The shockwaves from the landmark ruling at the end of last month are still being felt across Britain’s automotive retailers.
The Court of Appeal found it unlawful for dealers to receive commissions from finance companies unless the payments had been properly disclosed and customer consent was given.
It’s important to balance this issue. While it has caused uncertainty, a new normal will emerge over time. Lenders have already started to return to the market, and dealer systems are adapting to new and enhanced compliance procedures.
However, every crisis presents an opportunity, and this is no different. The power of fintech and blockchain can create a new era of transparency with buyers and drive greater efficiencies for dealers.
Fintech solutions allow dealerships to offer digital financing options, enabling quick approvals, flexible payment plans and a more modern, app-based purchasing experience that appeals to younger, tech-savvy customers. While blockchain technology can store a car’s entire history in a secure, tamper-proof ledger, giving buyers direct access to verified information on ownership, mileage, service records, and accidents, thereby increasing trust in the dealership.
Blockchain-enabled smart contracts could also simplify the buying process by automatically executing sales, financing, and warranty agreements, reducing administrative tasks and operational costs for both dealerships and customers. Adopting fintech and blockchain will undoubtedly require new investment in technology and expertise, especially for smaller dealerships. It will also need regulatory guidance from bodies like the FCA to ensure consistent and secure applications in the automotive sector.
By leveraging fintech and blockchain, dealerships can enhance customer trust and satisfaction, creating a transparent, efficient buying journey that meets modern consumer expectations and strengthens their market position. In an age when customers expect seamless, transparent digital experiences in all aspects of their lives, dealerships need to accelerate their use of technology to enhance the buying and ownership experience.
Fintech is revolutionising multiple aspects of consumer finance, and its application in car dealerships is long overdue. Traditionally, financing a car purchase has been a convoluted process involving numerous intermediaries, each adding layers of paperwork, fees, and potential delays. With fintech, dealerships can streamline this process, providing digital financing options that allow customers to receive approvals, compare offers, and finalise loans within minutes—all from a mobile device.
This is particularly valuable in a post-pandemic world where buyers prefer online interactions over long hours at a dealership. By adopting digital finance solutions, dealerships can simplify the financing experience and increase their appeal to younger buyers who expect a modern, app-based purchasing process.
Flexible payment options such as buy-now-pay-later (BNPL) or subscription-based services can make car ownership more accessible to a broader demographic, particularly as the rising cost of living impacts disposable incomes. By offering flexible terms for digital financing plans, dealerships can cater to diverse customer needs, potentially increasing sales and building loyalty with consumers.
A new level of transparency would significantly boost customer trust. A car with a verified, blockchain-backed history is far more appealing. In turn, dealerships that leverage this technology could attract more customers wary of second-hand purchases. For new car buyers, blockchain could streamline the registration and ownership transfer processes, reducing paperwork and errors while improving security.
The industry must overcome a few hurdles for these fintech and blockchain solutions to succeed in UK dealerships. First, it must invest in the necessary technology and expertise to implement these systems effectively. This is no small undertaking, particularly for small, independent dealerships that may lack the resources of larger, franchised groups. Collaborations with fintech and blockchain startups could help bridge this gap, enabling dealerships to adopt innovative solutions without bearing the full development cost.
Despite these challenges, the opportunity is significant. Car dealerships that proactively adopt fintech and blockchain can position themselves as industry leaders, offering a superior customer experience that sets them apart. These technologies are no longer futuristic concepts; they are practical tools that can address long-standing pain points in the car-buying journey.
Forward-thinking dealerships that embrace these technologies will be well-positioned to win over the next generation of buyers, who demand transparency, efficiency, and flexibility.
Mike Allen is the managing director of Cambria Private Capital, a firm that invests in and provides advisory services to automotive startups and scaleups.