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Partnering with a car buying service could help community banks drive auto loan business By Ashley Bray, contributing editor
T
he challenge for many banks is to determine the most effective time to market products like auto loans to their customers. The bank is often out of the loop on the product research process—increasingly done online—and is only considered, if at all, at the end of the process. “Banks are stuck in the traditional product-centric mindset,” says Robert Meara, senior analyst, banking group, at Celent. He says banks do invest money in marketing analytics to try and figure out when their customers may be interested in a mortgage or auto loan because “promoting those things in ways that are not timely or relevant is a waste of time.” But that’s still late in the process. What if the bank was involved at the start of the auto buying process—in the research phase? This is what GrooveCar aims to do. Currently, the company only serves credit unions, but David Jacobson, president and CEO, is open to working with community banks, who he believes could
also benefit from GrooveCar’s programs. “I’ve always been a firm believer that you should do what you know on your own, and you should absolutely bring in resources, and in most times outsource, what you’re not really great at,” he says. A car dealer for many years, Jacobson noticed a disconnect between credit unions and dealerships. “ The credit union’s goal is to make sure that the members did not finance the car at the dealership, and the dealer’s goal was to make sure that the members financed through someone at the dealership other than the credit union,” he says. Ja cobson launched GrooveCa r in 1999 to bring together the credit unions and dealerships, and the company now offers several programs.
Get them before the dealer GrooveCar Direct gets the credit union involved at the start of the auto buying process by providing a website template, which is then branded with the particular credit union’s name, rates, and other
“Wheeling and Dealing” Though banks are still leaders in auto lending (35.1% market share of total financing), with captive finance companies second (28.3%), credit unions (third, at 19.6%) are the fastest-growing segment. This data (and data, right) is from Experian’s State of the Automotive Finance Market report for third-quarter 2016. Tinyurl.com/experian-autoreport
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BANKING EXCHANGE
February/March 2017
Example of car buying ad for credit union websites provided by GrooveCar. It would do same for banks.
information. The site includes everything a member needs to research a vehicle—crash test ratings, gas mileage, dealer inventory, etc. As the customer is searching, advertising for the credit union’s loans and financing appear. “The best chance that you have of getting an auto loan is if your members come
Auto loan balance, by lender (bil.) 2015 Q3
$161
$234
2016 Q3
$178
$269
$0
$200
All banks
$400
$242
$250 $600
Captive auto
$331
$358 $800
$1,000
Credit union
$1,200
Finance