It is well known that anticipation is one of the greatest forms of pleasure. Let’s take the example of buying a car: proud future owners can hardly wait for the day they can drive round in their new set of wheels. Around 75 percent of all new passenger car registrations in Germany are based on leasing and financing models – according to a study conducted by the Arbeitskreises Autobanken (AKA), this trend will continue to rise.
However, a number of steps have to be taken before a leasing contract can be concluded, many of which are still manually processed on paper. Are we seeing consistent digitalisation and automation in this area? Not at all! One of these steps is for the lessor to obtain bank information from the lessee’s bank. Similar to a credit check, automotive banks use the bank information to gain an impression of the customer’s payment behaviour and solvency.
Conventional Bank Information Is Merely an Indicator of Creditworthiness
In a nutshell, bank information is data that a bank provides about the financial situation, business practices and payment behaviour of a customer. In contrast to a detailed credit check, bank information only serves as an indicator. Its structure differs only slightly from bank to bank and contains very generic statements based on pre-formulated text keys. Let’s take a look at some of them:
The overall circumstances leave a good impression.
We are not aware of any detrimental effects.
The financial situation appears to be tense.
To the best of our knowledge, any obligations entered into so far have been fulfilled on time.
The amount requested seems too high to us.
We advise that you proceed with caution.
Almost all credit institutions provide bank information on a printed form, which the bank employee manually completes by ticking the appropriate box. This allows conclusions to be drawn about the reliability of a customer’s payments. However, due to the manual processing method, this procedure is more a subjective assessment by the bank employee than an objective, data-driven interpretation of payment behaviour.
In addition, there are other aspects that have a negative impact on the customer experience. In an increasingly digitalised world, it seems anachronistic to justify concluding a leasing contract on a paper form with crosses when purchasing a state-of-the-art car with an intelligent driver assistance system and digital sound system. The media disruption delays the entire process because several days can quickly elapse between the application by the automotive bank and the issuance of bank information by the house bank.
It goes without saying that bank information is not required for every leasing application. However, with around 3.5 million new registrations in Germany and a leasing and financing share of 75 percent, the optimisation potential is huge. Digitalisation and automation could help significantly accelerate the process speed. But what could this digital replacement for conventional bank information look like?
Bank Information Becomes Faster, More Detailed and Largely Automated
Leasing companies could revert to a solution that is already being used today in many other areas of the financial world: the Digital Account Check. The questions listed in the information form can be filled out automatically with the help of the Digital Account Check. This significantly lightens the workload for bank employees and the automotive bank will reap the benefits of additional contextual information, which will make the credit assessment more reliable.
The Digital Account Check involves a PSD2-certified Account Information Service Provider accessing a customer’s online banking account after approval from a customer. Transactions that are relevant for the bank information are analysed and included in the automated filling out of the bank information. From the perspective of a leasing provider, this would represent a decisive step forward in digital transformation:
- A primarily manual process is no longer necessary – this helps eliminate possible sources of error.
- We can bid farewell to long waiting times for the preparation of bank information by a house bank – the Digital Account Check works in real time.
- The customer benefits from a digital customer experience and is always in control of their data – without it being exposed to anonymous assessment by their house bank.
The Digital Account Check enables bank information to be created digitally and largely automatically.
Like all industries, the leasing industry is facing the challenge of gradually automating its business processes with the help of digital solutions. However, in contrast to many other industries, there is a lot of catching up to do – but many leasing providers are displaying great optimism. When it comes to digitalisation, the industry is primarily focussed on adopting best practices from the banking world, which has long reaped the benefits of cooperating with innovative FinTechs.
“Instead of being considered a threat, FinTechs are actually regarded as cooperation partners. They are a source of inspiration” says Horst Fittler, Managing Director of the Federation of German Leasing Companies (BDL). The integration of the Digital Account Check in conjunction with Account Information Service Providers would be a positive step towards embodying this claim in practice.
Successful financial companies already rely on intelligent data processing and use machine learning amongst other things to help them. Read our free White Paper to find out how this can help providers enhance their customer experience. Go to White Paper.