FICO looks to optimize deal structures with new tool
FICO now has more than just a consumer credit score to offer auto finance companies during the origination process.
Leveraging its deep analytic expertise coupled with advanced algorithms and the latest optimization technology, FICO recently highlighted its new automotive industry-specific loan origination solution can enable auto finance companies to evaluate millions of alternative offers instantly to compete for business aggressively without compromising risk standards, growth targets or compliance requirements.
The new tool impressed Anil Goyal, who is senior vice president of automotive valuation and analytics at Black Book.
“This innovative FICO solution brings advanced analytics in real-time to the origination processes. Lenders can discover thousands or possibly millions of offer alternatives to deliver the most appropriate offers to dealers and customers,” said Goyal, one of many experts slated to be a part of Auto Fin Con during Used Car Week beginning on Nov. 13 in Palm Springs, Calif.
“This solution allows for the integration of vehicle values and depreciation rate forecasts to enable lenders to estimate accurate loss projections and overall profitability while delivering the ultimate in choice to customers,” he continued.
As the automotive industry and vehicle-buying experience dramatically change, FICO insisted auto finance companies need to make data-driven lending decisions in real time.
In a recent report by Deloitte titled, "Financing the Future of Mobility: Auto Finance in the Evolving Transportation Ecosystem," the authors contend the digital disruption to origination and underwriting of auto financing is made clear.
“Historically, customers have rarely relished the process of initiating a loan, with its reams of paperwork and long wait times at the dealership. That's already beginning to change, as auto retailers look to adopt customer-centric omnichannel retail models,” the report said.
Ken Kertz, senior director of the FICO auto practice, elaborated on those points and noted where FICO’s new tool comes into play.
“Today’s digital-first consumers expect simplicity and instant gratification at every touchpoint of their car buying journey. Given increasingly fierce competition, dealers must be equipped to deliver instant, compelling, profitable and flexible financing offers across digital channels and in the dealership” Kertz said.
“By enabling finance companies to balance competing priorities with an analytically-driven approach, satisfied customers will be able to actually drive cars off the lot instead of being bogged down by burdensome paperwork or greedy deal terms,” he went on to say.
Leveraging the power of the FICO Xpress Optimization Suite and FICO Origination Manager, this auto industry solution is designed to generate multiple optimized deal structures for approved applicants, giving the customer and the finance professional greater flexibility to balance competing business outcomes (such as lowering risk or winning market share), as well as negotiate and instantly adjust the terms of the loan (length, interest rate, or monthly and down payments).
At the core of this offering is a sophisticated decisioning engine that enhances productivity and profitability for finance companies by enabling them to respond to applicants instantly, eliminate negotiation turnaround times, manage risk and significantly reduce manual paperwork.
For more information, watch a video here or at the top of this page, and go to www.fico.com/en/auto-lending.