Industries change at an increasingly rapid pace and consumer automotive finance is no exception. With increasing levels of economic turbulence, the likelihood of black swan events escalates. That is why it is critical to continuously challenge assumptions and reassess what is best for our clients and our business. Recently, I was interviewed by Auto Finance Excellence for my views on these issues and more. Below is a synopsis:
Major Industry Trends That Don’t Receive Much Attention
Rapid emergence of subscription based services. Early players in the auto subscription business such as Fair are experiencing rapid adoption among Millennials. Fair recently raised $1B in debt finance from Goldman Sachs and Credit Suisse. Many of the major OEMs including Porsche (Passport), BMW (Access), Volvo (Care), Jaguar Land Rover (Carpe) and others are getting subscription based models into the market. Technology companies like Less and Flexdrive have launched subscription based services that aggregate new and used car options from a variety of manufacturers via savvy and easy to use apps. Legacy servicers have significant technical challenges using systems designed twenty years ago to service these types of products.
Growing market entry of fintech competitors. Fintech companies are increasingly looking to the automotive space to fuel their growth aspirations. Startup companies like Blinker rely on simplifying both the car buying and the car financing process. Borrow and Fair are introducing financial models that provide an alternate to traditional auto loan and lease financing and allow subscribers to avoid direct interaction with the OEMs. The US Treasury recently released its latest paper supporting fintech bank charters and other measures that would increase the ability of these types of companies to expand in the auto finance market nationwide.
Increasing volume and complexity of regulatory requirements. OK people, give this one a lot of attention…because the impact on the auto finance market is profound. Regulators are not only promulgating new regulations at a rapid rate, but those regulations are also becoming more complex and require more significant investment to achieve compliance than ever before.
Drive to outsourcing. Several factors are causing players in the auto finance market to outsource more and more functionality to third party specialist companies including the increase in regulations, rapid evolution of technology and increasing specialization required to achieve competitive advantage. In the servicing arena in particular, the nature of servicing as a process intensive, highly regulated, scale driven activity drives originators to outsource. There is also a clear trend to moving away from the legacy providers towards more technology focused providers.
Strategies for Ensuring Great Loan Servicing
Insanely great levels of customer service. We – First Associates – work to ensure that each consumer has a positive, reinforcing experience with our client’s brand. Strong customer service leads to strong portfolio performance. Our work in this area has shown, again and again, the link between happy customers and portfolio performance.
Tight integration with clients. We are part of our client’s team. A tight link between us and our clients enables us to respond rapidly to opportunities or issues as part of that team. Client strategies in branding, product delivery, pricing and technology are increasingly dramatic. Legacy models of static systems simply don’t win market share for auto finance originators.
Compliance. Maintaining excellence in compliance is key to delivering service to our clients. First Associates has the highest servicer rating possible from Morningstar and maintains an extremely robust compliance program.
Artificial Intelligence driven speech analytics. AI speech analytics is a game changer for call center environments. Many servicers say they have or use it but really don’t. 100% call monitoring, which First Associates delivers for clients, provides a significant uptick in performance across compliance, service levels, agent training and other areas. AI also delivers insights from the voice data stream that positively impact service and business growth that were simply impossible to achieve before.
Data science. Data science goes hand in hand with speech analytics. Where legacy servicers are still providing static service levels to consumers based on anecdotes, First Associates employs dynamic consumer communication strategies that encompass data from demographics, known behaviors and other inputs. These strategies are significantly more effective than legacy strategies. In a regulated industry, where the number of consumer touches are more and more limited by law, optimizing each communication touch point for maximum effectiveness is critical.
First Associates takes pride in providing best-in-class loan servicing and customer service support. When we say we are the best, we mean it and deliver the service levels to prove it.
First Associates’ best-in-class primary loan servicing will help your business excel. We serve as a seamless extension of your staff and deliver results by focusing on communication and utilizing the latest call technology to help improve portfolio performance. First Associates delivers:
* Low-risk, cost-effective loan servicing strategies
* Increased customer satisfaction with one-call resolution
* Reduced delinquencies and defaults
* Top-notch investor, credit bureau and regulatory reporting
* Secure fund flow and control
* Rapid results from a rating-agency approved partner
Capital Market Support
With 30+ years of experience and laser-focus on providing the best service, compliance, security and technology, we are able to provide the solutions you need rapidly, without additional service providers. We have existing relationships with rating agencies, money center banks, investment banks, trustees and other financial market participants to smooth things along. Our capital markets services include:
* Backup Servicing
* Contract Verification
* Borrowing Base Calculation or Validation
* Custodial Services
* Treasury Services
Call Center Support
First Associates’ dedicated call center agents deliver customized, omnichannel solutions. We combine cutting-edge technology with proven, proactive service to deliver solutions for every client that offer:
* Live agent call centers – Inbound, outbound, voice, text, social and chat
* Artificial Intelligence for proactive customer service
* Lead generation and key business insights
* Customer service support across any industry
* Nearshore and Onshore solutions to fit any business model and budget