For those working within the rapidly-changing finance sector, feature, function and flexibility are three commonly used terms - often viewed as the key to success - helping boost system efficiency, support core business propositions and help expand portfolios - Feature, Function and Flexibility.

COVID-19 has created a completely unprecedented set of circumstances affecting thousands of businesses and individuals across the UK. With travel restrictions and ‘stay at home’ being the call to action for the majority of 2020, it’s unsurprising that the automotive finance industry has seen a decline in new business.

New figures released by the Finance and Leasing Association (FLA) revealed that the consumer car finance market saw a 27 per cent year-on-year decline in new business in February 2021. The number of new consumer cars financed also reported a fall in volume of 34 per cent over the same 12-month period.

Commenting on the figures, Geraldine Kilkelly, director of research and chief economist at the FLA confirmed that the UK’s lockdown restrictions over the winter months contributed to a fall in consumer car finance new business of just over a quarter. However, she reassures, as car showrooms reopen and consumer confidence recovers, we can expect a strong rebound in demand, and the value of annual new business in the consumer car finance market is expected to reach its pre-pandemic level this year.

Aside from this, the automotive industry has continued to deliver advances in innovation and digital services in its marketing and sales departments in recent years. The car buying process has been analysed and adapted, to keep up with the changing buying behaviour of customers. Restricted movement during the pandemic has only encouraged further development, as even more focus has been placed on on-line capabilities, as consumers haven’t been able to shop in person.

However, despite these innovations and advancements in marketing and sales, most dealership’s auto finance still remains off-line, paper-based and manual.

The EY biennial fintech report highlights a 64 per cent rise in the global adoption rate of consumer fintech in 2019, and a staggering 71 per cent increase in the UK and Ireland. The rapid growth makes for a compelling case for new technology and the benefits it can bring to be implemented wider across the ever-changing instalment credit marketplace.

Equally, according to PwC, 91% of automotive dealers believe a strong digital presence is important to their overall sales strategy, but only 17 per cent have a digital strategy in place. Automating the auto finance loan process and embracing fintech is one way that dealers can begin implementing digital transformation and see tangible results quickly.

Cloud based technologies combined with shorter implementation times enables auto finance providers to rapidly bring innovation to market - whether that is within the dealerships themselves or by making digital financing accessible from a customer's home. These systems improve the auto loan process for the customer while also delivering security, compliance and efficiency benefits for both the dealers and lenders.

In such a dynamic, fast moving and ever-changing finance sector, harnessing the 3 Fs effectively can give lenders a genuine competitive advantage.

Feature, Function and Flexibility

Feature offers the ability to automate and integrate a data partner of your choosing. Function is the creation of the software hierarchy and creating a workflow. And when both combined with flexibility, a highly configurable design is created.

For example, Aryza Sentinel has a modular design to build a system particular to each client’s needs. The system offers all the tools to manage the entire auto financing process, providing a flexible end-to-end solution.

A highly configurable system design provides the ability to make changes dynamically to both business and credit reference rules. Users can challenge existing rule sets and write new rules to provide flexibility to decisioning models and ensure continual improvements in the way they transact business.

This level of flexibility is critical in many ways, including improving operational efficiency and reducing operational costs. The configurable nature of the solutions gives the finance company full control over their process, from customer touch points to decision engine capabilities.

An intuitive lending solution designed specifically for the finance sector will help lenders boost system efficiency, support core business propositions and help diversify while expanding product and client portfolios.

Consumer expectations are changing, driven both by the increasing number of millennial and even Gen Z buyers, and by the day to day ease of digital interactions. Young, tech savvy buyers are shifting the location where consumers make major financial decisions.

The growth of fintech capability and availability means consumers expect to be able to manage their finances from the palm of their hand.

There is an opportunity in auto finance for both dealers and lenders to leverage technology to usher in a new era of financial transparency and turn their financing experience into a competitive advantage.

This will save both automotive companies and lenders time and money, and enabling them to prioritise advancing product and marketing developments.

* Darren Greeyner (pictured) is the chief commercial officer of Aryza Lending Solutions. He has more than 15 years of experience working both directly as a lender in the motor finance market and as a third-party supplier. He also spent nine years at vehicle data company HPI in leadership roles including finance, insurance, and sales.