Automotive News Canada - July 2018 - v2 - 4

* JULY 2018

Fintechs a new
player in online
auto purchases
Customers demand
seamless digital
transactions
By STEVE MERTL

VA N C O U V E R C O R R E S P O N D E N T

Robert Armstrong
said robust, seamless digital platforms are essential
in a buying experience that is rapidly changing.
Current auto
sites have proven unsatisfactory
once things get past selecting a vehicle,
Armstrong said, noting that shoppers
accustomed to two-click online retail
shopping are directed to a dealer salesperson who responds by email.

AUTO DEALERS ARE BEGINNING
to turn to fintechs to smoothly integrate
financing and insurance products into
an end-to-end online transaction.
Fintechs are information-technology
providers specializing in applications
delivering F&I products to customers
LOW-PRESSURE ENVIRONMENT
via a dealer's website.
AutoFi's platform is not just a
The online auto-purchasing process
lead-generation tool, he said.
often stumbles when it's time to final"And I don't know that we see it addize a loan, says Michael Buckingham,
ing incremental sales but rather servicsenior director of J.D. Power and
ing the customer in the way that they
Associates' automotive-finance practice
want to be serviced now."
in Costa Mesa, Calif.
Singerman and Armstrong
"For the most part, they're
distinguish fintechs from other
catching up the finance process
platforms in their ability to
to the sales side and the service,"
better handle finance arrangehe told Automotive News Canada.
ments, offer buyers options
The U.S. auto sector has used
beyond the captive lender and
fintechs for a few years, but they
present them with products
are only now penetrating the
such as extended service conCanadian market.
tracts and wheel and tire insurSan Francisco-based AutoFi
Michael
ance in a low-pressure environlast spring announced an agreeBuckingham, ment.
ment with the Tricor Automotive senior direc"When I speak to the variGroup to provide a white-label
tor of J.D.
ous
lenders, what they tell me is
car-buying and financing platPower and
it's very difficult to build a good
form. The privately held group
Associates,
solution for the consumers that
operates new-car dealerships
said the
can also integrate with the dealacross Canada and offers financonline auto
ers," said Buckingham.
ing and warranty products.
-purchasFintechs have found a niche
ing process
providing online financing for
MAJOR LENDERS SOUGHT
stumbles
when it's time buyers and channels for lendNeither AutoFi nor Tricor
ers that they might not have the
to finalize a
would discuss details, which
expertise to develop their own,
loan.
still require negotiation with
he said.
auto manufacturers and lenders. AutoFi co-founder and CEO Kevin
TEDIOUS PAPERWORK
Singerman said it's expected AutoFiMost dealer and carmaker sites allow
powered dealer sites will be running by
buyers to apply for credit online, but
the end of this year.
often the paperwork must be complet"Our goal is to have at least one
ed at the store, sometimes repeating the
major Canadian lender live on the platwhole tedious process.
form when we go live," he said in an
"Consumers are telling us they
interview.
spend all this time online and then
Tricor operations vice-president

CANADA'S AUTO-FINANCE MARKET
* Record new-vehicle sales have been
accompanied by a significant expansion of Canada's auto-finance market,
which has nearly doubled in size over
the past eight years, to roughly $120
billion from $60 billion.
* The expansion of consumer debt in
auto loans has outpaced that of all
other forms of household credit, including mortgages. Prior to the financial
crisis (2007-'08), the financing arms
of automobile manufacturers were the

dominant providers of auto financing in Canada and a greater number
of consumers used leases to acquire
new vehicles. When automakers pulled
back during the crisis and subsequent
recession, leasing declined and federally regulated financial institutions, such
as banks, acquired a more prominent
share of Canada's growing auto financing market.

Source: Financial Consumer Agency
of Canada, 2016 study.

I L L U S T R AT I O N F R O M I S T O C K P H O T O S

they go into a dealer and start from
said Armstrong.
scratch," said Raymond O'Kane,
"It's still the pressure cooker; it's
executive chairman of Torontostill the box, if you will," he said.
based Motoinsight, which devel"In order to get the dealers on
oped online platforms for automakboard, recognizing that the F&I
ers including Hyundai, Honda and
products are an integral part of the
Mazda.
transaction, they have to include
Motoinsight does not consider
those in the consumer-facing view,"
itself a fintech since it doesn't seek
said Buckingham.
direct partnerships with lenders.
Fintech platforms incorporat"We're lender agnostic, we're
ing mini-tutorials on F&I proddealer agnostic," said
ucts reduce customO'Kane, who ran
er angst. They can
BMO's automotive
educate themselves
finance arm for 15
earlier in the puryears before retiring.
chase "journey," said
Fintechs can inteSingerman.
grate e-contract comO'Kane said he
pletion and proexpects fintechs will
vide customers with
overcome hurdles set
finance options outby Canada's tighter
side dealer/automakbanking regulations
er captive lending
in areas of financing
channels.
compliance and disFor buyers who
closure.
opt to do some of the
AutoFi has hired
AutoFi CEO Kevin
transaction in-store
Canadian legal counSingerman said AutoFithe platform needs
sel to ensure its platpowered dealer sites
to make that handform will comply
off seamlessly, which should be running by the
with local laws, said
end of this year.
doesn't always hapSingerman.
pen now.
Canada's relatively smaller lending pool actually may
PRESSURE COOKER
make it easier to launch AutoFipowered sites here than in the
The ability to incorporate backUnited States, he added.
end products, such as extended ser"That actually lowers the barrivice contracts, into the final pricer to entry around maybe working
ing calculation is also essential to
with a few key partners and being
dealer revenue. While vehicle pricable to have a much bigger impact
ing has become more transparent,
out of the gate versus the U.S.," he
that final phase of the transaction
said. - ANC
remains stressful for customers,

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