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How Technology is Impacting F&I


Technology is a constant. It is in every part of our lives, and the F&I office is no exception. At the P&A Leadership Conference at the Paris Hotel and Casino in Las Vegas, providers from around the industry sat down with moderator Greg Arroyo, editorial director, F&I and Showroom and Auto Dealer Monthly, to talk about the role technology plays in the industry, and where they see it going in the future.

First and foremost, the panel made clear that they don’t see technology as a replacement for well-trained F&I managers. It improves the tools they use, but while technology can make a good F&I manager great, it cannot do the same for a bad F&I manager. “It’s about people,” said panelist Brent Allen, president, StoneEagle. He went on to note that, while technology does have a place in the F&I office – for example, by allowing dealerships to track compliance more easily – it will never replace the need for well-trained people.

Bob Hymen, president, Service Payment Plan, agreed, noting, “Technology helps make it easier to present the products, but it’s still all about training the F&I manager. It’s not a ‘game changer,’ it just takes away the excuses. It’s just a tool – you still have interaction, technology just makes it easier.”

eSignature is one area the panel was interested in. They saw it as a technology that will increasingly be the standard in F&I offices around the country. “There is some eSignature,” said Kumar Kathinokkula, COO, F&I Administration Solutions, “but it’s not as prevalent as in other industries. That will be the next wave.” He went on to note, “Right now, there is so much paperwork to sign for so many people that it’s a discordant experience for the consumer. As technology providers, we have to get ahead of the curve. A lot more people have to support it though – we’re still a few years out.”

“We would love to have everything electronic,” said Hymen, “that’s the goal. But it won’t happen until dealers are ready – and that won’t happen until the OEMs require it.” His argument – backed up by several other panel members – is that while there are tech-savvy dealers out there, many refuse to change unless it is a requirement. If the manufacturers start making eSignatures a franchise requirement, dealers will have no choice but to follow suit.

Another area the panel touched on was selling products through the service drive. “Every administrator has tried after-sale service drive products,” said Kelly Price, president, National Automotive Experts. “It’s challenging to get people motivated in the service department to sell. So far, we haven’t found anything that has stuck.”

“There has to be a culture change in the dealership,” agreed Christina Schrank, president, NAC. “And that change has to come from the owner of the dealership or general manager down.” Options might include offering e-mail newsletters sent out to dealership clients, or offering more training and easier-to-use systems in the service department. But that alone isn’t enough – if top management is not totally committed to the idea, the service department will not sell the contracts, no matter what providers do to ease the way.

Arroyo then took the panel in another direction, asking them why F&I is not taking more advantage of the opportunities online videos present, in order to inform and educate car buyers. Price noted that one insurance company did a study, and found the average customer does about 16 hours of online research before they ever step foot on a dealership lot. “We’re going to need to make F&I available that way too,” she noted. “If they are doing that much research, we need to make sure the dealer has all the information on their Web site. If a customer walks in and has never heard of something being sold to them, they will get defensive. We need to try to educate.” Customers are seeking the information whether the dealership – or provider – wants them to or not. And that is becoming increasingly more true as the younger generations, who are used to researching and shopping almost entirely online, become more involved in the purchasing decisions.

“Some of the reluctance,” said Shrank, “is that it isn’t a controlled environment. So we need to give them videos with facts, and not just random videos.” The best presentations will always be from the F&I managers in person, in their office. But, she noted, videos with the correct information from providers that give product overviews and help explain why the customer would need the product, will help pave the way for the F&I manager. The random videos are out there – being produced by the consumers themselves in many cases – with an incorrect understanding of how the products work and what the benefits are. Professional, factual videos could help break down the resistance in younger car buyers, and make them more receptive to the presentations when they do finally make it to the F&I office.

Developing the Future
Technology has also become a major part of product development, the panel noted. “In the past, we launched a product and worried about technology later,” said Price. “Now you have to do the coding in advance. The biggest challenge is to remain consistent.” That consistency can be hard to achieve when the interface needs to work- and look the same – no matter what platform (PC or Mac) or browser (Internet Explorer, Chrome, Safari, Firefox, etc.) the dealer is using. On top of that, mobile systems such as iOS, Android and Microsoft Windows bring their own challenges, but with mobile becoming more prevalent in dealerships, providers can’t afford to ignore this space either.

Allen agreed, noting, “I feel like that’s a good thing. Today we have to build the technology first, take the time to find the profit in any new product and control the costs. It slows us down a bit, and we take more time with products.” The products in turn, he believes, have fewer problems and more functionality. Time is put into making sure it all just works in the beginning, rather than rushing to get the product out the door, and dealing with bugs or problems as they come up. The issues are complex enough that there can still be things that will need to be fixed once the product goes live, but many of the major problems are now sorted out up front, making for better, more stable products in the long run.

“Any business needs technology to grow,” said Kathinokkula. “You can’t leave it out of the plan. The definition of technology has changed over the years, but the extent to which it needs to be part of your planning hasn’t changed. And that includes mobile – it’s impossible to grow today without it.”

But knowing when to develop those technologies in-house, and when to go to outside help, can be a tricky decision as well. There are pros and cons to both choices, which, in many cases, boils down to the needs of the organization and the speed of development required. “Systems should be flexible, but at the end of the day, the truth is some companies want to know they own it,” said Allen. “It’s also scale – just getting started, that’s not the way to go, but once you hit a certain point, it can make sense to go internal, so I think there will always be both.”

Kathinokkula disagreed. He believes that outsourcing certain types of technology is always going to be a better decision. “You don’t build your own accounting system,” he noted, “you buy one. Companies have to look every year to keep on top of what’s out there for their administration needs. Maybe no one had what you needed before, but that can change rapidly. Right now, there is no reason to have an internal administration system – you don’t need to support that cost and you don’t need to invest in that level of programming ability. And even then, do you really want to build from scratch, or do you want to start with a solid base, with a system developed by people who know what they’re doing? Use technology resources wisely and don’t rebuild the basics every time.”

Price gave the other side of the equation, noting that her company is one of those with a completely internal system, which has had the same developer since the 1990s. She noted that Allen’s take – that flexibility and control of the entire process can outweigh the costs – for them has been a successful tradeoff. “We can adapt and change as quickly as we want to,” she noted. “It’s expensive, but it’s been a positive experience.”

At the end of the panel discussion, everyone who participated agreed on one thing – technology is a major consideration for providers today, and that is not going to change. The debates – whether or not to outsource administration; the use of eSignatures, whether or not product information should be available online for consumers, etc. – will continue to change as technology evolves, but they will always be a healthy part of the industry.

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