Last year brought its fair share of changes in auto finance. Here are some trends that likely will continue in 2018.
Big moves in digital retail. Digital retail and digital finance and insurance have advanced over the last few years, but customers could soon be able to pay for at least part of their transaction online with a credit card. Rumor has it that two notable companies plan to join forces to support this type of transaction, and other companies likely will unveil similar or complementary solutions at the National Automobile Dealers Association convention in March and throughout the year.
Significant changes at the Consumer Financial Protection Bureau. Under a Republican administration and now with a Republican acting director, the CFPB could behave very differently. Mick Mulvaney, who is also director of the Office of Management and Budget, placed 30-day freezes on regulatory actions and hiring while he conducted a review of the CFPB's operations in November. Auto-related enforcements have already begun to taper off, but they could lessen even more under the bureau's new leadership.
Stabilization of bank auto lending portfolios. Banks probably won't continue to pull back on auto lending, said Melinda Zabritski, senior director of automotive finance for Experian. Many banks restructured their portfolios and adjusted their auto finance exposure in 2017.
Some banks lost auto finance share as a result, but others are trying to gain share, she said. "It's not really a strong decrease, probably more of a stabilization for where banks are right now."
Stepped-up cybersecurity. Fraud was a hot topic in 2017, and this year, dealerships and lenders will likely increase their security efforts. Lenders may form consortia or work with vendors to fight fraud as a group. Dealerships may tackle fraud with third-party companies. Even so, there's a good chance a high-profile breach will get everyone's attention. Already, there are plenty of signs that the bad guys are stepping up their activities against dealerships.
According to Helion Automotive Technologies, a dealership information technology support provider, 3 to 7 percent of dealership employees were willing to provide credentials when prompted during online phishing simulations. Among the incidents Helion has seen at dealerships:
In the F&I office, malware installed on a computer captured credit bureau log-on information, and 200 customer credit reports were pulled.
In the accounting department, staff uploaded banking details, which led to an unapproved $400,000 transfer attempt. In another incident, banking credentials were captured via malware, and a wire transfer was attempted.
In the sales department, an associate was tricked into revealing a password.
These trends have been budding over at least the last year but will be worth watching in 2018.
The online transaction some industry players have been pining for may come to fruition; the CFPB could play a different role that favors the auto industry more than in the recent years; banks will adjust, likely catering to more prime borrowers; and the auto finance and retail industry may be forced to amp up cybersecurity measures. How will it all pan out? Time will tell.