Listen: Automation, data management key focus at auto lending conference

Automation, data management and compliance strategies were a focus of discussion last week at the Auto Finance Innovation and Auto Finance Risk Summits in San Diego. Chase Auto , Wells Fargo Auto and Mazda Financial Services plan to expand their automation efforts through new upgrades and investments. Chase, for one, is creating a digital journey that allows consumers to purchase a car from anywhere; Wells Fargo is further automating its loan-decisioning process; and Mazda is focusing on eliminating unnecessary friction on its mobile application. Along with digitization efforts, data management was a hot topic at the Summits. Chase Auto, for example, is looking to simplify its risk management strategies in order to make the most of its internal data, Chief Risk Officer Ajit Nalla said at the Risk Summit. Exeter Finance , too, is shifting its data management strategy through its ongoing migration to the Microsoft Azure cloud, which is expected to be complete by the end of 2022. Still, as technology progresses and lenders focus on the latest and greatest ways to manage their systems, attendees were reminded to keep compliance at the forefront of their practices. Experts at the Summits discussed recent fair lending cases, state-to-state privacy law updates and Consumer Financial Protection Bureau hot buttons to be aware of for the rest of the year. In this episode of the Weekly Wrap, Auto Finance News Editor Joey Pizzolato, Deputy Editor Amanda Harris and Associate Editor Whitney McDonald discuss the week’s top stories coming out of the Auto Finance Innovation Summit and the Auto Finance Risk Summit. Editor's Note: This podcast originally appeared on Bank Automation News' sister site, Auto Finance News . Subscribe to The Roadmap Podcast on iTunes , Spotify , or download the episode. Video Transcript: Editor’s note: This transcript has been generated by software and is being presented as is. Some transcription errors may remain . Joey Pizzolato Hello everyone and welcome to the roadmap from auto finance news since 1996, the nation's leading newsletter on automotive lending and leasing. It's Monday, May 2, I'm Joey Pizzolato joined by Amanda Harris and Whitney McDonald. This is our weekly wrap on what happened in auto finance for the week ending April 29 2022. In larger economic news, US gross domestic product fell at a 1.4% annualized rate in the first quarter following a 6.9% increase at the end of 2021. Looking ahead in q2, the expectation is that trade and inventory deficits should get back on track and the economic growth should pick back up in auto finance, Capital One Ford credit and GM Financial all posted their first quarter earnings reports. In the quarter Capital One's focus on digitization and its relationships with his dealers led to a 20% growth in auto originations totaling 11 point 7 billion. GM financials originations also grew 8% sequentially to 8.1 billion down 1.2 for 2%. From the same period last year. The captain continued to see lasting inventory shortage effects as its supply on dealer's lot set at 15 days and most of its new vehicle inventory remained in transit in foreign credits, profitability fell in q1, which was expected as the captain also continued to battle supply constraints. Its US and Canada, consumer outstandings fell 4.5% year over year and 1.4% sequentially to 54 point 8 billion. Although earnings before taxes fell in delinquencies inched up in the quarter, Ford still posted a positive portfolio reflected by strong lease residuals and credit performance. So far, consumer credit health has maintained a positive trend when compared to pre pandemic levels across the industry. Also, last week, we held our annual auto finance risk and Innovation Summit in San Diego with hot topic, items, including automation, inventory constraints, data management, and migrations to the cloud are all top of mind. I mean, are you held on the 14th handle a lot of our conference coverage? Can you tell us what the takeaways were from the those lenders shifting towards automation? Amanda Harris Yeah, um, so the biggest takeaway for me is that automation can mean a lot of different things. It's kind of just what I got from the event. So some of the takeaways just ran the gamut of, for example, Hyundai capital, was increasing automation in their financing process, at least within the next couple of years, are looking to automate more of the decisioning. Right now, they do have about 80% of their decisioning going through automatic channels, that's up from 53 50%, three years ago, there's looking to do more of that. And that includes, you know, things like E contracting and just using automation to decision loans that come in instead of doing all that manually. But then other use cases for automation that we saw were, you know, using data and analytics, to for risk management, and you know, decisioning, as well. So really automating more of that coming in, like using alternative data using automatic, you know, processes to bring in that data, and then putting it where it needs to be for decisioning and things like that. And then we also saw just, you know, all kinds of use cases from decisioning was the big one. We saw Chase auto also mentioned that Wells Fargo, but also just automating the entire car bonnet car buying journey, we know that something that lenders are working towards. And that also uses artificial intelligence. Like for example, using AI based targeted offers, so that when his customers are ready to make a purchase, they can see offers that are tied to what they're looking for. They can see financing, you know, like pre qualifications are really big right now being talked about. And then as it also is related to just migrating more to the cloud. For your processes for loan origination and management, that's something being talked about a lot, because you can easily scale those processes if you're hosting it in the cloud versus a lot of it being manual or hosted, you know, in a way that would take a lot of money, time and effort to update. So this is some of the use cases that I saw talking about automation and really just honed in that. That particular word can mean lots of different things in our industry. But we're seeing lenders adopt pretty much every you know, side of that, that you could think of Joey Pizzolato and I'm glad you mentioned data management because and just kind have an understanding where your data is coming from how you integrate that across your entire, you know, business. Whitney, we saw a lot of talk about data management at the at the summit in both segments, actually. So what what's going on there? Whitney McDonald Yeah, before we got to San Diego, we knew that data management was top of mind our APR feed future actually focused on data management, kind of using data for overall customer experience. So you guys can check that out. But yeah, at the summit itself, we heard from Chase autos, chief risk officer, a jet Nala, he spoke at the risk summit. And he focused on making the most of Chase autos internal data by just simplifying its process. So leveraging its data and analytics, in that early on in the decisioning process, not overloading consumers with questions, but making sure that they're asking the right questions. So that strategy of simplifying the use of data and also the collection of data is something that Chase Otto was focused on. Also, Exeter finance is migrating to the Microsoft Zurich cloud to realign its it and strategies with its corporate strategy. So moving to the cloud has just made their data management more scalable, with hopes to also bring faster integration capability. So they've been moving on. And then also, like I said, our April feature just going back to that was on data management, too. So lots of innovative processes came out, I was able to be in San Diego in person for my first live event. So it was exciting to see everything come together. And and yeah, it was great to be there and meet a lot of the attendees and speakers that came. Right. It Joey Pizzolato was good to be back in person, you know, we had an October, but that was still pretty, pretty close coming off closures. And I think everybody's really excited to get back out there and to network, you know, the route, we brought the roundtables back, that was a huge success. We'll definitely continue to do that in the future. But you know, one thing that kind of was highlighted, both at the conference and sort of in an in a roundtable participation is really sort of, you know, making sense of the changing compliance. Landscape. Right. And I think the the main takeaway from that is the CFPB has been much more vocal about what they are, what they're interested in what they want to see not happen. And, you know, just today, actually, they released some supervisory highlights that, again, focused on auto repossessions. And one thing that really came out of the conference, it's important to note is, for every one of our our lender lenders out there, the CFPB has basically a laundry list of things that they're looking at, and this came out in their latest, their latest bulletin, not the one today, previously. And really, it's just for the first time ever, we have in one place what the CFPB wants to see happen in the industry. So if our if our audience is going to take one thing away on the compliance front is check that bulletin and just make it make your compliance. You know, team aware of it, and use it as a resource in it really will help sort of kind of organize and prioritize what needs to happen in the coming year. So I thought that that was really interesting as well. One other important news announcement today, the 2022 big wheels report is available, as always provides in depth glimpse of inventory trends by breaking down the percent of financing volume for new vehicles, and the top 100 originations by total new and used volume. Additionally, the 2022 big rolls report includes a phone survey of customer service representatives at the nation's 200 largest financial financiers, the reps were pulled about whether a consumer could secure an auto loan with a nonprime credit score of 650 or a subprime credit score below 550. The results offer Big Wheel subscribers a more comprehensive view of financiers in the market. That about does it for our episode today. Thanks for joining us on the roadmap and follow us on Twitter and LinkedIn and we will see you online and auto finance news.net in here next time

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