2018 Global Tech Report · Auto Captives Summit, held in January 2018 in London, provided an...

2018 Global Tech

ReportThink Bigger

2018 Global Technology Report Think Bigger

White Clarke Group

White Clarke Group is the market leader in software solutions and business consultancy to the automotive and asset finance sector for retail, fleet and wholesale. White Clarke Group solutions enable end-to-end credit processing and administration to streamline business practice, cut operational cost and deliver outstanding customer service. White Clarke Group has a 25-year track record of leadership and innovation in finance technology, consultancy and new market entry. Clients value White Clarke Group’s industry knowledge, market intelligence and innovation. The company employs some 600 finance and technology professionals, with offices in the UK, USA, Canada, China, Australia, Austria, Germany and India.

whiteclarkegroup.com



The International Auto Finance Network conference and White Clarke Group’s Auto Captives Summit, held in January 2018 in London, provided an opportunity for leading executives in the auto finance sector to come together and look at how innovation and technology are remodeling the auto finance industry.

This report will summarize those discussions and provide examples of how innovative new business models are eliminating inefficiencies within the current system, while a wave of new technologies is introducing rapid change across the industry.

The key focus is data: how to keep it secure and how to monetize it, and how to use newly available data to transform products and develop seamless omni-channel experiences and services. That means taking the opportunities offered by the growing volumes of data on the customer and the car to create personalized services.

This Global Technology Report highlights once again that auto finance companies cannot afford to sit still. Customer buying and vehicle usage

patterns are changing as services become increasingly digital. In response, both traditional players and new entrants are embracing opportunities to acquire or partner with start-ups, and investing heavily in technology and innovation.

New marketplaces are emerging around ride-sharing and on-demand car services. Advances in Big Data Analytics and the Internet-of-Things have combined to add more digital services to Connected Cars, and now the “Digital Car Wallet”, where digital connections in the vehicle create entirely new services for the driver.

This report showcases new business models and best practices from around the world and separates them in to the following categories:

Mobile & Pay-as-you-go Car Finance Artificial Customer Service Cryptocurrency, Blockchain & Mobility Cyber Wars

We are delighted to share with you this year’s White Clarke Group 2018 Global Technology Report and video presentations taken from the Auto Captives Summit 2018 and IAFN conferences. For more information please visit: www.whiteclarkegroup.com

We hope you will find the results as interesting and relevant to your business as we have. As ever, we welcome your feedback and are happy to discuss our findings.

Kind regards

Brendan Gleeson, Group CEO, White Clarke Group

Executive summary

http://www.autocaptives.com/

http://www.autocaptives.com/

http://www.internationalautofinance.net/

http://www.whiteclarkegroup.com/


Mobile & Pay-as-you-go Car Finance



Mobile & Pay-as-you-go Car FinanceOver the last few years dealers and lenders have continued to use new technology to offer an improved user experience via online systems and to speed up existing document and identity verification and credit checks, an approach which adds efficiency but leaves the underlying processes unchanged.

But organizations cannot afford to stand still or simply make incremental changes to existing ways of working: the challenge is to find ways of using technology to create compelling digital propositions which appeal to an increasingly sophisticated user base.

Customers are demanding more immediate and more personalized service from vehicle sellers and finance providers, using streamlined processes which deliver what they want quickly and securely. Faced with exponential changes in demand, companies are looking to both new startups as well as established technology partners to help shape their future offering.

White Clarke Group are helping clients in this area with our latest Customer Direct Channel, a new module covering the application for finance through the lender’s website. This offers an intuitive and responsive user interface, and provides standard API’s to integrate with third party systems or through partner portals.

The key application features include: vehicle configurator, full quote functionality using the CALMS web calculator, customer application capture, integrated credit scoring and policy rules, and the option to integrate with our Digital Processing solution to handle electronic identification and e-signatures processes as well as a dealer locator.


Technology disruptors are also launching new business models which mark a step change. An example of this comes from US based fintech start-up AutoGravity who are hoping to revolutionize auto lending “on demand”.

Co-founder Andy Hinrichs describes their app as the “digital glue” between the customer, dealer and lender, by enabling the full car finance process on the buyer’s mobile device.

The app shows potential purchasers a range of cars at local dealerships that meet their specified criteria in terms of vehicle spec and monthly repayments. Once a selection is made, the buyer scans in their drivers’ license for identification checking, the app links to credit scoring bureaus, and the buyer is then offered up to four finance deals. They click on the one that best matches their needs, and go to the dealership to pick up the car with the finance pre-arranged ahead of the visit.

Choose Your CarReal-time inventory of all makes,

models, and trim levels

Find a DealerAll franchised dealers nationwide

Select Your LenderGet instant credit decision and

up to 4 financing offers

Search for FinancingInteractive credit application

1 2 3 4


This approach has a lot of attractions for the customer, but it also benefits the dealer and the lender. “At the point-of-sale, the dealer is paid a commission and the lender gets an origination fee. But the true value of the transaction lies in the treasure trove of data that becomes available when the whole transaction is digital,” Hinrichs explains.

That data can be used to launch highly-tailored marketing campaigns, refine financing options and build new customer services.

Vehicle specific shopping behavior can be tracked and analyzed

Model 1 (brand A)

Model 2 (brand A)

Model 3 (brand A)

Model 4 (brand A)

13%

12%

27%

28%

15%

20%

13%

13%

71%

68%

61%

58%

User applied for respective brand A model

User applied for other brand

A model

User applied for other brand A model


Browse Scan Driver’s License Link Bank Account & Sign Fair Agreement

Select Your Car

1 2 3 4

Current checkout process

The Solution: Fast And Simple End-To-End Experience All On Your Phone

Another start-up Fair, co-founded by industry veteran Georg Bauer, has challenged the mobile auto lending market further by giving consumers flexible terms. Fair customers can drive their cars as long as they want and return them with only five days’ notice. A limited warranty, routine maintenance, and roadside assistance come as standard.

Established auto finance players are building on innovation too. Digital financial services company Ally acquired BlueYield, a California-based technology company, and rebranded its product to launch an online marketplace called Clearlane, that connects consumers with leading auto finance providers to finance or refinance their vehicles. Clearlane provides customers with quotes from a network of national, regional and local finance providers, and personalized support to help apply for and complete transactions.

In a world where films and music are expected on-demand, the auto finance industry is also starting to look at providing cars via a subscription. Ford has acquired Breeze, another West Coast start-up, which was an early adopter of this alternative car ownership model. The service has been enhanced and re-branded by the company’s Ford Credit subsidiary to create Canvas.

Canvas allows customers to select a vehicle, mileage package, delivery location and other details via its website. Users pay a bundled monthly subscription fee that covers all of the vehicle costs and when the customer is ready to return the vehicle, they give seven days’ notice and Canvas will pick up the vehicle at a convenient location.

15 Documents

16 Required Signatures

15+ Feed of Paper

17 Pages


Fintech start-ups are leveraging innovation to revolutionize the way in which both vehicles and auto finance are delivered. Automakers, aware that new car sales are beginning to slide and conscious of the changes in the market, increasingly see mobility services like ride-sharing and car subscriptions as growing business opportunities.

A 2016 report from the consulting firm McKinsey predicted that “on-demand mobility services and data-driven services” like subscriptions, ride-hailing services, and remote software upgrades could create $1.5 trillion in additional revenue for the industry in 2030. For existing players and new entrants, that is a prize worth fighting for.

Wagonex rolls out UK subscription service

UK start-up Wagonex is working with manufacturers, dealerships and leasing companies to offer subscribers the car of their choice at an all-

inclusive monthly price, requiring drivers to just add fuel and go.

“We know many cars are only used 5% of the time, but we have technology which tells us where they are located; users are mobile and

happy to share their location; and we can use online credit checking and payment systems via the phone,” explains founder Toby Kernon.

Consumers check out the options on the Wagonex website, book the car they want for a minimum of a month and once the finance checks are

completed, the car is delivered and is theirs to use.

Luxury On-DemandLuxury car manufacturer Porsche has teamed up with Clutch

Technologies, a supplier of a software platform for vehicle subscriptions, to announce a new sports car and SUV subscription program, which provides members flexible access to its vehicles via a mobile app.

This month-to-month subscription program offers frequent vehicle exchanges, unrestricted mileage, and on-demand access for up

to 22 different Porsche models for a monthly fee of between $2,000 and $3,000.

Membership plans include vehicle tax and registration, insurance, and maintenance, and users can schedule same day or future vehicle

exchanges through the Porsche Passport app.



Artificial Customer Service



Artificial Customer ServiceDigital customer engagement is fast becoming the norm, and lenders are already experimenting with using AI and machine learning to revolutionize customer service. Existing options, such as phoning an agent in a call center, or chatting online, are expensive to provide and present challenges in ensuring information is delivered and recorded so it is compliant with financial regulations.

Now lenders are using text-based chatbots and voice-interactive virtual assistants to simulate a personalized customer-facing conversation via a company website or phone app. By combining machine learning, intelligent automation and predictive modelling, AI allows digital conversations to more naturally unfold in the way a human conversation would, with responsive, specific messaging at an individual level—all done with a high degree of accuracy, and matching brand marketing statements and compliance requirements.

Gartner reports that consumers will manage 85% of the total business associations with banks through chatbots and virtual assistants by 2020.

Recently Bank of America began trialling “Erica”, an online assistant available via the bank’s mobile app. Erica will allow customers to perform transactions 24 hours a day, seven days a week using their voice, operating in a similar way to other phone virtual assistants, such as iPhone’s Siri.

Erica can pay a bill, inform customers of their account balances or provide the date for when a credit card payment is due, and has been designed to understand a customer over time, learning that person’s preferences and habits. She has also been given a personality, and will say “you’re welcome” when thanked.

IBM also recently created “Rachel”, an online assistant who has human features but a super-human ability to handle calls and queries about bank and credit deals. The chatbot is programmed with a call center script, and uses machine learning techniques to refine the vocabulary and answers based on consumer responses. Future applications could be via screens in kiosks sited in banks or airports, to provide a friendly automated service.

Image Source: IBM Watson project



Swedbank Group, the leading financial institution in Sweden, Estonia, Latvia and Lithuania, is using Nuance Nina, an intelligent virtual assistant that delivers a human-like, conversational customer service experience to enable self-service capabilities and quick and easy access to information for customers and service agents. With the intelligent conversational system on the Swedbank website, banking customers can simply type their questions to the virtual assistant in order to find answers to their questions and identify the financial services that are best suited for their needs.

In addition, customer service agents use the system to quickly source information for callers, reducing the amount of time customers must spend on the phone seeking answers to their questions. In the first three months of deploying Nina, Swedbank reported an average of 30,000 conversations per month, with a 78% first-contact resolution rate.

Benji Stone, Customer Service Lead at UK start-up DigitalGenius explains: “Chatbots and virtual assistants offer your customers simple, frictionless access to your brand. The vision is to use AI as a layer of technology in the contact center, to help agents, to complement their work and raise the game in quality, efficiently delivered AI can tackle low value functionality such as routing, tagging, and information collection which is often a distraction and prevents agents from spend their time where it counts.”

While banks and insurance companies have started to use AI in these areas, the auto finance market has been slower to take up the technology. However, the drive to adopt a customer-centric view means this is fast becoming an area of growth.

Human+AI ™

DigitalGenius AI

Human Agent

Routing Tickets

Complex Tickets

Collecting Basic Info

Tagging Tickets

Personalisation & Humor

Churn Reduction

Repetitive Questions

Suggesting Answers

Up-sell Opportunities

“We put the machine to work” ; “we make it do things human agents should not be doing”


Cryptocurrency, Blockchain & Mobility



Cryptocurrency, Blockchain & MobilityWith the trend towards car usage rather than outright car ownership accelerating, manufacturers and others in the auto finance supply chain are looking to create platforms which allow users to pick and choose from a range of transport offerings to match their needs at different times.

Ford Smart Mobility is developing a broad suite of mobility products and services for personal vehicle owners, fleet owners and cities globally, leveraging the data that comes from connected and autonomous cars, and from mobile apps, to refine services.

These include Chariot, an on-demand shuttle bus service for city journeys and employee transportation services for business, which leverages vehicle connectivity to deliver data services and fleet optimization to the commercial segment, building on the automaker’s historical strength in serving fleet customers.

Ford’s Smart Mobility Platform uses Watson IoT Platform to help consumers have better travel experiences.

Combines subway, traffic & weather data to advise on most efficient method of transportation.

Uses City Parking data with time and location-based parking patterns to provide insights into available parking spots.

Dynamic rerouting of shuttle busses when malfunction detected.



Finnish firm MaaS Global, based in Helsinki, has launched a beta version of Whim, an app that combines options from different transport providers into a single mobile service, removing the hassle of planning and one-off payments.

It works out the best option for every journey – whether that is a taxi, public transport, a car service or a bike share.

Users can pay-per-ride, or opt for a monthly subscription. Following the launch of upgraded subscription packages in December 2007, Maas Global reported more than 20,000 Whim downloads in the first three weeks. Most of those who downloaded the app went on to use it on a pay-as-you-go basis, with substantial numbers also opting for the €49/month urban package and some for the €499/month unlimited service.

The company is also testing out Whim in the West Midlands area of the UK, offering subscribers National Express bus and metro tickets, routes and timetables as well as Gett taxi services through the app.

UK start-up DOVU, backed by Jaguar Land Rover’s investment arm InMotion Ventures, is taking this concept further, by looking at how new technology can be used to smooth payments across multiple partners and incentivize driver

behaviors. It is combining a mobility services platform with blockchain – the technology behind Bitcoin, Ethereum and other cryptocurrencies.

DOVU’s idea is to have a mobility cryptocurrency which they have named “DOV TOKENS” which can be exchanged for different services, such as the use of a fleet car, a ticket for public transport, or bike rental.

Drivers sign up to a “smart contract”, giving them a budget to spend. They can also earn further tokens by making the data from their vehicle available to others.

The tokens help to create a circular economy, as they pass between the different partners, and all transactions are instantly recorded on the distributed ledger. They can also be used to encourage or change certain driver behaviors by, for example, incentivizing data sharing by offering additional tokens to spend, or by encouraging users of electric vehicles to charge their vehicle at off-peak times on a reduced tariff. Fleet managers could offer more tokens for drivers who will switch to bikes on short routes, for instance, which they could later spend on the use of an upgraded car at the weekend.

Your car could be paying you to drive it.

Vehicle Sensors Collect Data

Data On Weather (Windshield Wipers) Or Road Conditions (Suspension)

This Has Utility For Businesses And

GovernmentYou’re Rewarded For That Utility Via The DOV Token


More established players are also working on blockchain applications. IBM is collaborating with ZF Friedrichshafen and UBS, using the shared ledger technology to enable secure and transparent in-vehicle payments, so that motorists can pay for tolls, parking, car sharing and battery charging on the go.

The new transaction platform developed by the three partners will enable cars to respond to their environment, navigate routes and perform diagnostic checks without human input.

It builds on “Car eWallet”, developed by ZF and UBS, a system that allows its users to make cashless, on-the-go payments. IBM’s contribution to the consortium will be to provide a way to synchronize and store information from each network participant in a secured record that only they can access. This capability will transform e-commerce in vehicles by allowing different institutions to connect digitally without fear of security compromise, and will also create new opportunities for automotive manufacturers, finance companies and service providers.

Global consulting giant EY has a similar project underway called Tesseract, an integrated mobility platform underpinned by blockchain technology. The platform facilitates fractional vehicle ownership, shared use and seamless multimodal transport and it will help lay the groundwork for how autonomous vehicle fleets can be owned in the future and provide access to a variety of on-demand mobility options.

Randy Miller, EY Global Automotive & Transportation Leader, explains: “With Tesseract, single vehicles, fleets and other transport services are available on the platform. Vehicles and trips are digitally logged on the blockchain, and transactions are automatically settled between owners, operators and third-party service providers through a single-source, usage-based payment system.”

Blockchain is another technology which is reshaping the automotive industry, offering a way to manage supply chain interactions and to share data without requiring substantial additional investment in infrastructure. Auto finance lenders, fleet managers and dealerships will need to ensure that their systems are sufficiently flexible and agile to allow them to enter this new world.


Cyber Wars



Cyber Wars As increasing volumes of highly sensitive and critical data move online, so do the criminals. Royce Curtin, Managing Director of Global Intelligence at Barclays, warns of the rise of “Crime-as-a-Service”, where encrypted communications via the Dark Web are used to find insider information and hackers who are prepared to launch an assault on some of the world’s biggest banks and retailers.

“We are seeing more attacks than ever that steal or manipulate data, compromise trading platforms, destroy data and services, or that spread misinformation to hurt a brand’s reputation, or by using social engineering to conduct massive fraud,” he said.

Digital Developments By 2020

In November 2016 Tesco Bank, which has over seven million accounts, had to freeze its online operations after 40,000 accounts were compromised and 9,000 customers saw more than £2.5m in unauthorized payments leave their accounts.

The same year, Uber suffered a hack that exposed the names, email contacts and mobile phone numbers of some 57 million customers and drivers worldwide. The company paid a $100,000 ransom to the hackers to delete the data. One of the biggest financial losses so far was suffered by the Bank of Bangladesh, which lost $81million in the first known theft by a nation state, North Korea.

50xmore data online

95xmore internet traffic than in 2005

300%increase in connected devices to 27.1 billion

75%of global IT infrastructure will be under third party control

$1trillionexpected global spend on IT Security

4.1 billioninternet users worldwide up from 3 billion in 2015

Source: Barclays, Cisco, Gartner

of all cyber-attacks start by clicking on a fake email (phishing)90%

Biggest Cyber BreachesCompany No. of user accounts breached

3,000,000,000+

165,000,000

145,000,000

143,000,000

134,000,000


“Companies suffer an average 1.5% share price decline after cyber-attacks are made public, with some drops of up to 15%. Financial services experience the biggest declines and the highest regulatory fines,” Curtin said.

But the biggest loss from a cyber-attack? TRUST – in an organization’s ability to deliver world class service through industry leading innovation at the speed of the market, and to keep all data and financial information secure.

The Top Five Cyber-Enemies

In 2016, 63% of data breaches originated from a third party. By 2020, three quarters of global IT infrastructure will be controlled by third parties, meaning organizations need to be sure they are on top of how their cyber security is managed.

As of May 25, 2018, the EU General Data Protection Regulation comes into force, requiring organizations to make a public notification of any data breaches it has discovered within 72 hours of such an event, as well as introducing new and stringent requirements around data erasure, the right to restrict processing and the right to correct information. Failure to meet those obligations could leave a business exposed to fines of up to €20 million or 4% of annual global turnover.

Nation states Organized international

cyber-crime gangs

‘Dark web’ criminals

Hacktivists Insiders

Fighting BackKeep up the battle in the ongoing cyber war by:

Leveraging the best and latest technologies to detect and prevent attacks – don’t forget, cyber criminals are also using bleeding technologies

Regular data backups of critical and non-critical systems

Building resilience and redundancies, so if an attack does happen, your business can continue to operate and recover quickly

Testing, exploring and validating all security options, particularly for IT assets held outside the company’s own control

Training and educating staff as well as customers on good cyber security practices


Future directions



The innovation and technology developments unveiled at this year’s International Auto Finance Network conference and Auto Captives Summit are evidence that disruption is far beyond any one technology, product or service. Long-established business models have been challenged and completely reinvented, with consumer preferences in the driver’s seat.

Businesses are under intense pressure to gain and protect market share as new players prove nimble, sophisticated and well-funded for shaping the future of automotive finance.

White Clarke Group believes that, with the right technology and partners, even traditional business models are able to close the gap. More aggressive outlooks suggest that traditional players could even become the disrupters themselves, if, and only if, they accept that evolution requires them to look critically at all aspects of how they operate. The winners will be those who are able both to build on their existing strengths, think bigger and adapt to the current pace of innovation.


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2018 Global Tech Report · Auto Captives Summit, held in January 2018 in London, provided an...

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