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A culture of learning in auto lending

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Driver of success: Mitigate auto lending risk
A culture of learning is a key driver of success. Does your risk culture continue to adapt?

There are many issues within auto lending that are unique to other financial services ecosystems: the direct versus indirect relationship, insights of the asset influencing the risk insights, new versus used vehicle transactions influencing risk and terms, and more. However, there is one universal standard common to all financial services cultures — change..

Change is constant, and an institution’s marketing and risk organizations need to be constantly learning to stay abreast of dealer, consumer, competitor and regulatory issues. No one has said it better than Jack Welch: An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.” This statement was quickly followed by a command: “Change before you have to.”

So the challenge for the portfolio manager is to ensure there are the system features, data sources, management reporting structures, data access features, analytic skills, broad management team skill sets, and employee feedback and incentive plans to drive the organization to a constant state of renewal. The challenge for many smaller and midsize lenders is to determine what systems and skills need to be in-house and what tasks are better left for a third party to handle.

For consumer-level data, vehicle history and valuation data, and fraud alert flags, it seems reasonable to leverage solutions from established third parties: credit reporting agencies. After that, the solutions to the many other needs may be more specific to the lender legacy skill set and other support relationships:

  • Are there strong in-house data-management and analytic skills? There is a significant difference between management information and data analysis driving policy and portfolio performance forecasts. Does the internal team have both?
  • Is the current operating platform(s) feature-rich and able to be managed and enhanced by internal resources within tight time frames?
  • Is the management team broadly experienced and constantly updating best-practice insights?
  • Is the in-house team frequently engaged with the regulatory community to stay abreast of new mandates and initiatives?

There is a solution. Experian® offers the data, software, solutions, management information, analytic solutions and consulting services to tie everything together for a lender-specific best configuration. We look forward to hearing from you to discuss how we can help.