1. How will the Fintech revolution reshape financial services?
Paul Kramarz
PwC Vehicle Lending and Leasing Practice

2. What exactly is Fintech?
Fintech is a portmanteau of financial technology that describes an emerging financial services sector in the 21st century. Originally, the term applied to technology applied to the back-end of established consumer and trade financial institutions. Since the end of the first decade of the 21st century, the term has expanded to include any technological innovation in the financial sector, including innovations in financial literacy and education, retail banking, investment and even crypto-currencies like bitcoin.
September 23, 2016

3. Growth of connection devices
The pace of technological breakthroughs and rate of adoption will continue to increase
Time from 10%-40% adoption
Growth of connection devices
Source: Cisco IBSG
Connected Devices Per Person
World Population
Connected Devices
6.3 billion
500 million
6.8 billion
12.5 billion
7.2 billion
25 billion
7.6 billion
50 billion
0.08
1.84
3.47
6.58
More connected devices than people
Source: ITU, New York Times, Pew, Wall St Journal, US Census Bureau
Key takeaways
The world is increasingly more connected
The Internet of Things will grow ever more rapidly
Device proliferation will be accompanied by data proliferation
Technology is changing faster than regulation
September 23, 2016

4. Electronics content in cars has been constantly growing and is expected to reach 50% by 2030
Automotive Electronics Content (% of Total Car Cost)
1950
1960
1970
1980
1990
2000
2010
2020
2030
Sources: Company interviews, PwC analysis
September 23, 2016

5. Customers are increasingly digitally savvy
Share of Customer Base by Digital Generation
Digital natives (12-33);
Always on
Globally connected
Expect change
Feel incomplete without technology
See new technologies as addictive
Traditional consumer
Digital converts
2000
2008
2012
2004
2024
2016
2020
100%
50%
Digital native
Digital natives are the business owners and leaders of the future
Percentage of the workforce
34%
70%
2013
2025
Source: Converging Megatrends – Shaking up automotive finance, PwC 2015
September 23, 2016

6. A mandate for change Channel preference by loan phase and generation
Source: PwC Experience Radar 2015
Perhaps unsurprisingly, borrower age is strongly correlated to digital preference
Consumers’ digital preferences are increasingly shaped outside of the lending industry
A full end-to-end digital solution to facilitate a sale remains elusive
Customers should be able to transition seamlessly between channels
September 23, 2016

7. Lenders are running behind evolving expectations
Average Customer Effort Score by loan phase and age group
Source: PwC Experience Radar 2015
Younger consumers find traditional loan originations processes cumbersome and antiquated
As digital evolution occurs, focus has been on the asset sale, not the financing
Dealers are frequently resistant to changes to the current F&I Model
September 23, 2016

8. Dealer Focus: mobile device intake
The number of mobile devices used for car shopping is increasing at a rapid pace, doubling in Dealers must employ a robust cross-platform mobile presence in order to reach consumers.
vs 2015 Auto Consumer Mobile Device Usage for Car Shopping
Usage Percentage (%)
Observations:
Mobile device usage has doubled providing buyers information whenever and wherever needed.
Even when physically present at the dealership, consumers seek car shopping information via their mobile devices.
Dealers must focus across all spectrums of consumer devices in order to deliver the right information at the right time.
By having increased mobile information available at their fingertips, consumers have flipped the power equation in the auto lending industry.
September 23, 2016
Source:

9. Is a Fintech investment a cost center?
Experiences can trump interest rate, depending on asset class
Customers increasingly demand convenience, even when it comes at a price
An online price negotiation between dealers and customers can favor leasing, which tends to feature lower payments than traditional loans
Leasing also features a more double ended customer experience than retail loans, creating the possibility of driving customer loyalty with experience delivery rather than price
Price insensitive consumers may also present more lucrative cross-sell opportunities for lessors with other business lines
Source: PwC Experience Radar 2015
September 23, 2016

10. What does Fintech mean to lessors?
Alternative Competitors
Dealer Model Evolution
Core Leasing
Consumers
Manufacturers
September 23, 2016

11. Open thoughts about Fintech…
It is an evolution, not a revolution, but…
… this evolution does not include extinction
Change is the only constant
The future may lie outside our borders
There’s more to executing “Fintech” than just “Tech”
Defining a strategy to cope is a must
September 23, 2016

12. Thank you
September 23, 2016