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A Call for Lender Finance Integration Standards

Futuristic digital blockchain background, fintech technology

This blog was written by Dr Mark Spink and James Holden

 

With most motor dealers seeing the demise of the fax machine for sending finance applications, the removal of client based point of sales systems, and the rise of lenders’ web portals over the last decade, it’s safe to say that we are living in a rapidly advancing technological time, especially in the motor industry.

APIs

As the dealer landscape changes and becomes more ‘virtual’, Application Programmer Interfaces (APIs) are gaining more and more significance. APIs are published by lenders to allow external parties to connect electronically from their own applications, such as showroom systems.

Unfortunately, almost every lender has created its own API and in 90% of cases it’s simply a case of “reinventing the wheel”, with the unwanted effect of creating a great deal of complexity for anyone wanting to use them.

One of DealTrak’s main USP’s is its ability to provide and maintain lender integrations, making them all available via one common DealTrak API. DealTrak consumes over 100+ of lender APIs and uses them to seamlessly send finance applications to lenders on the dealer’s behalf.

Open Standards

The situation is very different in the UK general insurance market. Unlike in motor finance, an industry body provides a set of standards that act as a common language between brokers, insurers, data providers and other organisations for carrying out new business, amendments, renewals and cancellations of insurance policies. This has allowed comparison sites to flourish and provide greater choice and transparency to consumers, while motor finance still operates on a traditional broker model.

Similarly, the Open Banking standards, driven by the Competition and Markets Authority, aim to tackle the lack of competition in the retail banking market by enabling customers to securely share their banking data with other banks and third parties. This enabled smaller and newer banks to compete with the larger established banks.

In the F&I sector, Open Banking can also play a role by aiding affordability based decision making and identity verification processes. An open finance standard would certainly complement these other open standards, and perhaps it could provide similar benefits of transparency consumer choice to the automotive and asset finance world.

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