Digital tools can improve compliance, but risks remain

As automotive retailing becomes more digital, so does the financing process surrounding it. Digital tools in the finance and insurance office have made dealers more efficient and more compliant. But they're still only as good the people using them, F&I experts say.

Hendrick Automotive Group, recognizing the shift toward digital retailing, decided five years ago to look at a fully electronic, digital deal jacket. "What we wanted to do was completely digitize our F&I process in the dealership," said Robert Taylor, the group's vice president of information technology.

About three years ago, Hendrick decided to install the Reynolds and Reynolds docuPad, a large, electronic, touch-screen device that allows deals to be constructed on a digital screen. It automatically verifies that documents are signed, and the data it collects can provide audits and usage reports. As of last summer, all 96 Hendrick stores had it.

Neither the group's customers nor its employees want to go back to sorting through paperwork, Taylor said. Digitizing the F&I process has eliminated thousands of documents and made the transaction exponentially more efficient. "Most people nowadays have an expectation that they're going to walk into a modern F&I office and walk away with something electronic," Taylor said.

The change has also improved the group's compliance, he said. "In the past, when you were dealing with individual paper forms, and sort of an analog world, it's just human nature to forget a form, or miss a signature, or something to that effect," he said. "So on the digital side, you know, there's really not that opportunity for them to do those types of actions."

John Tabar, who leads training at F&I company United Development Systems Inc., said interest in digitizing the F&I process has grown, especially in the past two years. Dealers are trying to make the F&I experience as seamless and easy as possible, he said.

It's simply in response to the way people are buying things now. "We need to start offering products in F&I like we do everything else [consumers] buy, and talk about it that way," Tabar said. "I think that's what's driving it."

Of course, going digital can pose problems. Sometimes different digital worlds are not well integrated, said Ritch Wheeler, vice president of training at F&I product and training company American Financial & Automotive Services Inc. Depending on which provider the dealership subscribes to with its dealership management system or its customer relationship management program, "a lot of times the choices are made to go with the shiniest new toy, but it sometimes doesn't play well with others," he said, echoing a gripe among dealers that some DMS and CRMs are difficult to integrate with outside software.

More of a concern, however, is whether digital tools could be prone to mistakes that could leave dealers vulnerable to compliance problems. Wheeler said he met with an F&I manager who was using a digital desking tool. The store had to update its printed buyers' guides on vehicle windows, but the dealership had failed to do so on the digital copies. Wheeler had caught it before the dealership ran into any trouble and helped fix it.

Improperly displayed buyers' guides — which say whether a vehicle is being sold as-is or with a warranty, and advise shoppers accordingly — was one of the three most commonly identified compliance problems during audits last year of clients of KPA, a risk-management software company.

The other top problems were customers' sensitive information being left out in the open and Monroney stickers missing or being improperly displayed.

In the case of the buyers' guides, dealers may have to make sure that in-vehicle and digital copies are updated as auto retailing transitions forward. But Trevor Stage, senior manager of product innovation at KPA, said he is not concerned that digital F&I tools could put compliance at risk.

Quite the opposite, he said, because digital tools can enable dealers to easily track compliance and to hold employees accountable. "What the compliance management system offers dealerships is not only to point out where the dealer may be putting itself at risk, but also highlight the peak performers," he said.

The important thing is for dealers to make sure they have the proper training in place, and the right people using the relatively novel digital F&I tools, experts said.

"There's an amount of compliance built in, for sure," said Tabar of United Development Systems. "But I think that sometimes we get into a little bit of trouble when we think that the software that we're utilizing is all we need."

If someone is going to be dishonest, there's not a lot of technology available that can get around that. Overall, training is key for everyone, especially on newer tools.

If dealers expect a robust tool alone will lead to success, they're wrong, said Taylor of Hendrick Automotive. People still drive the process.

"We're not looking at hiring lesser individuals or lower-cost individuals because we've made this investment in this particular technology," he added. "It still comes down to the people."