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Borrowers Want To Self-Serve Their Auto Loan Payments

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Our latest survey of consumers’ bill-paying habits shows a big shift toward mobile-payments adoption and related self-serve experiences, presenting big opportunities for lenders to dramatically lower their costs.

Here are some of the key findings revealed in ACI’s latest ACI Speedpay Pulse survey that indicate a path through these challenges. The picture is clear: By shifting borrowers to digital payment channels and self-serve options, lenders can lower costs while giving consumers the experiences they prefer.

Our latest ACI Speedpay Pulse consumer research shows an increase in consumer preferences toward mobile payments and self-serve experiences, setting up a welcome route to lower costs and raise customer satisfaction for lenders.

Re-engineering the customers’ payment experiences around mobile channels to enable customers to take charge of their account aligns with a couple of major challenges facing the sector right now. From recruiting and retaining staff, to potentially more delinquencies and fewer originations due to changing economic conditions, auto lenders are preparing for a perfect storm of increased costs and reduced revenue.

Preference for mobile payments has doubled

As viewers of the data can see, consumer preferences toward mobile devices for making auto finance payments have doubled since 2018. In fact, mobile is the only channel to have grown in preference during that time.

This illustrates the importance of mobile-optimized channels and experiences that enable customers to manage their account completely from their phone. Allowing them to take charge of making payments, updating billing information or restructuring loans, instead of calling into contact centers, is a rare opportunity for auto lenders to reduce their own costs while improving the customer experience. Driving traffic to self-service portals will also ease resourcing demands at a time when staffing challenges are a major headache for auto lenders across the board.

Payment choice still matters

However, within these mobile experiences, lenders must still maintain a varied payments mix to enable customers to pay with whatever is in their wallet — digital or physical — at any given moment.

Our research has shown that debit cards now dominate as the preferred payment method of most demographics – Gen Z, Millennials and Gen X. Lenders, driven by the guiding principle of “never turn down a payment,” will recognize that these younger demographics have grown up with digital real-time experiences and adapt their payments mix accordingly. These consumers prefer to make payments in the moment, using whatever is in their wallet and whenever they know the funds are in their account.

Looking a little further ahead, this trend is also driving many lenders to act on a major preference shift by embedding alternative payment methods within their mobile experiences, such as Apple Pay, Google Pay, PayPal and Venmo.

Ditch the robocalling for delinquent customers

As tougher economic conditions for consumers feed through to the auto finance sector, many expect to see an uptick in delinquencies, increasing costs and exacerbating resourcing issues.

Lenders have long turned to automation in the shape of robocalling to manage delinquencies, but there is growing evidence that this is ineffective and may even be counterproductive. According to the latest ACI Speedpay Pulse study, a majority of consumers have told us that they avoid communications from debt collectors when it comes to paying overdue or late bills. Their most commonly-stated reason is a preference to set up their own arrangements on a website or mobile device.

Clearly, automation alone is not enough. The type and timing of communications must align with consumer preferences to increase the chances of reaching borrowers and bringing them up to date. Many billers across a variety of industries have had success with short-code SMS messages, linking through to self-service portals where customers can make payments with whatever is in their wallet, schedule partial payments and set up payment plans. Pre-delinquency, these outbound communications can also be used to light up a customer’s phone with proactive notifications that their bill is approaching due. This increases the likelihood of lenders getting paid ahead of other billers.

Think holistically to reduce the cost of payments

As these findings show, optimizing the cost of taking payments involves more than minimizing the fees involved with processing or accepting that payment. There is a total cost of ownership associated with payment methods and the wider customer experience that is pushing lenders to think more holistically.

Yes, this means moving customers to lower-cost payment methods where appropriate and where it suits lenders’ requirements. But it also means considering the overall cost to serve customers, both when their account is up to date or when it risks slipping into delinquency, where, as we have seen, investing in the communications methods they prefer will be more effective in recovering revenue.

To understand more about the biggest payment trends impacting auto lenders check out the latest data on the ACI Speedpay Pulse interactive page, or head here for more info on the ACI Virtual Collection Agent.

Principal New Business Developer, Consumer Finance

Darcy Locke is a Principal New Business Developer and a trusted advisor in electronic billing and payments with more than 16 years’ experience, specializing in the consumer lending markets. An AFSA member for more than a decade, Darcy is the chair-elect for the AFSA Business Partner Board. She is motivated to help lenders elevate the customer experience, remain compliant and reduce costs.