Exploring the future of financial institutions in the mobility ecosystem: Bank11
In this exclusive interview, we sit down with Jennifer Zimmermann, Head of Business Development at Bank11, to gain valuable insights into the future of financial institutions in the evolving mobility ecosystem.
In this exclusive interview, we sit down with Jennifer Zimmermann, Head of Business Development at Bank11, to gain valuable insights into the future of financial institutions in the evolving mobility ecosystem.
How do you envision the evolution of financial institutions within the future mobility ecosystem? How quickly do you expect this evolution to unfold?
Financial institutions will maintain their central role within this future mobility ecosystem. There will always be assets that need to be (interim) financed – by the customer or by the manufacturer, importer, dealer, rental company or subscription provider. The market position of captive banks is therefore strengthened by the ‘agency model’ in the German market, which various manufacturers have already implemented or are planning to implement in the near future.
One important aspect within the evolution is the ongoing change of distribution channels. The classic purchase at the point of sale will endure. Nevertheless, there are many new sales opportunities and customer touchpoints to be taken into account. In fact, many customers are already willing to buy their vehicles online without setting foot in a dealership, or directly from the manufacturer. In this day and age it is even possible to purchase vehicles in electronics stores like Euronics or Mediamarkt, or online platforms such as Amazon. In addition, customer behavior is ever-changing. Many customers no longer want to own a car, but want access to it. This is why there is a growing market for leasing and subscription models.
So, as you can see, the market is very dynamic. Financial institutions must adapt to market changes and new trends very quickly and must keep one thing in mind: Simplicity is key!
In the future, it will be increasingly important for financial institutions to set up their products and IT infrastructure in such a way that they can be seamlessly integrated into the customer journey of third parties – if necessary also as white label solutions (embedded finance).
To what extent do you view financial services as a driving force behind the future development of the automotive ecosystem, and what do you think will be banks’ and insurers’ most notable contributions?
After real estate, cars are still the most expensive purchase in people's lives. In many cases, it is the financial institutions that give a large proportion of customers access to vehicles through tailored financing and insurance solutions that they would otherwise not be able to afford. Inevitably, financial institutions will remain a crucial sales promotion tool for importers, manufacturers and retailers.
The mobility market will continue to develop in close cooperation between financial institutions, insurers and retailers. It is important that everyone in the cooperation focuses on their individual strengths. Financial products are highly regulated. Minimum requirements for risk management, consumer protection, data protection, IT security – these highly complex issues are the responsibility of the bank, so that the other players can concentrate on selling and trading vehicles. In the complex variety of products and systems, banks can score points with simple, transparent products that can be understood and signed quickly and easily by both intermediaries and customers.
Focus is always on customer loyalty, both from the manufacturer's point of view and from that of the banks involved. Financial products must be designed in such a way that touchpoints are created during the financing or leasing period from the very beginning – to shorten ownership and bring the customers back to the dealer (trade cycle management).
The days when customers took out a vehicle loan from their bank and then acted as cash payers are long gone. Customer acquisition no longer starts with the first visit to the dealership, but much earlier, online. The right products are therefore required for varying customer needs, and in the future these products should also be as highly integratable and multi-channel-capable as possible (banking-as-a-service). Financial products must be offered where customers spend their time – and ideally on their smartphone.
With the evolution of mobility services, such as ridesharing, electric vehicles, usage based models and mobility-as-a-service platforms, how can financial institutions adapt their product portfolios and engagement strategies to align with the changing needs of consumers?
Established banks often struggle with outdated systems that are incompatible with each other and require costly maintenance. This complex system landscape often hinders rapid product development and adaptation to market changes. Therefore it is crucial to invest in a flexible system architecture that allows modules and functions to be quickly and seamlessly merged into new products. This includes not only proprietary application processes, but also the provision of interface solutions to smoothly integrate financial products into the customer journey of platforms and online retailers. So to speak, the right product at the right time in exactly the right place. Once again: convenience is king!
Let’s take the example of our car subscription product ‘smive’. In the past, the dealer would finance a vehicle for his inventory via a wholesale limit. At some point, a customer would buy the vehicle and finance it conventionally via a loan. Nowadays, many customers do not want to buy, but rather subscribe to the service of using a car. In this case, we provide the dealer with the opportunity to refinance the mobile vehicle stock via our wholesale financing. Repayment is made from the customer's monthly usage rate. After returning the vehicle, the customer can either buy it and finance it conventionally with a loan through us, or the dealer can put it into his standard wholesale financing line. So, we have just combined and marketed existing functions and products in a more clever way.
The need for cooperation among established financial institutions, fintechs and companies in the mobility sector seems essential. Can you share some insights on successful partnerships (your own or in the industry) which have enabled both parties to unlock what they couldn’t do alone and what factors made the partnership effective?
In our case, the partnership with Europe's largest automotive club, ADAC, is an outstanding example. ADAC enjoys the loyalty of more than 21.7 million members in Germany and is a trusted brand. These members are always on the lookout for attractive mobility products, online and through ADAC's approximately 190 local offices. At the same time, ADAC does not have its own banking license. Bank11 on the other hand is a licensed financial institution with the necessary products and application procedures to offer an ADAC car loan as a white label product. In this partnership, both parties benefit from their respective strengths and core competencies. This type of cooperation enables us to jointly offer unique and attractive solutions in the mobility sector that we would not have achieved on our own.
Considering the significance of climate change and sustainability, how might financial institutions actively contribute to promoting the adoption of environmentally conscious and sustainable mobility solutions?
Financial institutions are crucial to promoting sustainable mobility by providing financial resources and expertise. They can offer specific subsidized loans for green vehicles and charging infrastructure, and provide highly attractive interest rates and flexible repayment options.
Sustainable corporate guidelines, such as environmental requirements for loans and investments ensure that environmental standards are met. Focusing on digital processes help banks reduce their environmental footprint. A suitable example of this includes offering a paperless contract at the point of sale. Furthermore, partnerships with governments, environmental organizations and manufacturers enable joint sustainable mobility initiatives. Last but not least, customer education through awareness campaigns and counseling promotes environmentally conscious behavior.
From your perspective, what will be the biggest factors differentiating the financial services ‘winners’ and ‘losers’ in the future mobility ecosystem?
In our opinion, the thing that makes all the difference is a clear and modern modular system architecture. A financial institution’s role comes down to more than just providing application systems, but also offering banking-as-a-service. Agility and responsiveness to both market changes and diverse customer needs are as important to business success as simple, lean, digital products.
You can't be the best at everything, so focus on your own strengths and the synergies of meaningful partnerships.
This interview series is a part of our exclusive partnership with CVA. Visit CVA's website
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