In recent years, auto finance providers have witnessed a massive overhaul in the auto lending industry. With the increasing number of tech-savvy and digital-first consumers, auto finance providers are fast-tracking their shift toward digitization. While the pandemic has undoubtedly hastened this trend, it was already underway in the auto industry.
By looking beyond 2022, auto finance providers can prepare for these trends and create strategies to adapt. Staying ahead of these trends will ensure auto lenders means they will meet regulatory demands in the auto finance industry.
Trend #1 –Digitization takes the lead
Today, many consumers start their car-buying journey online using mobile devices and social media. They research brands, prices, and secure financing before visiting a dealership. Consumers expect seamless digital experiences when they apply for an auto loan.
Auto finance lenders can streamline their workflow with paperless processing, making it faster and more reliable while reducing risks. Partnering with technology providers specializing in auto lending can increase speed and flexibility, leading to a higher market share.
Trend #2:Tightening security measures
The financial services industry is experiencing a rise in cyberattacks and data breaches, putting consumer information at risk.
In response, the Federal Trade Commission (FTC) recently updated the Standards for Safeguarding Customer Information (Safeguards Rule) under the Gramm-Leach-Bliley Act (GLBA). These new standards mean Auto finance providers must have a comprehensive security system to protect customer data and digital loan documents.
Wolters Kluwer eOriginal provides Digital Asset Certainty, guaranteeing the highest level of enforceability and compliance with the GLBA Safeguards Rule and industry best practices.
Trend #3: Securitization goes digital
Digitizing the creation of eContracts and securing assets in an eVault benefits secured lending in the auto financing business. This process increases efficiencies, improves transparency, and mitigates risk around the ownership of assets.
Using a secure eVault to manage eContracts makes selling asset-backed securities more efficient. This reduces the time for loans to be approved and increases capital efficiency. Auto finance providers can tap into a broad digital ecosystem of secondary-market partners, including warehouse lenders, custodians, servicers, and investors.
Embrace digitization to stay competitive
The Wolters Kluwer Digital Auto Finance Index reports significant growth in digital financing transactions between 2020 and 2021, with a 79 percent increase in 2021 and a 38 percent increase in 2020.
With auto sales on the rise, adopting digital technologies has never been more crucial. Auto finance providers must keep up with the escalating need for electronic processing to accelerate into 2023 and beyond.
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