeting customers with offers that suit their specific budget, taste and needs on an omni-channel basis.
“End-to-end, this creates a more cohesive, compelling and enjoyable car-owning journey. For customers, such tailored information will make the process of understanding and committing to what is often the second largest purchase they will make, smoother, more personalised and less stressful.”
By John Mellor
Read More: Related articles
