Inovatec Systems Corp. announced today the results of its latest survey, where dealers reported partnering with fewer than twenty lenders to finance automotive loans, highlighting a competitive financial marketplace for lenders. The data sheds light to the importance of accurate and efficient lending processes in an environment where dealers can be selective about their lender partnerships.
When asked about their current dealership financing options, 58% of dealers reported relying completely on third party financing, while 42% said they offer in-house financing. When asked about their finance preferences, 40% stated that they prefer to use their own in-house financing options over the help of a third-party financial institution.
Respondents were further asked about their credit application procedures, transaction times and COVID-19 related changes in sales and processing time. Of those surveyed, 75% said that customer credit application forms could take up to one hour to complete. When asked about the average transaction time, 39% of dealers reported their transactions take between one to two hours. An additional 21% said a transaction takes between two to three hours, 12% said between three to four hours, and only 28% said it takes less than one hour. When dealers were asked how long the average lender transaction processing time has increased during COVID-19, 62% said it has increased by approximately one hour.
“The results of the survey indicate a clear need for quicker, more effective lending technology processes that can increase the efficiency of existing systems that require ample amount of processing time,” said Brendon Aleski, US Director of Sales at Inovatec. “It’s evident the financial marketplace is competitive and robust, and many lenders have struggled to adjust to the changing landscape during the pandemic.”
Changing out your decades old LOS/LMS system is inevitable and, given the acceleration to a Digital First world, now is the perfect time to start planning for it.
QUESTION: Would You Still Be Using a Cell phone from the 90s?
Many Auto Lenders are still using a Loan Origination System and Loan Management System developed decades ago. These systems have been customized over the years to reflect each institution’s unique workflow and compliance requirements.
For this reason, it takes a great deal of ‘gain’ to convince a lender that modernizing is worth the ‘pain’.
So Why Do Auto Lenders Want to Change Their LOS?
Fully 50% of auto lenders have expressed a desire to upgrade their LOS system. The top three reasons for wanting to upgrade are:
- Adding a new feature or workflow (such as remote access for work at home employees) to a legacy system is costly and very time consuming. By the time the change is made, the new feature implementation may already be obsolete.
- New products are introduced (such as federal electric car rebates) that the legacy system cannot support. In many cases, third party systems are needed which do not play nicely with legacy systems.
- Consumers are doing more virtually and are demanding an end-to-end, digital experience. Many systems have absolutely no support for direct consumer interaction and these lenders risk being left behind as more aggressive lenders can reach consumers digitally before they purchase the car.
WATCH THE HIGHLIGHTS Our panellists reveal what you should consider when you are ready to upgrade your LOS.
What Is Stopping Auto Lenders From Making The Upgrade?
At the same time, the top three challenges in making a change include:
- The legacy system has been customized to such a degree, that it may be incredibly hard to replicate the functionality and workflow in a new system.
- Inertia within an organization, including employee willingness to take on new platforms, make it an unpopular decision.
- The overall project risk of starting and not being able to successfully complete the project. The project risk factor was the main reason that wanting a new system and actually starting the process are two completely different things.
Even if these considerations don’t stop a project, they may delay decision making and the implementation timeline.
What Factors Should You Consider After The Decision to Change Has Been Made?
A proper project framework is critical to the success of any project and even more so for this mission critical infrastructure. Here are the top factors that will help to make a project successful:
- Make sure to compare the cost of changing versus the cost of the status quo. It’s easy to kill a project if all that is being considered is the overall cost. Leaving the project too long may put you out of business or at least at a competitive disadvantage.
- Make sure that IT is an equal partner. As one lender stated, the business owner may request the upgrade but if IT isn’t a partner in picking the vendor or, if it will be an internal project, providing the resources, the project is destined to fail.
- Pick the team and outside vendor wisely. The two main requirements of the platform are the ability to reflect unique internal processes and the ability to deal with regulatory complexity. The vendor’s platform must be configurable to reflect internal processes. This is less expensive and less time consuming than needing expensive customization. And finally, the vendor must take the responsibility to comply with current and adapt to future regulatory requirements.
WATCH THE WEBINAR What should you consider when you are ready to upgrade your LOS? Our panelists take a deep dive into the factors behind a successful transition.
Many new realities come with the new normal including a consumer oriented mindset that still supports dealer processes. Changing out your decades old LOS/LMS system is inevitable and, given the acceleration in the remote, digital first world, now is the perfect time to start planning for it. Pick a team, pick a vendor and get started.
Inovatec announced its strategic partnership with Wisconsin Consumer Credit, a leader in automotive finance. Wisconsin Consumer Credit will integrate Inovatec’s end-to-end solution into its lending services, rental payments, and debt collection systems.
Inovatec will partner with Wisconsin Consumer Credit to increase the speed and accuracy of lending decisions for the companies current automotive and rental payments portal that are accessible through online and mobile phone applications. Inovatec’s technology provides a solution that is scalable and data-driven, allowing for more strategic and confident lending decisions to be made.
“At Wisconsin Consumer Credit we have a strong appetite for growth, and it is critical that we implemented the tools necessary to make that happen. We are excited for what the future holds now that the ground-work is completed for a successful loan origination and management system,” said Amanda Kroener, VP of Operations at Wisconsin Consumer Credit.
Inovatec’s agile process builder will allow Wisconsin Consumer Credit to create processes and workflows that can be seamlessly and almost immediately implemented with minimal training. In a time when digital financing is increasing in popularity, lenders need a solution that allows them to quickly pivot their lending strategies and offer end-to-end AI solutions that give customers nearly immediate decisions. “The integration of lending technology and automation is allowing for seamless digital finance options for automotive shoppers,” said Bryan Smith, Head of Customer Growth & Strategic Partnerships at Inovatec. “By implementing sophisticated systems, the speed of buying and lending process is significantly increased.”
Inovatec announced its partnership with Repay Holdings Corporation (NASDAQ: RPAY) (“REPAY”), a leading provider of vertically-integrated payment solutions.
As the proprietary payment platform of choice for Inovatec, REPAY will enable lenders and finance companies on the Inovatec system to securely accept debit cards, credit cards, and ACH payments through its digital suite of consumer-facing payment channels, including text-to-pay, Interactive Voice Response (IVR) phone pay, the REPAY mobile app, and online payment portals.
With its strength in business process automation, Inovatec’s configurable loan servicing and customer engagement platform provides full servicing capabilities and portfolio analytics while allowing businesses to create customized processes and workflows throughout the lifecycle of a loan or lease.
“Inovatec’s extensive experience across automotive, equipment, and consumer sectors, along with its strong presence in the United States and Canada, makes this a valuable and exciting partnership to embark on,” said Susan Perlmutter, Chief Revenue Officer of REPAY. “These critical times have proven how important it is for lenders to offer convenient, easily accessible digital payment solutions to their customers to help reduce friction in the loan origination and repayment processes.”
Inovatec’s cloud-based lending solutions for the automotive industry streamline the process of submitting applications to lenders. Combined with REPAY’s market-tested, proven transaction processing platform, Inovatec can ensure an optimal customer experience with a turnkey, fully digital solution that can be rapidly deployed end-to-end. “We look forward to our partnership with REPAY and are thrilled to now have the ability to provide fast and secure payment processing solutions to our clients,” said Bryan Smith, Head of Customer Growth and Strategic Partnerships at Inovatec. “We selected REPAY as our platform of choice because of the company’s seamless integration capabilities, direct lending processing solution and distinct experience in the automotive industry.”
Inovatec has been awarded the Trusted Information Security Assessment Exchange – TISAX Certificate for meeting compliance with stringent information security requirements. TISAX Assessments are conducted by accredited audit providers that demonstrate their qualification at regular intervals. TISAX and TISAX results are not intended for general public.
TISAX was developed by the German Association of the Automotive Industry (VDA), whose members based the catalog of requirements on the international industry standard ISO/IEC 27001, adapting them to the automotive sector. One substantial benefit for both manufacturers and suppliers is they no longer need to audit TISAX-certified suppliers themselves, making it possible for them to shift new processes to modern cloud services more quickly than before.
“For Inovatec, confidentiality, availability and integrity of data and information are all part of our core company values,” Christian Reina, Information Security Officer at Inovatec. “We have taken extensive measures to protect the integrity of sensitive and confidential information. To adhere to the highest industry standards of protection, we follow the question catalogue of information security from the German Association of the Automotive Industry (VDA ISA)“.
As the automotive industry rapidly evolves to incorporate new technologies like the Internet of Things (IoT), connections to the cloud and autonomous vehicles, specialized compliance offerings such as TISAX are critical to winning customer trust.
Inovatec Systems Corp., a provider of industry-leading, cloud-based software solutions for all financial institutions, announced the results of its latest survey, showing 61% of executives who finance equipment reported their organization lacks modern process management technology to organize complex loans that can be critical to operational function during business downturn.
Non-Typical and complex equipment finance loans are gaining traction among many businesses that require equipment to remain profitable. In fact, 44% of executives polled reported that their business requires special conditional finance options such as six-month terms or low payments during slow seasons. When respondents were asked how they manage these non-typical complex loans, 53% said they either did not have an internal process management solution to track payments and organize their loans or they felt it didn’t apply to them. Of the 47% who reported they were using a process management solution, respondents overwhelmingly reported challenges associated with their existing processes.
Financial technology is increasing every year, and customers want processes that are quick and efficient. In fact, digital payments, alternative lending and alternative financing were in the top financial technology segments by transaction value in 2019. As this segment of the market continues to grow, so must lending processes to meet the needs of customers.
For example, Ritchie Bros., a leading financial services and asset management company offering customers end-to-end financing for buying heavy equipment and assets, has implemented a process management solution that has enabled them the flexibility to pivot their lending strategy amidst business and economical changes as a result of COVID-19. Their business has remained stable and unaffected from an operational perspective, and they can service customers in the most efficient and effective way.
The survey revealed an obvious need for process automation in the equipment lending space. Without an internal process management solution, these companies are manually managing loans on a month-to-month basis. Furthermore, when asked what type of business transformation their organization was most in need of, cost reduction (43.6%), workflow management (51.3%), and efficiency (55.1%) were top of mind. When asked what they did not like about their current loan processing system, only 32.1% reported it needs modernization, yet 70% went on to report their current system needs between two to four weeks or more to train a new employee. “The survey shows there are clear discrepancies between those in the equipment finance space and inefficient lending processes and procedures that can be critical to keeping businesses afloat during seasonal or even economic downturn,” said Bryan Smith, VP Sales & Marketing at Inovatec. “In a time where many businesses are looking to restructure or refinance their loans, having modern and sophisticated processes in place to keep these loans organized should be a top priority for maintaining long-term customer relationships.”
While enhancements in auto financing certainly have been made over the years, a pair of surveys orchestrated by Inovatec Systems Corp., revealed areas where improvements still could be made for the benefit of finance companies and consumers.
This week, Inovatec began with the results from its latest survey that touched on consumer pain points associated with finance companies when financing a vehicle.
When asked about the biggest complaint associated with financing their last vehicle, 56.8% of consumers said that finding a bank or finance company that would approve the purchase of the vehicle was their biggest complaint.
An additional 37.8% of those respondents said there were too many steps involved, and 30.6% said the processing time was their biggest complaint.
In a separate survey, Inovatec recapped that finance companies were asked to identify issues and challenges with their current processes in their organization. More than 35.6% of participants reported operational issues were a struggle, while 28.1% reported issues in lack of efficiency.
Read the original article on the autoremarketing.com.
Majority of Consumers Report Complaints Related to Time and Efficiency in the Automotive Lending Process
Inovatec Systems Corp., a provider of industry-leading, cloud-based software solutions for all financial institutions, today announced the results of its latest survey, revealing consumer pain-points associated with lenders when financing a vehicle.
When asked about the biggest complaint associated with financing their last vehicle, 56.8% of consumers said that finding a bank or lender that would approve the purchase of the vehicle was their biggest complaint. An additional 37.8% of those respondents said there were too many steps involved, and 30.6% said the processing time was their biggest complaint.
In a separate survey, lenders were then asked to identify issues and challenges with their current processes in their organization. Over 35.6% of lenders reported operational issues were a struggle, while 28.1% reported issues in lack of efficiency. The findings show a clear discrepancy between lender processing systems and customer needs. Consumers today desire quick outcomes, yet also expect personalized customer experience. Companies are searching for AI tools that allow them to increase customer satisfaction through digital retailing.
Furthermore, consumers were also asked what factors would make the buying process easier in the future. Over 62.2% said that quicker, more simplified processes were top of mind. Another 29.7% reported that in-real-time access to updates on the status of their loan would simplify the process, and 24.3% said that access to pre-qualification tools would improve their experience.
When consumers were asked about their level of understanding on the terms of their loan, only 34% reported they fully understood their loan. Sixty-six percent of consumers reported they either do not understand the terms of their loan at all, or somewhat understand but do not know every detail. This statistic should be concerning to lenders specifically as misunderstanding of loan terms can significantly affect loan default.
“The survey shows a clear divide between lender process system efficiency and customer needs that affect the overall customer experience,” said Bryan Smith, Head of Consumer Growth and Partnerships at Inovatec. “Lenders need access to updated systems that integrate artificial intelligence to improve their processes, which has a trickle-down effect to customers over time.”
It’s no secret that for years consumers have been privately listing their vehicles for sale on sites like Autotrader, Kijiji, Cars.com and more. In fact, according to the NIADA Used Car Industry Report, approximately twelve million cars were sold through private party sales in 2018. With an increase in used-car sales, it can be assumed that private-party consumer-to-consumer sales will also increase. And while millions of consumers have sold their cars online, they’ve always been at the mercy of their buyer arranging financing in order to complete the deal. New technologies today may be changing this in the consumer’s favor.
While many technological capabilities are now available to dealerships, lending technology historically remained limited for consumers looking to sell their own vehicle. In a private sale, the buyer must secure their own financing independent of the seller, either through their own bank or private party lender. However, there is always a chance that the buyer’s funding may not get approved- requiring the seller to find a new buyer. What’s more, privately selling a vehicle often-times opens sellers up to many risks including theft, misrepresentation and fraud.
A new series of technological advancements has changed this. Lenders today are looking to offer a more effective solution for consumers in both a buying or selling situation. The process starts when a seller lists their vehicle for sale on a website that supports automotive resale. Through lending process management technology, the seller would have the ability to offer their vehicle for sale with financing options that are backed by a lender. Thus, allowing the buyer to work directly with the lender to purchase the vehicle, without securing financing through an outside vendor source.
Furthermore, because of technology available today, listing aggregating sites such as Autotrader or Cars.com can offer, connect and facilitate lending options to their customers who are selling vehicles on their website. This allows the seller to offer financing directly to the buyer, all made possible through an AI powered software platform that is integrated through the site itself. Not only does this increase customer confidence in the sale, but overall customer satisfaction as well. This technology is enabled through loan origination software that builds out a loan based on a variety of factors, allowing for this “consumer-to-consumer” transaction to occur.
An additional benefit of this process is that buyers can have more accurate conversations with lenders about their finances and vehicle affordability. When the buyer is working directly with the lender, they may feel more secure disclosing discrepancies in their finances, rather than providing that information first to a dealer who reports the information back to the lender. Often, when a consumer enters a car dealership, selects a vehicle, and sits down to go through financing, the financing aspect takes the longest amount of time.
Over the past few years, it’s evident that buyers today do not want to spend hours at the dealership shopping and sitting in the finance office. Websites such as Carvana and Vroom that promote buying and financing cars online are increasing in popularity, likely because of convenience. With new options available for buyers and sellers at the consumer level, more consumer-to-consumer transactions can occur.
Through automation and lending technology provided by a loan origination software system, consumers can have a more honest and direct conversation with the lender. Consumer income, dependability, and credit history can more accurately be depicted leaving less room for unaffordable loans in which consumers often default. Automation technology allows for more reliable and secure transactions to occur at the consumer-to-consumer level, increasing private-seller appeal for automotive buyers.
Overall, the implementation of AI driven lending technology will certainly reshape the way consumers transact with one another, as well as the way consumers transact with lenders. It’s possible that such technology will also lead to an increase in consumer-to-consumer private party deals, with more secure transactions leading to customer confidence.
Author: Vladimir Kovacevic, CTO Managing Partner
Today’s leading financial institutions in the United States are investing millions into updating their capabilities through the use of artificial intelligence (AI). Automation affects almost every industry today in one way or another. More specifically, the mortgage industry continues to see change in regulations and compliance, increasing the need for stronger processes in internal and external systems.
Many of today’s mortgage firms are realizing that they have missed the mark in their processes and internal systems, specifically as artificial intelligence capabilities increase. In most of these organizations, there are many disparate management systems that are used internally throughout the lending process to simplify and organize documents and records. There may be a system used by the accounting department to manage finances and transactions, another system used by the marketing department to increase lead generation, and another LOS (Loan Origination System) used for processing documents.
Many organizations face difficulties in streamlining these processes, blending all facets together as one unit. The accounting system, the marketing system, and the LOS system are all independently run, with no connection to each other. Each system in itself works to be customer-centric to provide a more positive customer experience before and after a transaction is completed. However, processing systems would actually be more customer-centric if they were interwoven.
For example, the accounting system runs independently from the LOS system, and both may store their data in a singular data warehouse that ties all functions together. Yet, these systems are tied together only at a data level, not at an operational level. Because they are tied at a data level, it’s nearly impossible to find status on documents and mortgages in real-time. If the systems were tied at an operational level, anyone in any department could pull a real-time status update for a customer, allowing for quicker decisions and better customer service.
The development of artificial intelligence tools is enabling new systems to be completely process oriented. All functions can be tied together creating a transformative system that can be utilized for years to come. While some organizations maybe taking full advantage of advanced AI technology integration, others are simply upgrading the technology they currently use. Essentially, allowing for very little organizational change and “doing what one’s always done” just in a faster way. Mortgage companies that excel in their processes understand that small upgrades simply do not provide the same level or organizational transformation that a complete process management system enables.
Not only does the integration of a process management system improve internal efficiencies for mortgage lenders, but AI digitalization offers lenders an opportunity to engage with their customers on a more personalized level, encouraging stronger customer relationships by using AI to enhance their experience. For example, some process systems will allow for lender customers to log in and view actionable items themselves, rather than requiring a customer to call or email their lender. The same system can allow for customers to upload documents and necessary items directly through a portal, which can be placed directly into the process management system rather than requiring the customer to scan and email documents, and then requiring internal personnel to upload them. Not only does this better serve the customer, but quickens the process internally for lenders.
Furthermore, the standardization of processes helps mortgage lenders to stay in compliance with ongoing regulations. With updated AI systems, legal documents can be more easily found and organized. By improving the way documents are held in a secure environment, there leaves little room for error. This is especially true with systems that have the capability to flag the lender when they are missing legal necessities in a document, such as a signature.
In conclusion, standardization of processes utilizing AI can help mortgage lenders to provide better customer service, increase efficiency, and save money over time. Rather than making simple and costly upgrades to separate existing systems, using a business process management system with integrated artificial intelligence that connects all systems into one will significantly improve operations for mortgage lenders.
Author: Vladimir Kovacevic, CTO Managing Partner