Brian Reed has a post over at P&A Magazine on provider sites for e-contracting. I would say that he cribbed my analogy with online credit apps, but I know Mr. Reed is an old hand and he has lived through the same history.
In the mid to late ’90s, a number of auto finance companies developed their own system for dealers to electronically submit credit applications.
I agree with Reed’s central complaint about the provider sites. As I have written previously, they break the dealer’s process. I might add that DMS integration isn’t getting any easier. So, what is the best way for a product provider to support e-contracting? Continuing the analogy with online credit, Reed suggests a single web site for multiple providers. Think of Dealer Track, only with products instead of finance contracts.
I see a few problems with this idea. First, providers will not support a shared platform if it allows rate shopping. Then, of course, there is the problem of DMS integration. But the biggest problem flows from the online credit analogy.
Lenders can now bypass the aggregation sites, in favor of direct links to the DMS. Marty Zwolan calls this “disintermediation.” It’s the mission of Open Dealer Exchange. The best way to support e-contracting is to exploit a system the dealer is already using.
About a year ago, I did an informal survey of F&I product providers. They were, and still are, moving toward a service-oriented architecture that prints forms and originates contracts online. For providers who do not have a forms service, Provider Exchange Network will host forms at a nominal charge. We offer this as a convenience, even though providers are moving away from it.
Lenders, however, are not moving in this direction. This is mainly due to stricter regulation of finance contracts, and also the disparate experiences of the two groups. In the late nineties, finance sources – both captive and independent – developed online credit systems. They subsequently moved to aggregators like Dealer Track, and many single-lender systems shut down.
So, while product providers have retained their online systems, and support their own services for e-contracting, most lenders do not. This is why my colleagues in Lender Services are busy loading their forms library, while we are unloading ours.
In the software business, we often blame the customer for not embracing our latest innovation. This has certainly been the case with e-contracting. We solved a host of technical problems, from data standards to digital signatures, only to discover – dealers won’t use it.
They have some good reasons. Laser forms require multiple copies and multiple signatures. Signature pads cost money and customers don’t trust them. Laser printers are expensive. Inkjet printers are cheap enough, but you need one in each office. Blank paper is $9.00 a ream, compared with contract stock brought in free by agents and field reps. All things considered, the impact printer works just fine.
This reminds me of when we first put credit applications online. Dealers already had the perfect solution. “I go have a smoke while they fill out the app, and then I blast fax five lenders.” How do you compete with that?
We showed that online credit, combined with automatic approval, closed more deals. We showed that the internet was cheaper than the fax, and that the system would share data with your DMS. We also kicked in a $20.00 spiff, as I recall, which we recovered in data entry costs.
Today’s challenge is no different. Dealers are shrewd enough to know that the benefits of automation accrue mainly to the finance sources and the product providers. As innovators, it is our job to show what’s in it for them.
We are ramping up for (continued) domination of F&I e-contracting. PEN is looking for a Project Manager, a System Administrator, and two Software Developers. Here is the link to our postings on Career Builder.
F&I experience is a plus, of course, maybe with a provider or a relevant software vendor.