“The truth will set you free, but first it will piss you off.” ~ Gloria Steinem
Some of you have investors who don’t understand auto lending, at least not as much as you do. They are smart, but auto lending is not their passion. No matter how many times you explain to them why the default rates are trending upward, why it might be logical, why the competition impacts various components, they are focused on one thing—their investment.
Some of your investors are constantly telling you exactly how you should be running your business and expect nothing less than perfection. They want results, and beating you down is the way they believe they achieve them. Even though they chose to invest in you because they had faith in you and they liked your business plan.
Others have investors who stay completely out of the way, letting you run things as you see fit and never taking an interest or sharing their perspective. This type of investor just assumes you know their expectations clearly and will hit them.
And finally, if you are lucky, you have investors who actively participate in your success. Being there, being understanding and empathetic, and working with you to ensure everyone wins.
The relationship between you and your technology partners is not so different. You are the expert in your niche of auto lending. They are the experts in technology. In the same way lenders do best with active investors who participate in ensuring success, technology vendors also do best when their lenders actively participate in the relationship’s success—by working together, being understanding and working toward mutual success.
That said, when dealing with technology, here are the painful truths. You may wish they weren’t true (I know I do), but they are truths nonetheless.
Painful Truth #1: Technology is Ever-Changing
“The only thing that is constant is change.” ~ Heraclitus
Technology evolves quickly. Lenders don’t have time to run their business and keep up with the ever-changing trends in technology. To keep up, lenders need to partner with technology partners who won’t get lazy. For technology companies once they have built their system, the margins are great if they never change it and don’t keep up. If they continue to invest in keeping up, their margins slip. There is no short-term financial gain to a tech company to continue to keep the product leading-edge. Therefore, you have to partner with a technology company that cares about the product and the client more than the short-term bottom line. Steve Jobs, in an often quoted example, was focused on creating a company “where people were motivated to make great products, everything else was secondary. Sure, it was great to make a profit because that is what allowed you to make great products, but it was the product not the profits that were the motivation.”
What is most important to your future? Having a well-known and static system that takes years to roll out a new version (aka your Blackberry) or having a system that will continue to reinvent itself, making sure you stay up to date without thinking about it (aka your iPhone)?
Painful Truth #2: Your Relationship with your Technology Partner is a Marriage, not a Date
“I have learned now that while those who speak about one’s miseries usually hurt, those who keep silence hurt more.” ~C.S. Lewis
This is my first time being a vendor. I get to see what the other side of the equation is all about (sorry to all my past vendor partners who had to deal with me before I learned what it is like on the other side!). Like marriages, there are technology partner relationships where one works harder than the other, one gets more benefit than the other, but then there are relationships that both parties work together to grow. I have found that takes honesty, communication, and empathy from both sides tend to make a good relationship.
When we started with our first client, instead of reporting pains, even small ones, they would just work around it to not bother us, so we thought all was good. They were being kind—I loved it—it made the first six months so much smoother than it would have been had they been pointing out all our flaws. But the relationship couldn’t continue to grow and thrive without painful truths and open, empathetic discussions. A good marriage doesn’t mean perfection, but it does mean continuous efforts to improve. Holding feedback in, in effort to keep the peace, impedes progress.
But much like a marriage, the key thing is the manner in which you deliver the message. My mother was right. It is about the tone of voice. Telling your vendor painful truths does not need to be an “I own you” situation. Certainly don’t roll over. Be assertive. Deliver the painful truths. Their actions and business plans impact you. But remember, they are running a business too. They are balancing the same struggles of business that you are.
If all of our clients sat quietly on their hands, saying nothing—we wouldn’t know the most common areas for improvement.
We may spend all of our time enhancing a feature that no one cares about or spend our hours and time in an area that doesn’t increase customer satisfaction.
As a lender, you have to balance what the dealers want from you to be happier (faster funding) and what helps you run a more efficient business (auto-decisioning). As you know, that balancing act can be tough—it’s tough for your vendor-partners too!
Painful Truth #3: Problems will happen
“Facts do not cease to exist because they are ignored.” ~Aldous Huxley, Complete Essays 2, 1926-29
I hate this one. Fact or no fact. I hate it. I want perfection. I expect a lot out of myself and almost as much out of others. While in my 20s, if a partner would have said to me our relationship will not be perfect, we will hit bumps of all sizes, but we will get through it—I would have told them to take a hike. A partner who was predicting there would be problems?!
But it turns out that regardless of how I feel, it’s true. Finding a perfect partner is impossible. Finding a partner who works hard, has the same vision, and responds well when there are issues—priceless.
Progress is not perfect. There will be bumps. There will be disagreements. There will be miscommunications. It is often two steps forward and one step back. Quite frequently I sit back and dream of this “perfect” state and I want to be there now. But there are tradeoffs, no one can do it all at once. The question becomes, are you partnered with someone who is committed to your success, who takes your feedback to heart and learns from it? If not, it may just be the right time to get off the wrong path.
Stephanie Alsbrooks, founder and chief truth-sayer of defi SOLUTIONS
defi SOLUTIONS provides configurable loan origination systems, loan management and servicing, analytics and reporting, and a wide range of technology-enabled BPO services. If you’re struggling with the limitations of your current lending technology solutions, take the first step in realizing the benefits of modern technology. Contact our team today or register for a demo.