An ever-increasing number of business transactions are conducted via mobile devices. Statistics from Cyber Monday 2018 indicate more than a third of transactions were done via mobile devices. Mobile reduces transaction “friction,” offering greater convenience for the buyer and more opportunities for the seller. With mobile, you can conduct commerce practically anytime, anywhere.
Technology and demographics drive the mobile trend. Cloud services and near-universal connectivity put processing power in your palm. According to the report, The Next Generation Car Buyer Millennials – What You Need To Know “Millennials are more likely than any other generation to use mobile devices.” A 2018 Pew Research Center report shows US millennial mobile ownership at greater than nine in ten.
Despite the leveling off of auto sales in 2018, Forbes reports that “Millennials were responsible for all new-vehicle sales growth in North America during the first quarter of 2018,” The message should be clear for direct lenders: Millennials are a key market segment and they increasingly prefer mobile commerce. You need to provide mobile auto loans to stay competitive.
Mobile Auto Loans: A Greater Lending Opportunity
Compared to an Amazon purchase, the automotive purchase has room for improvement. Per the Cox Automotive Car Buyer Journey, 2018 buyers complain about the amount of time spent at the dealer. Mobile auto loans help fix this and contribute to a better overall buyer experience in the following ways:
- Mobile provides greater convenience;
- Mobile enables online researching before buying;
- Approved borrowers arrive at the dealership ready to buy; and
- Eliminating financing negotiations leads to a faster, more efficient transaction for buyer and dealer.
Mobile auto loans also offer direct lenders opportunities to extend their reach (beyond web-based and desktop) to capture a greater number of loan applications.
- Millennials do a substantial amount of auto buying research via mobile. Mobile auto loans are a logical extension of that process. By offering mobile auto loans, you gain access to the important millennial market segment.
- A buyer who “just happens upon” a must-have vehicle before the opportunity slips away is highly motivated to seek financing. Mobile auto loans increase your chances of capturing those impromptu opportunities.
Embracing the mobile channel for auto loans is a sound strategy to compete in an auto market that appears to be leveling out. In a very competitive lending market, mobile auto loans improve your chances of capturing a greater share of applications from mobile users, and certainly from millennials.
The Mobile Experience Must Be Well-Designed
Success with mobile auto loans isn’t just a matter of applicants accessing your website via mobile devices. The auto loan application process you provide via a web browser is unlikely to translate into a smooth mobile auto loan application experience. After all, it wasn’t designed for mobile.
The user experiences of many other mobile applications have set high expectations for how a mobile auto loan application should behave. A well-designed mobile experience is crucial to capturing lending opportunities. Cumbersome processes and non-intuitive interfaces can make a potential borrower quickly abandon your site and look for alternative lenders. Your auto loan application process needs to be mobile-friendly, designed to quickly and smoothly step the applicant through the process.
You’ll Need the Latest Fintech Capabilities
If you’re using a legacy lending system, it will take significant time and investment to retrofit mobile capabilities. Fintech advances are lowering CapEx and OpEx throughout the lending industry. Direct lenders should opt for a modern loan origination solution to efficiently capture loan applications, online or mobile. To achieve this, look for a lending solution that:
- Provides a single WYSIWYG development environment (forms, fields, text, images, and buttons) that supports both web/online and mobile auto loan applications;
- Uses REACT technology, specifically developed for building user interfaces;
- Is highly configurable, using menus to tailor the interface to the lender’s brand and smoothly guide the applicant through the mobile auto loan application process;
- Includes display logic to control which fields are shown based on context or previously entered data;
- Supports data validation using masking, rules, minimum values, maximum values, and integration with external data sources;
- Allows you to develop a site, then easily duplicate and modify it to meet different lending needs such as watercraft, recreation vehicles, and motorsports;
- Lets you preview the user experience on simulated mobile devices and desktop environments to verify process flow, interface, and overall usability; and
- Integrates with document collection and verification services to upload identification, pay stubs, proof of residence, etc. to accelerate the application process.
Using the latest fintech capabilities lenders can quickly develop and continually refine their mobile auto loan application processes. That lets them address their specific market segments and capture more lending opportunities. Once the application is captured, modern loan origination systems continue to deliver a better borrower experience. Decision rules enable nearly-instantaneous approval for prime and superprime applicants. Auto structuring offers multiple loan alternatives to help capture opportunities. Digital contracting accelerates funding without delays associated with paper documents.
Vital to Your Lending Future
A softening auto market puts pressure on direct lenders to capture a larger number of loan applications to remain competitive. The rapid adoption of mobile devices as the preferred channel of commerce and millennials’ contribution to new vehicle sales growth compel lenders to embrace mobile auto loan applications. Legacy lending systems are inadequate to deliver the mobile functionality that’s required in the current market. Modern loan origination solutions address these needs and enable lenders to capture a greater volume of auto loan applications and do so efficiently and economically. The future for direct auto lending is mobile.
defi SOLUTIONS, recognized as one of the Top 50 Most Promising Fintech Providers by CIO Review and one of the 50 Smartest Companies by Silicon Review provides solutions to meet lender’s needs today and well into the mobile future. Contact our team today or register for a demo of defi LOS.
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