Innovative pricing and decisioning technology help lenders stay competitive
BOSTON, March 27, 2023 – Market drivers for vehicle demand have been more volatile since early 2020 than any time in history and lenders require flexible pricing technology to stay competitive, according to the Competing and Capturing Customers in a Disrupted Auto Finance Market report. The paper published by Earnix, the global provider of intelligent, composable, SaaS solutions for insurers and banks, discusses vehicle financing trends and the need for improved pricing and decisioning technology. Executed by Celent, a leading research and advisory firm specializing in financial services, the piece evaluates the changes technology and competition are driving in how lenders need to sell, price, underwrite, retain, and cross-sell vehicle loans.
Challenges of a Volatile Market
“The vehicle finance industry has witnessed major shifts in the last few years due to stagnated consumer demand, supply chain disruption, and inflation. This has tested traditional business models, forcing lenders to re-evaluate best practices for profile growth. It is time for mass adoption of advanced technologies that improve product pricing and speed of decisioning to meet customer expectations,” said Craig Focardi, Principal Analyst, Celent.
Global automobile sales are expected to rebound slightly and grow by 0.9% in 2023, after a 2022 decline of 4.4% due to supply shortages for vehicle computer chips. Rising fuel costs as well as higher vehicle prices for new and used vehicles have caused many consumers to delay purchases. Across all segments, it is harder to compete and grow lending volume.
“To stay competitive and properly leverage the abundance of data and analytics now available, lenders need composable, rules-based, SaaS technology for loan origination, decisioning, pricing, and portfolio management,” said Focardi. “Enterprise pricing systems, alternative data, and AI/machine learning-driven analytics can enhance and automate lenders’ loan pricing and decisioning capabilities and are essential components of a best-in-class vehicle finance business.”
Modern pricing engines can better manage multiple data sources and multiple analytics models in a loan decisioning and pricing process to create a more refined loan offer. Financial institutions have the opportunity to access more data and analytics to more finely evaluate customers and prospects than ever before.
“Celent’s research validates Earnix’s long understanding that the vehicle finance industry needs composable, sophisticated pricing technology,” said Giovanni Oppenheim, Director, Banking Solutions, Earnix. “Earnix continues to invest in its best-in-class pricing and decisioning solutions backed by machine learning-driven analytics and optimization capabilities. Our intelligent decisioning capabilities allow the speed and agility lenders need to provide a more modern digital-first vehicle finance business designed to ensure consumers receive the best offer at just the right time.”
About the Report
The Competing and Capturing Customers in a Disrupted Auto Finance Market report was commissioned by Earnix and designed and executed by Celent. Research was conducted by Celent, and the analysis and conclusions are Celent’s alone.