Harness Startup’s Tech — A Game Winning Strategy for Lenders

JengaWith the auto finance industry evolving rapidly — particularly as startups and fintech companies attempt to disrupt the space — it can be difficult for some lenders to keep up to speed with changing technology trends, said Chris Ballinger, chief financial officer and global chief officer of strategic innovation at Toyota Financial Services.

The auto finance world “is moving fast on so many fronts,” Ballinger said. “There is a whole new ecosystem developing, and no company — no matter how good they are — can do everything at once and in all places for customers,” which is why it can also be beneficial for lenders to partner with startups and small fintech companies, he added.

For example, TFS announced in early July that it has joined New York-based startup R3CEV LLC’s blockchain consortium to explore distributed and shared ledger technology for potential applications in auto financing. TFS is the first captive to collaborate with R3’s network, which includes more than 50 of the largest financial institutions working to develop use cases for blockchain in the financial industry.

Startups need access to what captives and larger lenders have, “which is scale, customers, and brand recognition,” Ballinger said. “Likewise, we need what those companies have,” which includes speed, access to small market niches, and the ability to try new ideas and “pivot quickly if that doesn’t work,” he added.

Earning a customer’s trust and delivering value “is always in fashion,” regardless of whether you are a startup or a longtime auto finance veteran, Ballinger said. Technology companies have delivered on convenience, ease of use, intuitive experience, and online speed to the market, he said. Meeting, not only existing customer expectations, but getting ahead and delivering the experience customers want — that’s something all companies can learn from leaders in the tech space, he added.

“The startups are not a threat, and we are not a threat to them,” Ballinger said. “It’s not like we are coming in and trying to conquer [the industry]. We need what they can offer us, and they need what we can offer them. Startups provide the opportunity for us to serve customers and dealers in much better ways than we’d be able to do on our own.”

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