At Tricolor Auto Acceptance, technology drives the goal of delivering seamless, sustainable financial products across dealerships and digital channels, President and Chief Operating Officer Don Goin told Auto Finance Excellence.
“Our business strategy is hyper-focused on the customer experience relative to financial inclusion,” Goin said. “Part of this strategy is the prioritization of product development that simultaneously solves for differentiated experiences and efficiency in how we operate.”
Goin spoke with AFE about the subprime lender’s new Google AdWords campaign, the most overrated innovations in auto finance, the biggest concerns facing the industry, and the major lessons he’s learned in his 17-year tenure in the industry. What follows is an edited version of Goin’s conversation with AFE.
Auto Finance Excellence: In March, Tricolor implemented Google’s AdWords advertising platform to attract a more refined set of customers. What was the impetus for that initiative?
DG: Our core customer is highly engaged online, particularly on social media, and most of them interact digitally via smartphones. We are deploying Google and a handful of other companies as part of an overarching lead-generation and customer-retention strategy. We implemented these with a test-and-learn methodology and found interesting results that have led us to continue our investment.
AFE: What is the most underrated innovation in auto finance that you’d like to incorporate into Tricolor’s practices?
DG: It’s probably easier to define overrated innovations in auto finance!
I started my career as a software engineer and spent most of my career building technology capabilities and organizations in and around auto finance. Even in my operations roles, I employed technology heavily and always had a nearby software engineering team. Those experiences help me see through market hype and distill promoted technologies to their core capabilities.
Frankly, a lot of what we see in mainstream technology today has been around for a long time, it just hasn’t been as accessible. For example, the distributed computing that we see in cloud services has been around for decades, but great companies like Amazon and Google have now made it available to the masses. The math behind algorithms that drive artificial intelligence and machine learning were proven out long ago, but the computing capacity had to catch up.
The greatest advancement has been in the widespread adoption of technologies like APIs, Big Data, cloud, and machine learning, because they generate an ecosystem of capabilities that are much easier to develop and integrate than we’ve seen in the past. In the end, it’s more about what an organization is able to do with a given technology and how they choose to innovate than [about] the technology itself.
If I’m placing bets on what to choose next, I would make the bet on AI. Business leaders should pay very close attention to what is happening with machine learning, computer vision, natural language processing, and social network analysis. AI appears to be growing globally at a much faster rate than we expected in terms of VC funding, startups, earnings call mentions, and patents.
AFE: What is the biggest concern the industry is facing? Interest rates? Tightening regulations?
DG: I think the industry is too focused on price. Lenders are just beating each other up. I’d rather see companies focus on the customer experience, matching customers with vehicles they desire and to offering affordable financing options they need and deserve.
AFE: What major lessons do you take away from your 17-year tenure in the industry, and how do you apply those lessons to the changing auto finance business?
DG: That’s a big question! I’ve had the good fortune to work with a number of innovative companies and many talented people over the years. Thee auto finance business is more challenging today than ever. But looking back, I think there are some important lessons in how to be successful.
In the early days, we were using faxes for credit applications and doing our own data entry on the funding floor for contracts and stipulations. Buyers worked every deal over the phone, and servicing was mostly manual. As the industry evolved and became more digital, it put pressure on our pace of innovation, and we had to adapt accordingly.
I’ve also had experiences where we were the digital leaders, causing competitive disruption. In either case, I characterize my most successful experiences as those that occurred during intense periods of change, with lean, at organizational structures and very talented people. The focus and unity of talented people drive a dramatically different result.
Today, the pace of change is increasing, and the cycles occur in compressed timeframes compared to a decade ago. Competing in an efficient market with digital disruptors means we need to be more agile and execute with more precision than ever before while ensuring we have good controls across our business.
My advice for others would be to focus on real business problems and don’t follow the pack. Innovate toward capabilities that make you more competitive by listening to the customer. Don’t undertake a “digital transformation” project — just be digital. Finally, never lose sight of risk management, controls, and cybersecurity. They serve an important purpose that will allow you to be a market disruptor without disrupting your business.