Car finance has a new face – and it’s not a bank
3 minute read
Take a moment to think about what you value in your customer experience.
What makes you a loyal user? According to a 2018 study by Salesforce, your answer is likely to include factors like speed, simplicity and convenience. 70% of the customers surveyed stated that seamless, connected processes were of importance for choosing a service.
Whether it's entertainment (Netflix, Spotify), travel and transportation (Uber, Airbnb) or shopping (Amazon); convenience, speed and seamlessness in the customer journey are becoming key differentiators in the digital age. Consequently, as we become used to customer-centric services, we naturally shape our expectations according to that standard.
Financial services are no exception here.
Research by McKinsey underlines this notion: in their 2019 study, they found that in Germany, online banks consistently rank higher in their customer satisfaction levels than their traditional counterparts across banking, consumer loans and mortgages. However, online banks still only make up a modest portion of the overall German banking market. The majority of customers still deal with cumbersome, analog and complicated banking services that are disconnected from the digital services they use every day.
As our expectations change, financial services will need to adapt to them.
If financial services can be integrated directly into the products and services we use daily, we can create the frictionless experiences that we have come to expect, by creating “one-stop-shop” experiences that make a visit to the bank branch redundant. A 2019 study by Accenture on financial services consumers found that there is a strong appetite for such integrated banking experiences, especially among tech-savvy customers. 82% for example were interested in home-care propositions covering home insurance, financing, and utility services.
A prime example of how the integration of financial services with digital user experiences works in practice is CarNext.com. CarNext.com is a leading pan-European marketplace for high-quality used cars. With a focus on improving the experience of buying a used car, CarNext.com creates an end-to-end customer journey, including online car purchase, ancillary services and now, through the partnership with solarisBank, also car financing.
In the German market, over 40% of used cars are financed via loan, making the financing of the car a crucial part of the customer journey. CarNext.com aims to offer a seamless customer journey, but if the final step - the loan application – presents too much of a hurdle to the user, due to analogue processes involving bank branches and letters, it could significantly dampen the conversion rate.
CarNext.com could try to offer financing themselves, but that requires both licensing from a supervisory authority as well compliance with strict capital requirements and anti-money laundering regulation.
This is how the cooperation between solarisBank and CarNext.com came to fruition. Instead of investing the time and capital into acquiring an own license, CarNext.com partnered with solarisBank. With its Banking-as-a-Service platform, solarisBank integrated a completely digital consumer loan directly into CarNext.com’s customer-facing frontend. As a fully licensed German bank, solarisBank takes care of the entire lending process, from the algorithmic scoring and video-identification to the origination and payout, all in as little as ten minutes. solarisBank’s process nestles in neatly behind CarNext.com’s frontend, meaning the entire user flow remains in CarNext.com’s look and feel, without any media breaks or interruptions.
This way, CarNext.com can focus on delivering a dazzling experience and leave the regulatory duties up to solarisBank. This example acts as a template for what lending in the future should look like. By using the Banking-as-a-Service approach, financial services can be embedded seamlessly into other products and services, enabling frictionless and fully digital financial experiences to meet today’s consumer standards.
Many banks are still reluctant to give up customer-facing interaction, but they must accept the fact that consumers don’t necessarily want to interact with them. The consumer doesn’t want a loan for loan’s sake - they want to use the loan to buy a car. Therefore, the smoother and shorter the lending process is, the quicker the consumer can reach their intended goal. If banks learn to play to their strengths and leave the customer interaction up to service providers, everyone can win; true to the motto “do what you do best, and let others do the rest”.
