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We are now in the era of latest technology bringing both opportunities and challenges alike. The auto finance industry is constantly evolving so here are our predictions for what may see in auto finance this 2020.
Amazon unsheathed an expansive vision of of software-defined vehicles.Accenture
1) The combination of human + machine workforce matures
A workforce with digital skills is no longer an option but a necessity. A 2019 survey of US consumers conducted by FICO found that 91 per cent of consumers would accept, or at least consider an instant vehicle loan offer if they could avoid dealing with a bank or doing extra paperwork. This means this could only be done with the help of technology.
This year, it might be possible that companies will work to expedite the lending decision process with more advanced sophisticated analytics and intelligent operations. Increasing demand for data experts and scientists is likely to continue. People with talent and expertise in the end-to-end payments system will be needed to help organisations support new operating models and identify innovative capabilities.
2) Mobility X.0 could be lead by winners of the in-vehicle payments platform
This 2020, in-vehicle experiences expand from infotainment and navigation to e-commerce has been seen connected. It started by Apple CarPlay and Android Auto. Amazon has also revealed an expansive vision of software-defined vehicles incorporating Alexa home-to-car and car-to-home integrations and offerings such as Amazon Pay. This has been uncovered at the Consumer Electronics Show 2020 (CES).
Along with the major technological advancement, progressive automakers are also thinking ahead reimagining the in-vehicle experience. BMW, for example, is sharing its vision of autonomous vehicles with an augmented reality layer and a digital personal assistant. Just who will dominate in this field remains to be seen.
There are three strategies automakers can employ to capitalise on this trend:
- Build a proprietary system that delivers all aspects of the connected vehicle experience
- Either buy a suite of microservices, use a payments-as-a-service platform, or otherwise outsource the platform development to a third party
- Partner with third-party providers to deliver the experience
3) When it comes to data, more lenders will start to think like captives
Manufacturers have long made use of data from vehicles to make diagnose and maintenance analysis and recommendations. What might an intelligent lending operation recommend to its customer based on usage data from increasingly connected vehicles?
If they own the data, auto finance companies could begin to use these data in new ways. Lenders are in the best position to own such data and make such offers because they have the customer experience and data governance structures to support them. While banks may be better positioned to make a customer a personalised offer, it would need to think like a captive and combine its data with mobility data to formulate a more competitive, real-time offer.
4) Everyone is looking to AI
Key topics at the World Economic Forum in Davos were focused on data privacy, inclusive capitalism and the responsible use and governance of artificial intelligence. AI is increasingly making significant decisions, from who gets approved for credit to how to answer customer questions about loan decisions in real-time. If restructuring a lease deal is assigned to an AI, how can the lessor ensure its AI is making an accurate decision? 2020 will likely be marked by an increasing effort, thanks to regulations like GDPR and consumer demands, to explain AI decisions and retrain AIs as needed.
5) Data will be shared across many platforms
Open Banking is prompting companies to look beyond traditional boundaries for opportunities to monetise shared data and add value for customers. Many ride-sharing platforms are serving customers in new ways with shared scooters and bicycles, embedding themselves in the larger mobility ecosystem. Data will have to move beyond a company’s centralised data lakes and into data rivers—ecosystems generating data from multiple stakeholders—to enable new, attractive offers for customers. For example, customers can agree to share data in exchange for lower auto insurance premiums when they finance a new car. The same data can also be used to offer customers maintenance discounts.
The use of advanced technology is really reshaping the auto finance industry and only time will tell how big the impact could it bring to the auto industry.