3 reasons consumers are choosing to shop for finance online
Consumer behaviour continues to reshape the vehicle finance landscape.
As more and more aspects of everyday life move online, consumers are increasingly comfortable with new technologies and the benefits they bring.
Digital transformation has taken online retail environments by storm. From online retail now being a cornerstone of every major supermarket to high street banks closing their branches in favour of providing better online service to their customers, the way people interact with businesses seems to be changing every day.
In this post, we’ll look at three key reasons why consumers are choosing to shop for finance online.
What changes have we seen so far?
We compiled data from our retailer platform and over the years, the share of finance applications completed online has continued to grow.
In 2019, 22% of applications were made online, with the majority still being made in the showroom. However, in 2020 this figure increased to 30%, and in 2021 continued to rise to 35%.
The accelerating trend leads us to believe that in 2022, 45% of all applications will be made digitally and remotely, rather than in the showroom as part of a traditional sales process.
The 3 things changing consumer behaviour
1. The COVID-19 Pandemic
We’ve mentioned the pandemic a lot in some of our recent blog posts, but its impact on the commercial world cannot be overlooked.
The pandemic made a relatively large section of the car-buying public more comfortable with online processes.
While the overwhelming majority will combine elements of both the digital and showroom journey, there has been a significant shift towards the use of digital tools, and consumers now complete more key stages of a buying journey online.
2. The Changing Retail Landscape
Many retailers have adapted their business strategies to better meet consumer needs, and as a result, the retail landscape has shifted.
This is in part a result of changing consumer needs, and down to modern expectations.
Retailers have upgraded their online presence substantially over the last two years, and the finance journey on offer is simply better, and easier to use for consumers.
3. New Technologies
The technology available to both retailers and lenders has continued to improve.
Technology has leapt forward significantly over the last two years, much more than the incremental shifts seen in the industry over the last decade or so.
The online journeys now on offer are more effective, easier to adopt, easier to use and are better integrated into the purchasing process as a whole.
How can retailers improve their online finance offering?
We spoke to James Tew, iVendi’s CEO about motor finance journeys, and how the shift to online presents opportunities for retailers.
James said: “Many online motor finance journeys now offer a degree of flexibility that means customers can play with the main variables behind each deal, much more effectively than ever, until they arrive at the kind of offer they want”
“In many ways, online motor finance is more customer-friendly, allowing the customer to run different variations of the numbers in a way that is difficult when sitting in front of a salesperson in a showroom.”
“Systems have done this for many years, but the latest iterations, such as the Digital Deal feature in our TRANSACT system, makes customising finance deals more efficient than ever.”
“Once they have made a choice, the potential buyer can even check the likelihood of approval online without leaving a footprint on their credit file that is visible to lenders, before they make an application, which is a major plus point for many.
“For all of these reasons, we expect the swing towards online applications to continue not just this year but to rise substantially for the foreseeable future. While there will always be a place for showroom-based applications, we believe increasing numbers of car buyers will choose the digital option.”
Making the most of the buying journey
Get the latest industry insight from iVendi by downloading our white paper, Connected Retailing: Addressing the Challenges of Digital Transformation, and see how consumers and digital activity are impacting the market, and how emerging technologies continue to re-shape the automotive retail space.