In the 2023 American Financial Services Association Vehicle Finance Board Annual Survey, participants named the biggest opportunities as technology improvements, both at the enterprise and functional level, improved data management and the use of AI and machine learning. This is no surprise. The industry is increasingly adopting new technology to increase efficiency and agility and to maximise profitability in a difficult season. Companies that have embraced technologies such as predictive analytics, straight-through processing and integrated design are already reaping the benefits.
However, there is a major block for companies looking to gain from these technologies. Monolithic architectures are proving to be obstacles in the face of evolving market demands. Businesses need more agile back-office systems and the existing inflexible systems are holding back too many businesses.
In a competitive market, customer experience can be the differentiator between staying ahead or falling behind. Manufacturers that deliver exceptional customer experiences are proven to stand out from the crowd, and data-driven insights and personalised offers can be invaluable in delivering that stand-out experience.
Digital transformation
Microservices, a decentralised platform approach to delivering technology value, are typically developed to meet the needs of rapidly evolving markets like the automotive industry. Microservices are precisely segmented processes adopted to replace large legacy applications like those currently holding back automotive businesses from meeting the customers’ needs—and their business potential.
Seamless integration of consumer data through microservices delivers greater understanding of customer needs and preferences, because consumer data and insights are easier to manage, assess and maintain when they are broken down into smaller, composable pieces. These smaller pieces can be worked seamlessly together and provide a comprehensive customer view which is greater than the sum of the constituent and interactive parts. With greater insights, comes more tailored offers and ultimately a better customer experience and increased loyalty.
In addition, digitalisation via these decentralised platforms enables greater agility and responsiveness, faster time-to-market, real-time insights and improved customer experiences across the automotive industry. Cloud innovation and more flexible tech solutions also drive down long-term structural IT costs whilst increasing scalability and competitive advantage.
Dismantling the legacy
Seeking to streamline and modernise, a growing number of automotive businesses are beginning to dismantle their legacy systems and monolithic cores, in favour of more loosely coupled and manageable components. They are particularly focused on delivering responsive offers, alternative deal structures and defining new business and product models.
By way of comparison and inspiration it could be worth looking at the way modern banking and financial services’ architectures and real-time data have become key lynchpins to success. Top performers are now scrutinising the value of every customer, enabling analytics teams to increase revenue by incorporating disparate smart insights and data sources via digital decisioning. This delivers a far more comprehensive picture of the potential offered by each customer, and highlights which deals, add-ons and extras will help ensure they remain loyal.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Jag Gill is Senior Associate Partner at FICO
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