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Car buyers love financing their vehicles. In the first quarter of 2021, more than 80 percent of cars purchased in the United States were financed.
That should be great news for companies involved in the automotive purchasing and financing process, but not everyone is celebrating.
Because as consumers embrace digital technology and online buying in their day-to-day purchases, they increasingly expect a seamless Amazon-like experience from auto companies. They don’t want to haggle or “talk to the manager.” And for them, sitting in the dealer’s showroom or lobby for hours waiting for loan approvals and paperwork preparation is an irritating waste of time.
In a recent Wolters Kluwer industry survey, auto industry professionals acknowledge these struggles. Some 74 percent of respondents say that completing paper based financing processes takes more than 30 minutes. More than 60 percent estimate that a quarter to nearly half of all deals have errors due to manual processes.
To deliver the kind of customer experience that attracts, satisfies, and retains valued consumers, auto companies need to transform their processes by deploying digital technology.
eContracting solutions help firms shift from manual, face-to-face processes to lower friction, more compliant digital processes. eSignature tools enable compliant digital signatures. Electronic vault technology allows companies to house documents in digital storage, where they can be shared with retailers, lenders, consumers, and companies in the secondary lending market.
By allowing enterprises to stay digital across their end-to-end financing processes, these advanced technologies can enable faster, more-accurate loan origination. Simpler, more efficient loan processes improve the convenience and overall experience of customer interactions. And, not surprisingly, those benefits can increase sales.
Auto companies that embrace digital solutions can streamline and improve the auto financing process. In the Wolters Kluwer research, 76 percent of respondents say that the solutions allow them to complete transactions in just 10 to 20 minutes. That’s a huge improvement—one that consumers will love.
Unfortunately, most auto industry leaders haven’t yet adopted digital finance solutions. According to the survey results, many decision-makers say that they haven’t found the right solution or they are unsure of the value the technology can deliver.
Of those who have deployed some digital tools, most firms are just getting started. Only about one-quarter of respondents say they are using the technology in more than half of their business.
Even fewer companies have deployed eVault solutions, which ensure regulatory compliance and legal enforceability of digital asset-backed securities. Less than half of the survey respondents said they are using an eVault solution to provide proof that a digitally signed document is the original, unaltered document.
What’s the takeaway from this data? Some auto companies may think that they have nothing to lose by waiting until digital solutions are more widely deployed. They couldn’t be more wrong.
The percentage of manual finance and insurance processes will continue to shrink as companies digitally transform themselves. The COVID-19 pandemic accelerated this shift and—like the new, more-convenient business models adopted by retail and consumer products industries— consumers will expect auto companies to get on board. In fact, the Wolters Kluwer Auto Finance Digital Transformation Index shows a nearly 80 percent increase in digital transactions since the first quarter of 2021.
To deploy digital solutions quickly and with minimal cost and downtime, leading auto companies are connecting with third-party platforms and cloud services. These technology providers can help auto companies digitalize more of their processes faster and more deeply. This is especially true for niche players who function effectively only when they can efficiently share trusted, standardized data and documents with other players in the auto ecosystem.
A shared, digital cloud platform offers a single, secure, and tightly controlled environment that companies can use to manage all processes and handoffs throughout the financing journey. It can ensure the integrity of all documents, data, and connecting points—from beginning to end.
By using a digital cloud platform, companies can sign and manage contracts digitally, eliminating paper and its associated inefficiencies and risks. Firms can manage contracts with tight security, control, and speed. And they can use trusted, reliable, and low-touch governance features to boost compliance control and efficiency.
Companies that delay this transition, effectively refusing to add value for their customers, risk losing business and being pushed out of the market by competitors. In a softening economy, where new and used car sales are lower than projected, meeting customer interest by offering a fully digital car buying experience is a smart move, and one that’s definitely worth celebrating.
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About Wolters Kluwer