What Role Does Fintech Play in The Automobile Industry?
Financial technology has become the cornerstone of global development, steadily supplementing technological advances in several fields and industries. The automobile industry has been in a long queue awaiting its merger with the fintech industry. Auto fintech is still a novel augmentation that is steadily getting conceptualized to become a futuristic technology. Some remarkable advances in auto fintech are gradually modernizing simple activities in the automobile industry, like payments or insurance.
The amalgamation of the automobile industry with fintech is the accession of several key developments that have taken place in both industries; the key one being the Internet of Things (IoT). The introduction of IoT platforms has facilitated free-flowing communication between smart devices connected to the internet. The IoT sector individually penetrated the fintech and automobile industries, where it made its niche market.
IoT in fintech enabled people to make payments and conduct other financial activities using devices such as smartwatches. And IoT in the automotive industry facilitated navigation, monitoring traffic, etc. The auto fintech industry comprises the best of both worlds.
The global automotive industry is valued at more than 2.8 trillion dollars, making it one of the most lucrative industries. The fintech industry is estimated to cross $700 billion by 2030. The figures suggest that both these industries are powerful and lucrative.
Factors Influencing the Growth of Auto Fintech
The growth of auto fintech is almost customary owing to the importance both these industries hold in the world economy. Auto fintech bridges gaps between the mundane processes involved in the automobile industry to bring efficiency and convenience. Several factors have contributed to the growth of the auto fintech industry, such as:
Increasing Production of Vehicles
The manufacturing and distribution of automobiles have been on the rise in recent years. With the growing population, it is almost inevitable that the automobile industry should gain traction. Because of the increasing production globally, the gradual and strategic percolation of fintech has caused revolutionary advancements. Several steps in automobile manufacturing and distribution are now facilitated with technology.
The Online Shopping Trend
The internet has become one of the most necessary media for data transfer, communication, etc. Several companies nowadays only have a digital presence, reaffirming the importance of the internet. The mass majority well-acquainted with the internet is steadily becoming more inclined to conduct their business, shopping, etc., online. Shopping for cars, motorbikes, cycles, electronic vehicles, etc., is rapidly gaining popularity. Such inclination and changes in the habits of consumers have compelled the intermingling of fintech with the automobile industry.
Consumer Experience
With most industries trying to enhance their digital presence, there is an evident change in the expectations of consumers, their habits, and their behaviors. Consumer experience is pivotal in shaping the future of companies and industries. Auto fintech provides an improved consumer experience. The increased focus on customer satisfaction is one of the prime factors promoting auto fintech.
EVs
Electric vehicles are gaining popularity because of numerous reasons, like climate change. The advent of fintech in the automobile industry has caused a shift in consumers’ perceptions. Electric vehicles that provide no added features or technological advancements are receiving criticism.
Technological Advancements
The technological developments occurring globally across the globe have found an unstoppable rhythm. Advanced technology facilitates convenience, comfort, and added benefits, like fraud prevention. Online payments, GPS tracking, etc., also make room for fraud prevention, thus, increasing the demand for auto fintech.
Auto Fintech Trends
The auto fintech industry is still in its infancy. Several companies are conducting research and trials to identify areas that have the potential to become the next big thing. Some of the trends that have already picked pace are:
Digital Payments
Online payments form the core of fintech. Online payment portals have been employed heavily across all the steps involved in the automobile industry, like production, procurement of material, distribution by OEMs (Original Equipment Manufacturers), insurance purchases, etc.
Rental and Sharing
Car rentals and sharing are gaining traction because of the prevailing inflation. Auto fintech is gaining popularity in the rental and sharing business as most of these rental services are offered through online applications.
Parking, Tolls, and Gas
Many car manufacturers have included automated payments in the car systems that allow consumers to pay for gas, parking, tolls, etc., automatically when prompted.
Blockchain
Blockchain technology has already become one of the most popular fintech technologies used by big companies, like Toyota, BMW, Porsche, etc.
The Bottom Line
Auto fintech is an exciting industry that is becoming popular among businesses and consumers. Apart from convenience, auto fintech facilitates the steps involved in the automobile industry, like purchases, insurance, distribution, etc. The auto fintech industry is still in its initial development phase, implying a bright future for futuristic car technologies.
