Disruptors are putting customers in the driving seat of vehicle finance
The financial services sector is being disrupted in exciting ways, including one that’s always been traditional – vehicle finance
The banking industry is now used to being in an almost constant state of disruption. The rise of fintech, new technologies and challenger banks have turned the sector on its head and into one of the most competitive and rapidly evolving business environments. But it’s not just the banks that are feeling the pace of change, the whole financial services sector is being disrupted in new and exciting ways, including one that’s always been rather traditional – vehicle finance.
A common theme amongst vehicle finance disruptors is a far greater emphasis on the customer. Here are a few of the most interesting examples:
- US-based TrueCar offers potential customers transparent pricing information on new and used cars, including what others have paid for it in the past.
- Car Wow focuses on the new car market. Customers upload their request, saying that they are interested in a particular model, and are looking for a particular specification. Dealers then bid for the business, competing with each other for the opportunity to sell the customer the car.
- Carvana is another interesting disruptor, focusing on the used car market. The business purchases second-hand cars, reconditions them and then sells them on to customers online, offering customers the ability to pick up the car themselves or have it delivered to their door. The company also achieved a marvellous feat of engineering by allowing those customers picking up their car to do so from a five storey, fully automated coin-operated car vending machine.
- Peer-to-peer (P2P) lending network Zopa recently began moving into the vehicle finance market, and its Car ReFi offer should prove popular. Buying a car is the most popular reason to take out a loan, and Car ReFi enables people to refinance their loan at a lower price – an attractive proposition for any consumer.
Traditionally the vehicle finance sector has been a close-knit one, and until now has proved resistant to change. Now though, the industry is changing, evolving into a future that’s far more tech-driven, and that puts the customer’s experience and interests at the heart of its model.
New disruptors are creating a fragmented market for the more traditional players. The industry is evolving, and just as the banks found before them, unless they adopt digital very quickly they risk losing out to these new, more agile competing businesses.