INCREASING moves by dealers towards creating multi-lender panels are ultimately proving to benefit all motor finance providers, says iVendi.
Rob Severs, Senior VP Product and Insight, at the company, which has processed around 430,000 finance applications so far this year through its dealer platforms, said that being part of a carefully constructed panel maximises business opportunities, removes the need for rekeying data and delivers useful management information.
“Dealer lending panels are nothing new but what has developed in recent years is an increasingly sophisticated approach on the part of dealers in constructing a hierarchy of lenders designed to meet all potential vehicle buyer needs. This is happening not just in large dealer groups but all kinds and sizes of motor retail businesses both online and in showrooms.
“What is not immediately apparent and may potentially appear counterintuitive is that these panels benefit all lenders. Moving from being one of perhaps two lenders used by a dealer – a prime and a sub-prime – and instead becoming one of maybe five that cover a spectrum of requirements, looks like it might be a threat to business. However, we are finding the opposite is true.
“The key is that, in a properly constructed panel, lenders are not in opposition but meet specific needs. The prime lender, for example, will still be the first port of call and approve the same percentage of deals as they would if they were the sole provider. However, in a panel, there are a number of options to try if the prime declines, with each one offering a different degree of likelihood for approval and risk appetite.”
The advantages really materialised, Rob explained, where a multi-lender platform meant that applications could be moved from lender to lender quickly and easily.
“Where an application has been keyed into the system by the buyer or dealer, that data can be easily moved from lender to lender quickly and easily to maximise the chances of placing the potential buyer without the need for rekeying. Of course, being able to do this means that every lender on the panel has a greater of chance of seeing more applications and therefore more potential business.
“Additionally, and this is something that we at iVendi supply for our major customers, management information reports are generated about multi-lender activity that are accessible to all the lenders involved, allowing them to gain much improved insight over lending activity, ultimately modifying their own offering if required.
“Certainly, over time, we are seeing more dealers move to this kind of lending panel model and more lenders embracing the opportunities that it brings.”
He added that having a single, multi-lender system also enabled dealers to much more easily meet the requirements of the FCA’s forthcoming Consumer Duty guidelines.
“Having all your motor finance data in one place makes it much easier to record everything that you need to ensure compliance in this respect, as well as to retrieve the data in the event of a query. In contrast, running multiple lender systems side by side creates much greater potential for errors and confusion.”
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