Technology is playing a bigger role in automotive finance and insurance, but it has lost out in one particular area: automated loan acceptances.
Lenders still use automated processes — based on predictive algorithms — to reject loans. But they've backed off from relying strictly on automation to approve loans. They cite too many imponderables and, consequently, too many risks.
“We've seen automated decision-making go down,” says Marguerite Watanabe, president of Connections Insights LLC, a finance consulting firm.
Still, modern technology can bring F&I efficiencies in such areas as filing e-contracts, submitting electronic credit reports, verifying loan information, speeding up the transaction and linking dealers to lenders.
“We need to help dealers embrace such technology,” says Charlie Robinson, executive vice president-national sales for Resource Automotive, a finance and insurance firm.
Dealers show a reluctance to do that, he says at a recent F&I Management and Technology conference. “But the advantages are too great to ignore.”
Such systems must not challenge users' abilities, says David Engelman, president of Smart Payment Plan, which offers computerized lending services.
“Technology must be kindergarten-simple, and if not, we as a company must go back and make it that way,” he says.
Dealers who leverage modern technology in their F&I offices and elsewhere are most likely to succeed, says Peter Biscardi, president of National Auto Care Corp., which provides F&I services and products to dealerships.
“But it is still a people business,” he adds.
Technology can speed up transactions and cut down on paperwork at dealerships. “There is more paperwork to buy a car than to buy a $1 million house,” Briscardi says.