There has been a buzz in the marketplace over the last few years about e-contracting and what transforming your business as an administrator/provider would do for your bottom line. The companies that were early adopters in developing e-contracting capabilities on their website did so in part to provide them with a competitive advantage.
A number of aftermarket administrators and providers have built very elegant websites with great functionality. As time has progressed and more companies have developed different types of e-contacting capabilities, many of these companies are disappointed because the use of these websites has not met initial expectations.
So the question is ... what needs to happen to drive market acceptance of e-contracting in the aftermarket F&I space?
To best answer that question, let’s look at the progression of the processing of credit applications electronically. In the mid to late '90s, a number of auto finance companies developed their own system for dealers to electronically submit credit applications. Dealers liked the functionality but did business with a number of different finance companies. Dealers did not like having to go to multiple websites to submit credit applications so they did not use it.
Along came Route One and DealerTrack and they made it easy for the dealer by aggregating all the lenders on their websites. A dealer could go to one place to submit all credit applications electronically. After the dealers went through the typical change management curve, the percentage of applications that dealers submitted electronically went from a very low percentage to virtually all of their credit applications being submitted electronically. The business model that focused on “ease of use” for the dealer allowed the tipping point to be reached for the submission of credit applications.
Over the last year I have met with many of the administrators, providers and their agents who have their own proprietary websites for e-contracting. Along with their dealers, they are saying that they need to be able to process their aftermarket e-contracting from one site because dealers do business with multiple administrators and providers.
At the same time, everyone realizes now that e-contracting is not a differentiator because everything processed in the F&I office will be done electronically. If you do not possess the capability, you are now at a competitive disadvantage.
The good news is that the components of driving the marketplace to 100 percent electronic processing are attainable. The technology is not the issue, it is in place. Even if the computer systems you are using are “older” this can be done.
It has been previously mentioned that one of the main challenges for dealerships to adapt web services is the technology they use, specifically when it comes to “legacy systems.” The simple truth is many dealerships have not upgraded their technology and may be under the false impression they need to spend thousands of dollars to make web services work. The term “legacy system” gives a false impression that the system is outdated and cannot be used.
What many dealerships and administrators need to know is that legacy systems (i.e., AS/400) can be used to make this happen. For example, First Data Corp., which is one of the largest credit card processing companies in the world, relies on an AS/400 platform and has for many years. These large systems are capable of running multiple jobs at a time including batch and interactive jobs. They are practically infinitely scalable, and are most often a single server instead of a server farm, which is often the case with PC-based systems. These platforms are known for tremendous speed and ability to “crunch” numbers.
So regardless of what system you are using, it is essential to know that e-contracting can be attained. The No. 1 critical success factor is making it easy for the dealer to use. This is accomplished by providing the dealers an easy way to process all of their business without jumping around to multiple websites with different logins and passwords, no redundant data entry and validation of the data so that when the contract is printed, it is always correct. The e-F&I office will be in place sooner rather than later – is your company ready?