The automotive purchasing and financing process has traditionally been a very hands-on, in-person, time-intensive experience. But in recent years, the automotive marketplace has undergone a technological evolution. Current automotive lending approaches, burdened by a disconnected, inefficient ecosystem, are no longer sufficient in an increasingly digital world.
Customers increasingly want a mostly digital automotive buying experience that is convenient, fast, touchless, and hassle-free – not hours wasted in a lobby in the dealership, waiting for loan approvals and paperwork to sign. To meet this demand, traditional ecosystem players have a choice. They can either leap forward today – or become irrelevant tomorrow.
A leap into digitization
Borrowers, dealerships, originators, warehouse lenders, investors, and even servicers are looking to technology platform providers to help them digitalize more of their processes. And given expected market trends, the time to digitally transform is now. The Wolters Kluwer Auto Finance Digital Transformation Index shows a nearly 80 percent increase in digital transactions since the first quarter in 2021. The increased activity in digitization is still skyrocketing, even with new and used car sales considerably lower than what was projected for 2022.
Some ecosystem players may question whether they should build their own technology, buy software or “consume” it as a cloud-based service – to expand their services and share data with other ecosystem players. Given the multiple complexities of building a proprietary digital lending system, the logical path forward is to consume the digital capabilities they need, when they need them, from a shared digital platform that is widely accepted and trusted by the lending ecosystem, including partner originators, lenders, custodians, and investors.
Moving processes to the cloud are essential to modernizing business infrastructure and gaining the agility and scalability needed to grow and expand offerings and revenues. Technology providers are free to “pay as they grow” rather than investing significant amounts of time and budget into building a proprietary solution that may be limited in its ability to scale and process data as business increases.
How a platform can transform the auto finance ecosystem
A digital platform can deliver value at every step of the financing process in many ways – but most importantly, by providing a single, secure, and tightly controlled environment to manage all processes and handoffs throughout the financing journey for all participants. This functionality ensures the integrity of all documents, data, and connecting points from beginning to end.
In addition, it supports signing and managing contracts digitally, eliminating paper and the inefficiencies and risks associated with it. Contracts are managed with tight security, control, and speed. Artificial intelligence-enabled technology ensures that there are no missing signatures or documents. Staff no longer needs to print and separate papers, which saves time and frees them to handle higher contract volumes and focus on the customer.
A deeper dive into key capabilities
Let’s explore the elements of a complete eContracting solution running on a tightly linked, integrated digital finance platform.
Loan origination and documents prep provider integration
An eContracting solution starts with loan origination and document prep provider integration. This integration can be achieved using paper to digital conversion, direct via retailer portals, and indirectly using a dealer management system that plugs directly into the eVault. What’s critical is that everything looks and feels the same, regardless of the integration channel. When this trust, accuracy, and consistency happens on the front end, everyone benefits on the back end.
eSignature
eContracting is often synonymous with eSignature, but it is just the beginning of the eContracting value chain. It is only after signing that the contract has market asset value. Signed contracts can support loans under a warehouse line of credit or be pooled with other contracts and sold on the secondary market – ultimately freeing capital for investing. Digitizing this process frees the capital much faster than using the traditional paper-based method and drives greater cost efficiency.
eVault
eVault technology can deliver Digital Asset Certainty® – the assurance that digital acts are created, stored, and assigned in full accordance with all compliance standards for the industry, and maintained for the highest level of legal enforceability throughout a digital loan’s lifecycle. eVaults can be used to support dealer-specific vaults, lender-vaults, and more, and facilitate trusted, seamless handoffs between vaults.
Conclusion
Scaling to meet emerging requirements of the new digital automotive economy demands a digital contracting platform and a portfolio of end-to-end digital services that connects the full ecosystem of players. This enables them to share trusted data and documents along the customer journey, and quickly and easily extend their services to deliver more value to customers.
Speak to a product specialist to learn how Wolters Kluwer’s eOriginal digital platform helps enable frictionless, secure, and trusted auto financing services.
