3 ways auto lenders can innovate in a rapidly changing industry environment

Interesting times continue for auto lenders and service providers. There’s been a lot of volatility so far this year with supply shortages and increased auto values, including the appreciation of used cars values. Our industry has seen a lot of change, some happening rapidly—from insurance coverages to total loss claims to federal and state regulations — that lenders are needing to quickly adapt to. These changing needs demand new, innovative solutions for technology integration, consumer education, and adaptable risk management.  

As the pandemic continues, it’s important lenders recognize that we’re not returning to a ‘2019 normal’, but remain forward-focused on preparing for a ‘2022 new normal.’ 

3 Ways Auto Lenders Can Innovate their Risk Management Program

• Consider Technology Expansion

Demand for digital communications and tech-driven solutions has skyrocketed in the midst of the pandemic. While a lot of the emerging solutions were already in motion, the onset of COVID-19 accelerated what was already happening and prompted more technology-focused products and services that help integrate the whole consumer process from start to finish. Some examples include, artificial intelligence virtual assistants, automated insurance and loan tracking, and data management interfaces. 

Across the financial industry, there’s work among institutions and providers to create more seamless processes and channels of communications among lenders, consumers, and providers. Particularly, as lenders are left to adjust to securing staff and address new, changing regulatory guidance, technology tools can be instrumental in innovating your risk management strategy. 

• Stay Knowledgeable on State and Federal Regulatory Guidance 

There’s been a lot of recent activity around regulations and regulatory guidance for financial institutions and service providers, particularly when it comes to recovery and collections, ancillary product refunds, and overall consumer protection. This increased regulatory scrutiny requires institutions to prepare for enhanced measures to ensure compliance is met. Having strategic tools and services in place is imperative for financial institutions preparing to best manage risk and continue to serve their members. It will be increasingly important to keep up to date on changing regulations and invest in solutions that help make sure service processes remain compliant. 

• Invest in Solutions the Help Optimize Processes 

There is an innovative spirit among auto lenders anticipating what challenges will need to be quickly addressed. One central need: considering how to make the start to finish process quicker for consumers. This means taking time to evaluate what preparation your institution needs to accomplish in order to best optimize your risk management processes and listening to what is needed to best serve your borrower. This includes identifying what can be accomplished in-house and what services may need to be outsourced. For outsourcing, focus on the right outsource providers with needed specialization your institution may be lacking. This includes technology needs, security considerations, and compliance measures.  

Finally, don’t lose sight of the human component. Investing in talent (both in-house and outsourced solutions) can help optimize your risk and recovery processes.

While much continues to be uncertain, investing in innovative solutions make it easy for lenders to best reach their goals: being a good partner to your borrower.