Online Lenders

Chase just entered another auto finance partnership

  • A partnership with AutoFi demonstrates Chase’s tacit recognition that banks need to be wherever its customers are, even if it isn’t front and center
  • It also reinforces the growing reality that banks don't just compete against other banks; they compete against retailers and any other non-bank provider of financial services
Chase just entered another auto finance partnership

Car buying is still a mainly offline process, but financing cars is experiencing a slow move to digital.

JPMorgan Chase wants to be part of that migration to digital. On Thursday it entered an agreement with AutoFi, a car shopping and financing startup, through which it will deliver auto financing terms online within seconds. AutoFi helps customers choose and finance vehicles through the auto dealers’ websites and complete the sale quickly and easily. Chase is the first national bank on the digital retailing platform.

autofi

This is Chase’s second auto financing partnership. In 2016 it partnered with TrueCar, an auto pricing and information website for new and used car buyers and dealers, to launch Chase Auto Direct, which lets customers shop for a vehicle and secure financing on the Chase website or mobile app.

About 47 percent of people are comfortable shopping and financing their cars online, according to research commissioned by the bank.

The AutoFi agreement is different in that it puts the bank on a third party platform interfacing with the customer, demonstrating Chase’s tacit recognition that banks need to be wherever its customers are.

What happens to brand is one of the biggest internal conflicts banks are dealing with as they navigate their identity crisis: while their brand disappears behind retailers, e-commerce experiences and other shopping platforms they still need to maintain enough brand strength to continue owning customers’ trust — which is required of every financial institution no matter how their roles evolve.

chase auto

It also reinforces the growing reality that banks don’t just compete against other banks; they compete against retailers and any other non-bank provider of financial services. Many auto dealers operate entire financing units, such as Toyota Financial Services, Ford Motor Credit, Hyundai Motor Finance or GM Financial. According to research commissioned by Chase, 45 percent of U.S. consumers finance their vehicles through a bank.

Large banks have been pulling back from the auto finance space over the past year, however. About a year ago BB&T, Chase and Wells Fargo reported double digit percent decreases in year-over-year auto originations, in July Wells said it would scale back its auto lending business due to growing stress in the market and in December TCF Financial discontinued all indirect auto originations. Sales of new cars and light trucks fell 2 percent last year to 17.2 million.

Chase’s auto portfolio grew throughout 2017, though it was more stagnant toward the end with just 0.9 percent growth in the third quarter. Banks lost share in the overall market that year; the combined marketshare of JPMorgan Chase, Ally Financial, Wells Fargo, Capital One and Bank of America fell to 25.3 percent from 26.2 percent the year before.

Chase has been one of the most proactive banks in pursuing collaborative agreements with different fintech startups to improve its digital customer offerings. It also works with OnDeck for small business lending, Roostify for mortgage origination, Bill.com business–to-business payments and is part of the Zelle network for consumer mobile payments. In October it made its first major fintech acquisition in WePay, a small business-focused payments company.

Online Lenders

A deeper look into the payroll advance industry

  • Along with 10 other states, New York is looking into the payroll advance industry.
  • Branded as a kinder, gentler version of payday lending, it's possible that the industry's tipping model is more than it seems.
Paige Stern | August 13, 2019
Online Lenders

‘We call it Dream Fuel’: Behind the growth of PayPal’s SMB lending business

  • PayPal is scaling its SMB lending business and its program recently surpassed $10 billion.
  • svp of credit Darrell Esch joins the podcast to talk about where the business is headed.
Zack Miller | August 07, 2019
Online Lenders

Affirm’s Max Levchin: ‘Walmart doesn’t get enough credit for its customer focus’

  • Walmart has recently rolled out Affirm's POS financing broadly in its stores.
  • CEO and founder Max Levchin sat with Tearsheet to talk about the state of the business.
Zack Miller | June 21, 2019
Online Lenders, Podcasts

Mirador’s Trevor Dryer: ‘The world doesn’t need another high price lender’

  • Banks and credit unions are able to compete digitally with non-bank lenders.
  • Mirador helps them compete on speed and customer experience.
Michael Deleon | June 17, 2019
Online Lenders, Podcasts

MSTS’ Brandon Spear on credit as as service: ‘Find a way to solve payments painpoints and you’ll create a real advocate inside a business’

  • MSTS was started by a Fortune 100 to help with fuel payments.
  • Now, the company wants to help large B2B companies solve complex payment issues.
Zack Miller | June 10, 2019
More Articles