Auto OEMs are increasingly collaborating with fintechs to introduce innovative touch points to improve customer experience, finds Frost & Sullivan
Toronto, ON (Feb. 12, 2019) – The average investment in fintech by automotive original equipment manufacturers (OEMs) is forecast to grow from $16 million in 2016 to $230 million by 2025 as they look to completely digitise the car finance process. Financers and insurers are responding to this digitisation drive by building deeper working partnerships with data analytics companies so they can optimise customer engagement through novel payment options such as mobile payments, wearables, and virtual currency.
“Collaborations between auto OEMs and fintechs can result in digitised, transparent, and faster financing processes,” said Shruti Pathak, Research Analyst, Mobility. “The technologies employed by both parties should simplify budget calculation, financing product search, vehicle selection, and paperwork for customers. These benefits are expected to improve customer retention rates and generate more direct leads.”
Frost & Sullivan’s recent analysis, Innovative Business Models in Automotive Finance and Insurance, Forecast to 2025, analyses the auto finance and insurance industry and its stakeholders in the North American and European markets. It focuses on identifying the factors responsible for the shift from the traditional business models to technology-based models. The study includes the trends that are likely to drive innovation from 2018 to 2025.
“Start-ups are disrupting the traditional usage-based insurance (UBI) business models with their on-demand insurance models as new mobility solutions like car-sharing, ride-sharing, and integrated mobility require novel insurance and dynamic business models,” noted Shruti. “Insurance providers will also offer tailored solutions such as bundled insurance policies covering electric vehicles (EVs), home charging station, e-bike, and recreational vehicles.”
Finance and insurance companies will be looking to tap further growth opportunities by:
- Providing subscription-based services, as they can create new revenue streams for vehicle lenders in the luxury car segment.
- Integrating Artificial Intelligence (AI) in their solutions to enhance claims processing, ensure fair insurance premiums, and perform data analysis more efficiently than possible with traditional methodologies.
- Focusing on customer-centric pricing models and value-added services.
- Developing UBI tracked by telematics systems as well as collective peer-based insurance calculations.
Innovative Business Models in Automotive Finance and Insurance, Forecast to 2025 is part of Frost & Sullivan’s global Automotive & Transportation Growth Partnership Service program.
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SOURCE: Frost & SullivanTags: customer experience (CX), digitization, FinTech, Frost & Sullivan, Usage-Based Insurance (UBI)