As the automotive industry continues to shift toward digitization, lenders have more data at their fingertips than ever, and managing that data has become a key consideration. Chase Auto, Flagship Credit Acceptance and GM Financial — and even financing conduits such as RouteOne — are continuously evaluating how they leverage their data management systems in a way that maintains compliance and enhances the customer experience.

“We are definitely going through some interesting times in technology,” Ida McKinley, senior vice president, IT services at GM Financial, said at the AFSA Vehicle Finance Conference last month. “In [more than 25 years] I’ve been within information technology, I can tell you that I have never seen so much transformation going on at any one time.”

Enhancements in the use of cloud data storage, automation, robotics, and development and IT operations (DevOps), have “set the stage for data management,” McKinley said. While lenders “want to make sure that we enable all of the [new technology], we still have to make sure that we balance it with the necessary controls.”

That’s where data governance comes in.

Regulation and compliance in data systems

With new technology comes new responsibility, and when lenders implement new systems, they must stay on top of regulations in order to capitalize on those investments in the long term.

To maintain compliance, Chase Auto has implemented a “traffic cop” on its team to ensure its data use is explainable, legal and permissible, Brian Jelenek, head of data and analytics at Chase Auto, said. “Traceability and transparency is absolutely what regulators and insurance teams are going to look for.”

Chase Auto “treats data as an asset,” Jelenek said. In doing so, the lender keeps its data organized so that when regulators ask about data collection, the company is able to explain why the data is being collected, how Chase is utilizing it, and describe its models and policies, providing documentation of the data use, he added.

RouteOne, too, encourages lenders to put governance plans in place across all lines of its business, Chief Executive Justin Oesterle said. In order to be confident in its data management system, RouteOne is always prepared to answer regulators who may ask how the company is managing its data, he said.

To set up organized data collection, lenders need to “invest upfront” in order to avoid “some real issues,” Oesterle said. The key is to avoid one-off solutions and think long term when applying new technology, he added.

Flagship Credit Acceptance also leans on consistency in the business by having periodic conversations between lines of business; for example, talking with IT regularly to determine what critical data reports are needed in order to make the most of data processing, Chief Information Officer Rush Blevins said.

In staying within regulatory expectations, lenders must be certain that they have consumer permission to use their private data, and a standard as to what the data is being used for, GM Financial’s McKinley said.

“At the end of the day, you need to make sure you are focusing on a great customer experience through your data collection,” Chase Auto’s Jelenek added.

Data for customer experience

As technology advances, consumers remain hesitant about handing over their private data for fear of compromising their identity. However, when lenders take the time to explain how their data will be used and that opting in to release it can improve their overall customer experience, consumers are more likely to acquiesce.

The concept is called “identity proofing,” McKinley said, adding that using this approach increases consumer willingness to allow their data to be collected and analyzed with the thought of “I could be ok with this as long as it’s for my benefit.”

Even with permissions in place, lenders must be mindful of the personal line they must not cross to maintain transparency and trust within the customer relationship, Chase Auto’s Jelenek said. For example, “we aren’t saying, ‘wow, I know you went to the bar three times last week,’ things like that wind up crossing the line,” he added. At Chase Auto “we are very careful about what we do from the personalization perspective to not cross that creepy line that people worry about.”

As long as lenders have methods in place for how to use their data appropriately and effectively, the use of that data allows for a more personalized approach, allowing lenders to “create an experience that is better for some consumers than others, based on what their preferences are and what products they have,” Jelenek said.

Tackling the talent gap

But for lenders with plans to leverage their data management systems, the current challenge is not necessarily the technology, but the lack of available data scientists.

The number of computer and information technology jobs is projected to grow 13% from 2020 to 2030 as cloud computing, data collection, and storage and information security needs grow, according to the U.S. Bureau of Labor Statistics. That leaves a wide gap of about 667,600 new jobs in the tech industry, jobs lenders are learning to be creative about filling.

Chase Auto, for one, has leaned on building its college recruitment classes, and GM Financial is adding training resources and focusing less on finding employees with certain skill sets, and more on finding those willing to learn.

Another strategy lenders can implement is to upskill current employees, training them on data and artificial intelligence rather than recruiting a whole new team, according to a January McKinsey and Co. report.

In an era when technology is more advanced than ever, the most difficult task for lenders is not data management itself but rather “recruiting and finding people” to fill out the tech teams, Jelenek added.

Editor’s Note: This story first appeared on Bank Automation News’ sister site, Auto Finance News.