Onward and upward.

Those two words could summarize analysis by Wolters Kluwer Compliance Solutions for its Q3 Auto Finance Digital Transformation Index.

Wolters Kluwer said adoption of digital workflows in auto finance continued to track closely with broader market activity during the third quarter, while digital securitization activity showed strong quarterly growth.

Analysts pointed out third-quarter data also reflected a market focused on efficiency and risk management, particularly as the issuance of subprime auto asset-backed securities (ABS) remains under heightened investor scrutiny stemming from the Tricolor Holdings bankruptcy.

Wolters Kluwer noticed digital contracting volume remained strong overall, with a modest quarterly adjustment that mirrored a slight slowdown in overall vehicle sales activity in September.

Analysts indicated eContracting volume decreased 2.34% quarter-over-quarter but rose 4.33% year-over-year.

What Wolters Kluwer classified as a “four-year positive trend,” digital adoption continues to show “substantial” growth, with an increase of 88.50% since Q3 2021.

Meanwhile, Wolters Kluwer noticed digital auto securitization activity demonstrated a “significant rebound” in the third quarter, “reflecting renewed issuance interest and the long-term move toward digital asset management.” Here are those details:

—Quarter-over-quarter surge: Digital activity increased 27.03%

—Year-over-year volatility: Digital activity decreased 36.90%

—Four-year trend: Adoption is up 39.55%

While the year-over-year figure reflects broader market volatility, Matthew Babcock, who oversees digital lending product strategy for Wolters Kluwer, explained the strong quarter-over-quarter increase signals market re-engagement.

Furthermore, Babcock pointed out overall industry issuance remained resilient despite performance concerns surrounding certain subprime auto segments.

“The Q3 data clearly shows that while eContracting is maturing, the next major frontier for digital transformation continues to be in the back office, particularly within the securitization workflow,” Babcock said in a news release. “In a climate where subprime performance is heavily scrutinized and institutional participation is expanding, operational efficiency is paramount.

“To unlock this growth, the industry must tackle the most critical risk areas in the back office,” he continued. “We need to digitally ‘bulletproof’ the process — aggressively resolving the bottlenecks of data extraction and standardizing documentation. This isn’t just about efficiency; it’s about establishing a new foundation of evidentiary integrity that minimizes manual error and allows us to confidently withstand the most intense regulatory and institutional examination.”

Babcock elaborated about these points and more during an episode of the Auto Remarketing Podcast, which is available in the window below.