For quite some time, banks, credit unions, lenders, and even automotive dealers themselves have been discussing the need for more consumer-facing online shopping and borrowing options. Considering the current pandemic landscape we are all facing, it seems the automotive industry recognized the need for intelligent processing procedures before those in various vertical markets. While many were discussing the need for more sophisticated lending solutions, very few were acting on implementation. However, there are several tools available to lenders to simplify the lending process and help pivot strategy in times of economic uncertainty or a shift in shopping habits. For those lenders that feel they are at risk of losing borrowers to more established competitors, it is more important than ever before to take-action.

Similar to the way that dealer management systems helped automotive dealerships to shift many of their paperwork processes online, the same can be done today through modern loan or lease origination servicing systems. Dealers should focus their efforts on building a strong online presence that will lay the foundation for more advanced procedures with their lending partners.

The key to consistent growth and stability of any powerful company or organization is built by a strong foundation. This remains true for dealers. In theory, dealers should have the capability to build from their existing processes, procedures, and platforms. However, not all of them do. Advanced technology will allow for more sophisticated additions to be built from simple foundations. It is important to consider whether the existing loan origination system is both flexible and scalable. It is even more important when marrying both direct and indirect lending technologies together. Online shopping and borrowing technologies should be integrated with multiple sources making it easier to start small with the option to grow larger.

When it comes to working directly with consumers and consumer-facing applications, lenders need intuitive technology for all processes. This means communicating with customers through the entire process which includes buying and financing to ownership. Consumers want access at any time from any device. Regardless of which phase a borrower may be in, it is most important to communicate each step to the borrower while protecting their personal data and documenting each step of the process to mitigate legal liability. Combining the needs of the lender with the needs of the borrower is part of that foundation which builds an online solution.

Solutions should be end-to-end and backed by a provider with experience and proven record of results and relationships with clients. Recognizing lender partners that not only meet the foundational needs of the organization but carry integrity and an eye for innovation can mean the difference between a successful online platform and a non-successful platform. For example, this is even more important in a dealerships digital retailing strategy. Still today, many dealers offer online financing resources to their customers, but when customers fill out an online credit application, the application is simply sent to the dealer as a potential buyer. The application is not sent to any lenders to start a transaction or facilitate a transaction, which is not truly a digital retailing experience at all.

The transition of enabling digital retailing services on the dealer website is quite complex when strict legislative regulations are considered. While it is possible to include an entire suite of finance offerings through the dealer website, it requires an end-to-end solution. There needs to be a way for the dealership website to transfer data to multiple lenders to get feedback and properly guide both dealer and customer through the process of structuring a loan. In other words, the deal needs to be more tangible.

It is important to consider technology that can easily evolve as the industry changes yet can match deliverables. The online lending process must include search functions that are vehicle-specific or financial-specific, offer products and rates, as well as credit applications, electronic signatures, and funding options.

The future of successful dealerships and successful lenders is in the art of borrowing and servicing simultaneously. Providing online servicing options comes down to automating what was previously manual through legacy systems, digitalizing what was previously paper, and affording borrowers the ability to self-help. Consumers should be able to easily access their account or make payment online.

It is important to note that the shift from indirect lending to more direct lending does not necessarily mean elimination of the dealer. Instead, it requires orchestration between all parties throughout the borrowing process. Technology platforms should provide a cohesive dealer-facing solution that allows access to all internal systems in the same way a borrower has access. The borrower requires dealer touchpoints along the buyer journey. Through this, there is synchrony between lenders and dealers, along with the technology they are utilizing. All of which, are key to successfully pivoting lending solutions to a more efficient online environment and strategy.

About the Author

Vladimir Kovacevic is the co-founder and Managing Partner of Inovatec, a leading software provider to Canadian financial institutions. Inovatec’s products are designed for origination, processing and management of loans and leases across a broad spectrum of credit quality and asset types.

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