BMW Financial Services' Bob Devine splits his time between U.S. headquarters for the BMW Group in Woodcliff Lake, N.J., and BMW Financial Services headquarters in Dublin, Ohio.
BMW Financial Services also has a growing presence in Salt Lake City, where the captive finance company last year chartered its own bank, BMW Bank of North America. The bank, in a recent joint venture with Chubb Group to offer auto insurance direct to customers, is part of a strong trend at BMW and the auto industry to offer more services to customers than simply selling and servicing cars and trucks.
BMW Financial Services N.A. Inc. has more than 330 employees and almost $11 billion in managed assets. It has 320,000 customers in North and South America, mostly in the United States.
Devine, 63, began his present job March 3. He joined BMW Financial Services in 1992. Before that he was with Ford Motor Credit Co. for 13 years. He spoke with Staff Reporter Jim Henry on March 3. Edited excerpts follow.
What got you started on BMW Bank?
We have been looking extensively at where we think the use of the Internet is going. Starting out, it was primarily used to generate sales leads and a little bit of financing. But it is evolving into something that has the potential to take control of the delivery process. That is not an outcome that aligns with the interests of BMW or BMW retailers. Our program will have the ease and convenience of the dot-coms, but it will keep dealers engaged in the process.
Is that direct lending, as opposed to indirect?
Dealer reserve, in effect, is an interest rate markup. That will go away on this. We will compensate dealers on the document-fulfillment end. We will be quoting the transaction rate to the customer on the Internet, directly, based on our parameters of creditworthiness. That precludes the dealer from the business of concluding the loan approval process. But similarly, in the non-BMW scenarios, they are all consummated off-site, too.
What's in it for the dealer?
We will provide fast funding turnaround. That gives us a significant advantage over the dot-coms. We can pay in 24 hours. The dealer gets a fee and much quicker delivery of funds. We do the credit application, the preparation of documents, and we get the registration information.
Will dealers get paid more for bigger loans, or strictly a flat fee per head?
We're still looking at what's most effective.
Where do direct loans come from now?
Credit unions, local banks, home equity instruments - and now, online lenders.
How will the BMW Bank transaction work?
It's important how you document the transaction, between the time the customer makes the application and the actual transaction. There is a lot of drop-off of interest in between. We provide the dealer with the online information on the customer that's needed to complete the transaction ... (Meanwhile) the customer gets a voucher with our approval on it. The dealer can also view this online.
What's left for the dealer to do? What do you mean by 'keeping them engaged in the process?'
The dealer fills in the information specific to the transaction, like the vehicle identification number. The dealer is not the intermediary in getting finance approval. The dealer is the document processor.
How much is the flat fee going to be? $50? $1,000?
It will be substantially more than $50. It will be a very competitive flat fee. Some lenders are already offering a flat fee in the indirect world, and they run in the range of $200 to $300.
You'll be offering credit cards, too, right?
Yes, as of late this summer. The features will be geared to the BMW lifestyle. We're looking at different awards programs. We will probably offer two cards, with two different levels of awards. There is some attractiveness to a tie-in with service. Or maybe you could earn a higher allowable mileage on leases. There will be multiple categories.
Do you really need your own bank to offer these programs? What are the advantages, as opposed to a joint venture?
A major element is asset ownership. By owning the assets, we can drive the customer service process; we can control the level of service. If we own the assets, we own the risk.
Doesn't accepting deposits impose a burden on you for maintaining reserves and all that?
How about other financial services, such as financial planning and stocks and some of the things that banking reform has made available to banks, that you would not have been able to offer a couple of years ago? Is banking reform a factor in the timing of all this?
That is going to be driven by the customers' desires. Obviously, we have some very sophisticated buyers out there. We're open to that; we've conducted some market research.
What's your timetable?
Direct loans will be the first product launch in the second quarter (of 2000). We look to launch credit cards in the third quarter.