Wolters Kluwer, a global leader in business information, software solutions and services, today announced a new analysis of its Auto Finance Digital Transformation Index, a key resource that tracks the pace at which auto dealers, service providers and lenders see growth in moving from paper-based financial back-office processes to digital. Click here to see the full data infographic.
According to the index, car dealerships, service providers and lenders saw 81.11% growth in digital transactions over the last twelve months, including a growth rate of 122.09% in the first quarter of 2022 compared to compared to the first quarter of 2021.
The automotive industry continues to pursue digital transformation across the spectrum of operations, exemplified by the surge in digital retail immediately following the onset of the pandemic. However, digital finance is different from online shopping in that it represents the conversion of back-office processes from paper to digital assets.
According to Wolters Kluwer’s Automotive Finance Digital Transformation Index, the industry saw 78.86% growth in digital finance transactions between 2021 and 2020, and 38% growth from 2019 to 2020. The company has also recorded a 98% increase in digital transactions compared to Q4 2021. with Q4 2020.
As the consumer experience has become more digital and the critical need to transact remotely during covid, this combination has led to the adoption of more digital processes and transactions through digital channels, including lease buyouts directly through the lender leveraging digital contract channels. Additionally, the increase in used vehicle purchases has occurred with many large conglomerates of used dealerships now using digital platforms.
Even though the index has shown a growth rate of 79% between 2020 and 2021, compared to 38% from 2019, there is still more room for industry adoption. In 2021, nine million out of 28 million car financing arrangements were electronic contracts, representing only 32.5% of all car loan transactions (new/used).
“Lending transactions are happening in many places today with the emergence of new models such as the adoption of EV, which caters to a more holistic digitized loan origination and document management process,” said Tim Yalich, Head of Automotive Strategy at Wolters Kluwer. “In particular, lenders are now looking for transparent, automated and compliant ways to transact and secure the benefits of digital offerings over paper. Lenders, third-party providers, and dealerships are now leveraging digital ecosystems purpose-built to manage the auto finance industry’s diversity of originating channels, eliminating the complexities of managing diverse multi-channel assets post-execution and significantly reducing operational and time costs. ”
To learn more and access additional information on the Wolters Kluwer Auto Finance Digital Transformation Index data, Click here.