But in the near term, auto transactions still largely paper-based, unsecure—and clunky
While great strides have been made in automotive commerce through the digitization of technology workflows and customer-facing retail transaction elements the past several years, there remains a great deal of work to do on the less glamorous, back-end parts of processes involving dealers, lenders and an increasingly digital-demanding customer population. Even those who employ some digitized processes can suffer from a fragmented system, using disparate technologies and platforms that severely hamper the broader experience for everyone involved. That’s according to Wolters Kluwer Compliance Solutions, sharing its digital lending expertise in a recently published byline.
“As the next phase of automotive transformation happens, what will surface is an awareness of more improvement needed throughout the journey, particularly around paper used in the transaction. In today’s world, the use of paper in the automotive transaction is risky and inefficient,” writes Jenn Reid, Head of Sales, Digital Lending – Motor Vehicle, Wolters Kluwer Compliance Solutions, in a DigitalDealer.com commentary exploring “Digitization in Automotive is Still Far Off for Back-End Processes and Documentation.”
She cites the risks and liability of exposed Personally Identifiable Information that can accompany paper-based transactions, along with major inefficiencies and costs in managing paper, keeping up with revisions and the increased likelihood of using outdated contracts, often leading to lender rejections, and paper returned to the dealer, which further increase one’s exposure risks.
“The next phase of digital transformation will leverage words such as e-contracting, multi-channel origination, digital certainty, auditing, document governance, security, post-transaction asset management and analysis tasks across all parts of the document journey,” Reid notes. “It’s not as flashy as the customer experience rally call of the past several years, but nonetheless critical for the industry to evolve to the next chapter of digitalization.”
Reid believes that successfully overcoming the challenges of paper-based transactions will require lenders, third-party providers and dealers to leverage purpose-built, digital ecosystems that can handle the auto finance industry’s origination channel diversity. Digitization can help simplify the complexities around managing various multi-channel assets post-execution, while drastically reducing operational and time costs.
Beside the benefits of improved visibility of assets, quick expansion of the investor and lender pool, agility, and the ability to scale quickly and dynamically, a digital approach provides assurance of legal and regulatory compliance, enabling lenders to securely manage digital assets throughout their entire post-execution lifecycle.
“This advanced process will offer centralized data management across an entire portfolio, allowing automotive professionals to view metadata across various origination channels and asset classes. What’s more, it will help to control and track access, manage status changes, and transfer control of digital documents while utilizing sophisticated granular controls and permissions to allow for departmental separation and visibility,” says Reid.
“All of this will result in improved speed and process efficiency, and for lenders particularly it will free up capital through syndication, sale, or securitization. It is time for dealers and lenders to lean in and commit to converting from paper to digital throughout the process to improve the experience, but also get ahead of the risks,” she concludes.