Auto Finance Companies: How to Tackle Both Sides of the K-shaped Recovery – Digitally

After a long career managing collections and servicing shops, I have a habit of preparing for the worst. As consumers find their financial footing, auto finance companies will be hungry to grow income from solvent customers. By summer, when stimulus payments and other benefits have dried up, they will also need to prepare to help their most vulnerable customers.

Last September, I joined Oracle for a webinar with Auto Fin Journal (start at 9:20) discussing the possible shapes of the economic recovery from the optimistic V-shaped return to the sustained downturn of an L-shaped recovery. Now, seven months later, all indications point to K-shaped recovery that threatens to widen the inequality between the haves and have nots, particularly exposing the goal of ownership for sub-prime consumers.

The Biden Administration is expected to focus on fair treatment as examiners investigate the haphazard application of pandemic relief to underrepresented communities – unintentional or not. CFPB Acting Director David Uejio recently said, “Our first priority is ensuring struggling families get the assistance they need. Servicers who put struggling families first have nothing to fear from our oversight, but we will hold accountable those who cause harm.”

With that in mind, COVID-19 accelerated the move to online channels. Auto finance companies can remove barriers to engagement by offering self-service features that address the urgency, simplicity and transparency that the oversight agencies will expect. Digital channels open the lines of communication, standardize practices and prevent unnecessary harm.

What about customer loyalty and retention?

At a time when retention is at an all time low, digital loan servicing and loss mitigation can deepen relationships with all borrowers consistently and scalably. This includes tailored pre-qualifications and new vehicle solicitations for those back to work and automated payment help or graceful exits for those still struggling.

This agenda is not going away. Customer-facing, interactive platforms strengthen the consumer experience and meet the high regulatory burden that is now expected of servicers. A recent study by MX Research revealed that consumers are demanding a more personalized experience from their financial products with nearly 70 percent agreeing or strongly agreeing with wanting finance companies to address their needs in the same format Netflix or Amazon do for entertainment or shopping.

Digital, customer-facing portals with smart self-service features, allow servicers to treat both ends of the “K” with the same urgency, transparency and commitment to do better by their borrowers with every interaction.

This is especially important for the population at the bottom half of the “K”. The stimulus package, tax refunds and moratoriums on housing obligations are providing a bridge, but servicers need to be ready for what’s waiting on the other side and acknowledge the existence of two very different end points for consumers.


Carissa Robb serves as President of Constant, a fintech SaaS provider of digital loan servicing solutions. She most recently served as senior vice president and head of US Loan Servicing for TD Bank, responsible for servicing a $150 billion dollar portfolio of auto, consumer, residential and commercial accounts. She joined TD Bank in 2009 to develop the Loss Mitigation program for distressed real estate and built the governance and control framework for TD Bank’s loan servicing and collections division. Carissa has been a part of dozens of M&A teams during periods of rapid growth and acquisition, and now applies those lessons learned in the fintech space.