Building for the Unknown: Insights on Auto Finance
Introduction
In a series of articles, Alfa Project Manager Michael Mousdale discusses various issues that confront the automotive finance industry today.
They include such concepts as digital dealerships, electric vehicles, in-car payments and connectivity, as well as subscription leasing.
In each piece, Michael looks not to solve the issues but bring them to the fore, noting the key technology requirements that must work together so we can build for the unknown.
Building for the Unknown #1: Electric Vehicles
The rise of electric vehicles continues at pace, and some automotive manufacturers - see General Motors, Volkswagen and Jaguar Land Rover - have pledged to phase out combustion engine vehicles.
Various countries and jurisdictions are under increasing pressure to accelerate this trend, with many implementing the extension of subsidies and grants, as well as identifying new ways to incentivise customers to buy electric vehicles.
This follows a number of other pledges to phase out fossil fuel-based vehicles, such as the United Kingdom’s ban on new fossil fuel vehicle sales by 2030 and California’s enforcement of a similar ban by 2035.
Supporting this change is about more than just the ability to list and sell electric vehicles. To ensure customers receive the appropriate benefits, providers of automotive finance need to look for enterprise solutions that support an ever-changing landscape of incentives, grants and subsidies.
Configurability is key. Being able to define where an incentive is valid, and until when, allows companies to satisfy the latest legislation. Delineating how the incentive behaves for the end customer, and how the money is recuperated from governments - as well as its taxability and accounting behaviour - are equally important.
Similarly, being able to link new incentives to certain types of vehicle and automatically update offerings and pricing, all through configuration, is critical to success. This not only ensures that customers are given the most up-to-date, competitive offering as soon as possible, but also reduces the potential administrative burden of corrections to existing but eligible contracts.
To capitalise on these opportunities, automotive finance companies are looking towards platforms that not only support the industry of today but also provide a set of configurable, rich building blocks to support the industry of tomorrow.
Trusted by top finance providers worldwide, the Alfa Systems cloud platform with open API lets you automate, innovate and challenge in your market. Prepare for your future - it could arrive at any time. Find out more.
Building for the Unknown #2: Digital Dealerships
The dealership of tomorrow has been evolving gradually into a virtual, flexible experience. This has been driven by the millennial generation, one accustomed to swift and efficient digital experiences, reaching its peak spending potential. The trend has been accelerated by the pandemic and, as a result, dealers have been forced to become more creative with their online offerings.
More and more automotive finance providers are looking to implement a technology ecosystem to support this changing demand. But doing so is about more than throwing together a self-serve application for viewing contract details; customers want support for the entire financing process, with maximum flexibility.
To meet this desire requires a robust and well connected spread of functionality, working in tandem with a seamless customer experience. Strong APIs must be able not only to price agreements and receive customer details, but also to provide customers with an intuitive and efficient experience that encourages purchasing. This requirement permeates throughout the onboarding journey: through browsing, quotation, credit and e-signing, as well as post-deal services such as delivery and an optional courtesy return of the asset.
To ensure automotive finance organisations can adjust to meet shifting demands quickly and, ultimately, provide the most compelling and competitive offering for consumers, these APIs must themselves be supported by a highly configurable parameter set. Similarly, configurable workflow and business rules allow providers to enhance the customer experience and update controls. In both cases, configurability enables rapid change to the customer experience through a no-code solution, reducing overheads and time to market.
To capitalise on these opportunities, automotive finance companies are looking towards platforms that not only support the industry of today but also provide a set of configurable, rich building blocks to support the industry of tomorrow.
Trusted by top finance providers worldwide, the Alfa Systems cloud platform with open API lets you automate, innovate and challenge in your market. Prepare for your future - it could arrive at any time. Find out more.
Building for the Unknown #3: In-Car Payments and Connectivity
In-car connectivity presents an exciting opportunity for automotive finance providers to challenge and transform existing communication and revenue channels, including recurring subscriptions for software upgrades or service fees for in-car payments.
Capturing the potential of this new marketplace isn’t just limited to having the latest in-vehicle technology; organizations will also need a strong ecosystem of tools to support the groundbreaking process.
Having a robust API to receive and process the wealth of data in a useful manner is key, as is the ability to transmit data to vehicles and therefore the customer. In addition, imploring a mechanism which can build and update integrations readily is also required, as manufacturers implement more sophisticated technology.
It is equally important for providers to ensure that the data received is maximized and used correctly. For example, the ability to purchase additional services and pay fees will require flexible business process automation (BPA) to ensure control and automation. As in-car connectivity becomes more common, the ability to implement controls and update processes easily will be vital in ensuring compliance with any new jurisdictional regulations.
Finally, having a rich and configurable suite of core functionality compliments the ability to receive vehicle data and implement business processes around it. In this example, configurable accounts receivable, accounts payable and accounting engines are also required to ensure providers are paid, the customer is billed in accordance with their preferences, and underlying accounting is updated accordingly.
In order to capitalize on these opportunities, automotive finance providers must look towards platforms that not only support the industry of today but provide a set of configurable, rich building blocks to support the industry of tomorrow.
Trusted by top finance providers worldwide, the Alfa Systems cloud platform with open API lets you automate, innovate and challenge in your market. Prepare for your future - it could arrive at any time. Find out more.
Building for the Unknown #4: Subscription Leasing
Access to vehicles through subscriptions is on the rise due to the increase in demand for convenience and flexibility, along with a declining desire for long commitments.
This has been unlocked by major technology advances - mobile phones of today offer constant connectivity and a valuable source of real-time data. Other market segments have proven the power of bundled services; customers are increasingly willing to pay for the convenience of a month-to-month bundle at a higher total price, as opposed to finding the cheapest price individually.
Having a servicing platform with a wide and powerful API allows customers to achieve more from their mobile devices, and providers to meet their demand for convenience, flexibility and immediate results.
Furthermore, a number of manufacturers have trialled subscription programs, often restricted to a particular location. It is imperative that providers are able to monitor the performance of such programs, both in terms of customer satisfaction and provider profitability. Being able to combine data from customer-facing mobile applications, with a wealth of reporting data from a servicing platform, allows providers to converge on offerings that suit both the customer and the bottom line.
But finding the right balance for a subscription offering is an iterative process. One tranche of data may not always point to the right solution. The ability to configure updates to offerings without having to update application software code is equally important to ensure shorter feedback loops and lower overheads. This allows providers to test and establish new products, update or expire offerings, or expand coverage without the need to engage a development team.
In order to capitalize on these opportunities, automotive finance companies must look towards platforms that not only support the industry of today but provide a set of configurable, rich building blocks to support the industry of tomorrow.
Trusted by top finance providers worldwide, the Alfa Systems cloud platform with open API lets you automate, innovate and challenge in your market. Prepare for your future - it could arrive at any time. Find out more.