Regulatory compliance, product shortages, inflation, and rising prices – these challenges affect all industries, including auto finance.
To remain competitive, auto finance business leaders must continue to evolve. Compared to those with an aversion to change, leaders in technology adoption and innovation grew twice as fast before the pandemic.
Disruption cannot limit market leaders’ adaptability, and technology can help turn challenges into opportunities. So where do you begin?
Five ways you can use technology to quickly adjust to change resulting from business opportunities or external factors:
1. Take advantage of digital technology
Making the commitment to go digital is the first and most obvious step. Over the past two years, the auto finance industry has experienced a great deal of digital transformation.
As a result of the Pandemic, many lenders have ditched paper and manual processes and to converted to digital processes. It has become clear to most that digitization will not go away anytime soon. Although auto finance lenders have varying levels of digital maturity, there are still far too many manual processes that could be automated. By going digital, you can optimize workflows, mitigate risk, save time and money, and enhance the customer experience.
2. Utilize cloud-based and SaaS services
In order to grow your business through technology, we recommend moving to the cloud, and using software-as-a-service (SaaS) solutions. There is a big difference between cloud services, and SaaS.
In a cloud-hosted model, the vendor is only responsible for building and deploying the infrastructure and technology. Then, you are responsible for maintaining the software, implementing the upgrades, testing, security, etc. The vendor builds it and then you manage the rest.
A true SaaS provider takes care of the security, redundancy, backups, disaster recovery, governance, and changes.
The SaaS model also works for companies of all sizes, from small startups using spreadsheets to large companies moving from on-premises systems. It’s common for smaller businesses to think they don’t have the technical expertise, staffing, or revenue to benefit from a SaaS platform. Larger companies often ponder whether SaaS can meet their scalability, performance, and complexity needs.
Every auto finance lender can benefit from SaaS, regardless of their size, sales volume, or digital maturity.
3. Keep standards high
It may have been a differentiator in the past, but legacy technology will hold you back competitively in this modernizing industry.
Data infrastructure and highly customized legacy technology are being challenged by rapid changes in the industry, business models, customer behavior, and technology. Modernizing technology can solve these problems. Due to their standardization capabilities, platforms are the vehicle for modernization.
4. Implement IT that is always up-to-dateCell phone operating systems are a good example. Before cell phones hit the mass market a couple of decades ago, you never really upgraded your phone. The manufacturers at the time weren’t really focused on upgrading their phones.
That’s a different story today. It doesn’t matter if you use an iPhone or an Android device, you receive quick updates every few weeks.
You should expect your fintech software partner to provide continuous updates.
You’ll want to ensure your auto finance software partner embraces evergreen IT, which updates your technology products regularly and seamlessly – monthly if not daily – for some functions. Regular upgrades won’t keep you up-to-date, as technology changes constantly.
5. Automate customer communications.The final recommendation is to Communicate effectively with customers. Auto finance business leaders must have the ability to efficiently communicate with customers to properly manage insurance status and disperse notices or updates. However, without the right software in place, it is easy to lose track of customers and fall behind on communications. With a loan management system, your dealership can take advantage of AI-programmed communications that are designed to automatically reply to customers via text or email. This ensures that your customers will receive timely notices and maintain the proper insurance coverage, so your dealership is never at risk.