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
close

Email a Friend

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.

0 comments on “Chase just entered another auto finance partnership”

Member Exclusive, Online Lenders

As Feds increase fintech scrutiny, experts outline a BNPL regulatory framework

  • After experiencing a meteoric rise in recent years, the BNPL industry is bracing itself for increased regulation in the US as government agencies are looking to widen their oversight into the fintech sector.
  • With concerning signs regarding credit quality, risk intake and its effects on consumers, industry experts are advocating for more regulations and offer recommendations of what these could look like.
Iulia Ciutina | May 04, 2022
Member Exclusive, Online Lenders

Lending Briefing: BNPL regulation and the growing digital lending market

  • The BNPL market needs more regulatory oversight in order for consumers to be protected, new research suggests.
  • The fast-growing BNPL industry exists in a legal gray space and mostly consists of subprime borrowing, and pure players are yet to demonstrate profitability.
Iulia Ciutina | April 27, 2022
Online Lenders

Deserve’s CEO on the fintech’s new corporate credit card as a service offering

  • White label commercial credit is blooming, aiming to help companies serve other businesses by giving them easy access to capital. In our latest briefing, we spoke with Deserve's CEO Kalpesh Kapadia on the fintech's new commercial platform.
  • In other developments, community banks are partnering with crypto lenders - selling loans to a crypto trust and converting the cryptocurrency in fiat dollars to continue writing more loans.
Iulia Ciutina | April 18, 2022
Online Lenders

This week in lending: 2021 BNPL results, credit markets poised for growth this year

  • US BNPL players are pursuing aggressive growth strategies, but underlying performances are beginning to surface some concerns in the market.
  • After the pandemic made lenders cautious, credit markets have opened again in 2021, thanks to positive economic signs from borrowers.
Iulia Ciutina | March 18, 2022
Member Exclusive, Online Lenders

Lending Briefing: 2021 BNPL results, C&I lending picking up again

  • US BNPL players are pursuing aggressive growth strategies, but doesn’t necessarily mean healthy growth - underlying performances are beginning to surface some concerns in the market.
  • In commercial and industrial lending, volumes are picking up for the third consecutive quarter since the onset of the pandemic.
Iulia Ciutina | March 16, 2022
More Articles