BOX 5, Westhoven, 2142
The emergence of Millennials and Generation Zs as increasingly prominent participants in the economy has presented a somewhat complex scenario for banks, and from a vehicle financing perspective, while we must strive to meet the needs of this new generation in a manner that suits their preferred way of doing business, we must at the same time cater for the Baby Boomers and Generation Xs, who are still prepared to use historic processes when buying or selling their vehicles.
Millennials and Generation Zs are quite clear, and vociferous, as to what they expect to happen. I personally don’t think they will forgive the retail motor industry for holding them to a different and outdated standard, and businesses who aren’t prepared to change will be quickly exposed. Businesses must realise that they need to adapt speedily to remain in tune with their customers. In many cases, this will be a matter of survival.
WesBank is very aware of the varied requirements from customers across the mobility ecosystem, so we must ensure we remain current, and continuously expand our mobility solution products to cater to changing needs. We are currently dealing with a hybrid digital world, with one group that wants to do research online and then go to a dealership to continue buying processes, while others prefer to do everything online and even have cars delivered to their homes.
Integrating vehicle selling processes with the provision of finance is not new, however new ways of doing business have been accelerated and improved significantly recently, partly as a side-effect of the pandemic, which has put pressure on all aspects of the automotive industry to do business and engage customers very differently. WesBank prides itself on being a pacesetter in the industry having started its digital journey many years ago, with the launch of iContract and its ability to streamline old-fashioned paperwork processes. This app has been updated as circumstances have changed over the years and is still a relevant component in the digital offering from WesBank.
However, a challenge we face is that we are dealing with a fragmented digital journey, with each stakeholder digitising its own aspects. Migrating to a fully digital world will have implications in terms of direct negotiations, and the relationship between financial institutions and dealers and Original Equipment Manufacturers (OEMs).
Trading in a vehicle is a case in point, that creates complexity. Unlike other secured assets, such as a home loan, the contractual relationship of your current car and your next car doesn’t cease at the point you sell your current car. In fact, it overflows as your current car becomes a deposit, to some degree, or a negotiating tool for the price point of your new car.
We also deal with the various OEMs that all have a desire to grow market share and therefore inform dealers how much of the retail price they can use in the trade-in process. There are also people who prefer to sell their cars independently, so it doesn’t come into consideration when the price is set for a new car.
We foresee an increasing number of people taking the option of selling their car outright and terminating the overflow of the relationship between assets. Their attitude is ‘I’ll sell my car and take whatever I can get for it, which I believe will be market-related, then enter into a new contract. Yes, I may lose somewhat on the price of the metal, but I think that over the long term I will make it up through a preferential rate on offer that I can get from the bank’.
This process demonstrates how difficult it can be to digitise trade-in processes into a single, seamless buying journey.
We must realise too that the new generation of buyers is savvy. They’re prepared to make a deal that best suits what they believe they’re worth. I don’t believe they will be coerced into believing that they don’t have options.
WesBank, along with both our OEM and dealer partners, will continue to digitise our business where it is relevant and beneficial, as we aim to deliver innovative services to our customers and partners.