Interview with Brian Longe
What does Wolters Kluwer Financial Services do to simplify the lives of automotive dealers?
Brian Longe
Wolters Kluwer Financial Services
President and CEO
An accomplished business executive with more than 20 years of experience, Longe is responsible for the financial, operational, sales, marketing and business development aspects of Wolters Kluwer Financial Services. While his professional experience spans several industries, more than half of his career has been devoted to leading companies that specialize in developing information technology and solutions for the financial services industry.
Email Brian via: Jennifer.Marso@WoltersKluwer.com
Wolters Kluwer Financial Services is one of the largest providers of regulatory compliance to the financial services industry. For car dealers specifically and the indirect lending area, we work in the finance and insurance offices and help ensure that the documentation and the process is simple for both the dealer and the consumer. We provide compliant consulting services and software to simplify the F&I process and ultimately improve the gross number of car deals.
What is your assessment right now of where things are going in direct lending in the automotive dealer space?
Despite the economic crisis, indirect lending is not going away. But as lenders tighten or change their standards, auto dealers have to adjust as well, Dealers must understand that risk mitigation tools, compliance tools and fraud reduction tools are critically important to the lender to ensure that loan transactions are done accurately, and in a timely and efficient manner. They also need to remember that this will protect their dealership and their customers, as well as the relationships they are trying to build and maintain with lenders.
What can auto dealers do to make themselves more attractive to automotive lenders at this point?
I think that the core thing that a car dealer can do is ensure that their processes are well documented in the finance and insurance office, and ensure that the documentation is compliant, correct and accepted by the lenders. I think "acceptance" is a key term. At Wolters Kluwer Financial Services, we offer a brand called Bankers Systems. For over 50 years we've provided Bankers Systems compliance documents to the financial services industry, so they are widely accepted by lenders.
Additionally, it is important that dealers provide better information about their customers and about themselves to the lenders they are working with. There is much concern around fraud and risk mitigation at the lender level. Car dealers need to utilize systems and processes that make the lending transaction transparent to the lender, and in turn, improve and speed the loan process.
How do they ensure that they are able to do that?
There are multiple ways that they can do it, but technology is really the key. One of our products, AppOne, certifies that the dealers have compliant processes utilizing our system and the financial wherewithal and reputation to come onto our platform. We connect them with lenders that recognize the value of the compliance systems that we provid
In addition to implementing technology that simplifies compliance, dealers can maintain positive relationships with lenders by having the proper documentation, and the proper utilization of tools and processes, to ensure that the car deal is done correct the first time, every time. That is critically important.
How does compliance play into all of this?
Inside of a financial institution, a majority of the indirect lending involves automotive lending, RV lending or marine lending. Compliance is necessary to get those deals bought. The lender has to be sure that what they are buying today is risk mitigated. They also want to make sure the documentation is compliant and the processes are complete. For a dealership to be successful with lenders, it has to make sure that its F&I office is on top of all of these things. That is what Wolters Kluwer Financial Services helps automotive dealers do.
So how many dealers actually have appropriate compliance in place?
While I don't know if you can truly quantify how many dealerships have strong compliance processes in place, I can tell you that the dealerships that do are much better positioned to weather tough economic times. Obviously the car purchase is the transaction, but to facilitate it, you need a lending source or the deal doesn't get done. Lenders are looking for dealerships that are effective, efficient and compliant. The more you are able to demonstrate this, the more likely you will increase their comfort level to lend to you.
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What do you see happening say six months down the road, in early 2010?
I think we see a couple of things happening. Historically, leaving a recession you would see increased demand at a higher level. I think that with the amount of consumer debt that is still out there, we will see a slower recovery than in previous recessions. Six months from now, it is possible that you will see a slight increase in economic activity, but I wouldn't expect anything robust in 201
There will be more and more independent dealers, which means there will be more dealers trying to establish new relationships with lenders—something these dealers might not have been required to do in the past if they were working with a captive finance company. Part of what we do with AppOne is connect qualified dealers to qualified lenders in a Web-based system that enables these independents to compete with the franchise dealers. It is critically important that independents recognize the fact that they need to have systems—whether it is AppOne or another system—that provide them with the efficiency and the risk mitigation and compliance tools necessary to provide quality documentation, and as a result, get deals bought.
What other advice would you like to offer for dealers?
Hang in there. I've talked to several dealers and some of them are doing quite well. I think it is a matter of having a positive attitude. The market will return—it is just a matter of when. In the meantime, dealers need to prepare so they are ready to capitalize on future demand. There is opportunity right now for dealers to have their F&I offices streamlined and install efficient, compliant documentation systems in place, if they haven't done so already.
Dealers also need to pay attention to Red Flag Rules. It might not be on the top of everyone's to-do list since they have been delayed multiple times. Just because the Red Flag Rule deadline gets pushed out, don't push out your need to comply. The Red Flag Rules are designed to protect your customers, your lenders and your dealership. Now is the time to ask yourself, "How is my dealership compliant? How is my dealership ensuring that I have the right regulatory controls, the right financial controls?"