Tomorrow morning, I’ll keynote Drive 17 — it’s a conference for credit union executives around the topic of the future of lending. Particularly, automative lending. This is similar to a keynote I did in January of this year for the American Financial Services Association — same topic and issues, except for banking executives.
It’s a challenging time to be in this space, as we witness seismic changes in both the very nature of automotive ownership and the manner by which lending decisions are made. Particularly with the next generation, who are very different from their forebears:
- they don’t have a job for life – they freelance
- their banking is mobile – they don’t use cash
- they don’t think long term – 25 year mortgages are a foreign concept
- they don’t stay at hotels – they use AirbNb
- they don’t use taxis – they Uber
- and 1 in 10 works in the sharing economy…. and so they don;’t have the typical risk profile of an employee
The biggest challenge? They might not even buy cars, but rather will take advantage of all the opportunities that the sharing economy presents. Of course, if you are in the business of lending money for the purchase of automobiles, this can be a problem, and requires some innovative thinking.
If they do, however, buy a vehicle, the manner by which they will seek financing will be very, very different. It will be done through their mobile device; they’ll expect instant options, and instant approval. We’re talking 30 seconds here. If you can’t meet their expectations in terms of the time for the transaction, they’re gone. Which means you need to challenge yourself in terms of interface, risk assessment and more.
In my keynote tomorrow, I’ll cover these trends and more. The reality? Every credit union and financial institution today needs to comprehend the speed with which transformative change is occurring, and how they must focus on innovation as a means of turning those challenges into opportunity.