Driving digital in the car finance industry
The majority of the car finance industry remains stuck in the pre-digital age.
The majority of the car finance industry remains stuck in the pre-digital age. A sector that has traditionally been associated with lengthy processes and time-intensive paperwork, it’s one of the few that hasn’t been able to keep up with consumer demand for digital services.
According to our research, consumer demand for digitisation is so high that it can no longer be ignored.
Our survey revealed that more than half (56%) of consumers who have previously bought a car on finance would like to manage their plans online. Reasons for this include wanting more visibility of their online finances (51%) and being able to pay their loan off more quickly (44% ).
Despite the demand, a separate survey of senior decision-makers within the retail motor and car finance industries revealed that only a quarter (25%) of the industry has started to digitise loan applications originated by consumers.
Despite this, these industry decision-makers agree about the benefits of digitising the process; with close to three quarters (74%) saying they see increased digital engagement as a significant factor when purchasing vehicle finance.
So what is holding them back? When asked about what is causing the lack of digital progress they cited a lack of internal resources (48%), followed closely by back office legacy technology issues (45%) and the cost involved (43%).
Whilst the UK automotive industry stagnates, the sector in the U.S. is powering ahead. Several digital-only players like Carvana, an online dealership disrupting the market by cutting out what they call the hassle of paperwork, whilst offering financing and delivery on top of the actual vehicle, have popped up. This, coupled with recent stats by Google which show that almost three quarters (71%) of car buyers would rather apply for finance online than in a dealership, points to a change in car researching and buying behaviour towards digital.
The auto finance industry needs to move into the digital age to meet consumer demand, especially if they hope to keep up with the growth of new competitors. The barriers to adoption all lend themselves well to working with specialist digital providers, such as Intelligent Environments, who can help them get to market more quickly and cost, whilst integrate into a back office of their choice.