We are now in an age of “connected intelligence”, surrounded by a whole range of products and services which link together to make up a digital ecosystem. We are experiencing an explosion of innovation, which is having a profound impact on the way we interact with each other, and on how businesses build and maintain a relationship with their customers.
Increasingly, we are seeing companies using technology to create a singular experience, by collecting and analyzing large volumes of data to mine insights into consumer behavior in order to deliver a highly personalized customer experience. Previously consumers were prepared to accept a standardized service, or services which varied according to which channel they used to interact with a supplier. Now they want “one digital life”, seeing the same levels of services across all their touchpoints with a particular company, and expecting that service to be tailored to match their preferences.
This new digital ecosystem is the result of four distinct developments coming together and interacting. The first is the changing nature of the customer base: As the Millennials are being joined by the latest segment, Gen Z, by 2020 between them they will make up over 60% of the global population, with a combined purchasing power of $4.6 trillion in the US alone. While both groups share a love of being online, they are actually very different in the way in which they use technology and will need to be treated differently.
Secondly, there’s the transformational nature of technologies like Artificial Intelligence (AI), which lies at the heart of the latest innovations such as self-driving cars, voice recognition, and chatbot technology, used to create virtual assistants online to help with customer queries and support tasks.
Consultancy firm McKinsey reports that change is now happening ten times faster and with 3,000 times the impact of the industrial revolution. Our report looks at what that means for the auto finance sector, from refinements in credit scoring, to the development of new customer service channels and the move towards mobility services. AI is moving into cars themselves, as vehicles are fitted with sensors, telematics and dashboard systems, which can all transmit and receive information. Handling that data is a major challenge, but also an opportunity. The “connected car” is becoming a data source on wheels, and that data is commercially valuable.
Keeping data secure and meeting increasingly stringent regulatory requirements make up the third element of the new ecosystem. Digital signing systems, for example, automate the sales process end-to-end from scanning customer ID through providing a secure vault for all the documentation. Blockchain technology – a method of creating a single, digital ledger of transactions, agreements and contracts – is exciting a lot of interest amongst the pioneers in the auto finance world as a means of ensuring instant access to up to the minute records.
New business models
Technology has become the lens through which customers experience a company. The relentless pace of innovation is driving the fourth stage of the digital ecosystem: the disruption of business models as traditional models collapse and new ones emerge.
Already the auto finance industry faces challenges from the likes of Apple’s CarPlay and Google’s Android Auto, which provide a familiar, easy to use way for drivers to interact with entertainment, navigation and a whole lot of other services, potentially including financial offerings.
Our summit saw industry experts, technology specialists, finance companies and others debate the consequences of this rapid change for the auto lending market.
To find out more details about the key developments and trends, and to gain insight into how innovation is shaping the future of auto finance, download White Clarke Group’s Global Technology Report 2017.
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