How is Blockchain set to revolutionize the auto finance industry?

In our new lightning talk video, taken from the White Clarke Group Auto Captives Summit in November 2016, Danny Williams, Chief Innovation Officer at IBM UK explains how blockchain technology can be used to efficiently track an automobile from the moment it's assigned a VIN through to the very end of its life. As well as the benefits blockchain could bring to the auto finance industry by increasing trust, reducing risk, eliminating intermediary costs and saving time.

Late last year, Toyota Financial Services (TFS) made the corporate decision to join R3’s CEV blockchain consortium to explore distributed and shared ledger technology for potential applications in auto financing. TFS thus became the first global auto finance captive to collaborate with more than 50 of the largest financial institutions in R3’s network on developing use cases for blockchain in the financial industry.

Chris Ballinger, Toyota Financial Services, CFO and Chief Officer of Strategic Innovation, was at the forefront of the deal, saying that Blockchain: “will ultimately lower costs, increase efficiency, and make auto finance more transparent.

We can all agree, that’s the future, some are just disagreeing on the timing of it. However, financing products for those markets have not been developed yet. You just see little experiments, and I think that’s big change and the big opportunity for auto finance. It’s a big market, huge, and question is how do we finance it, and make it affordable."

Outside the discussion groups, developers are experimenting with blockchain applications, but as yet there have not been any large scale projects built around blockchain technology that are not bitcoin or “altcoin” related. The appetite for extending its use however, seems to be massive.

Loren Parker writing in Automotive Digest argues that Blockchain seems likely to successfully migrate into auto CRMs and financial systems.

She stressed: “The accountability and transparency of the automotive industry - especially finance & insurance - could be improved by the usage of blockchain. What is of particular interest is the possibility to track an automobile from the instantiation of the tracking VIN through to the very end of its life.  Such a VIN database of all cars - complete with data from all owners and handlers/service providers - would essentially be like the holy grail for so many in the automotive industry/ecosystem.” 

“Privacy concerns,” she said, “are presently driving a great deal of the thinking around the management of information in the automotive services ecosystem.  Equally significant could be a system to help validate/authenticate the ownership and lifespan of automobiles so there can be trust and expectation in an industry composed of literally thousands of different service, financial and sales entities.

“A blockchain solution that is considerate of privacy but provides transparency for relevant parties would be beneficial to the industry as a whole.”

 

Watch the must-see 5 minute briefing on how blockchain is set to revolutionize auto finance now!