Automotive Meets Finance: The Expansion of Auto FinTech

The rise of financial technology, or FinTech, is reshaping various industries, and the automotive sector is no exception, as stated in an article by Penser. The digitalization of devices and the growing trend of connected cars are transforming how vehicles interact with the digital world, providing new opportunities for innovation and growth in automotive finance.

By 2020, connected cars were expected to comprise 75% of the car market. This connectivity has created a new ecosystem where technology, content, and services converge to enhance the driving experience. Connected vehicles can offer services like real-time traffic updates, enhanced navigation, in-car entertainment, and advanced vehicle management systems. According to industry experts, this integration allows for more personalized services and targeted marketing opportunities.

One of the most significant impacts of FinTech in the automotive sector is the development of in-car payment systems. These systems, often integrated with the car’s dashboard or accessible via mobile apps, currently allow drivers to pay for fuel and parking. However, the potential for expansion is vast, with companies exploring innovative payment models that could include broader in-vehicle transactions.

Recent years have seen several developments in this space:

• 2015: SAP partnered with Samsung Pay and P97 for mobile payments at gas stations.
• 2016: Ford introduced FordPass, a virtual wallet for mobility expenses.
• 2017: Visa and Honda showcased in-vehicle payment solutions.

Companies like Cardtek are pioneering in-car payment solutions by developing platforms that enable cars to interact with merchant devices, process payments, and even function as mobile wallets. These advancements suggest a future where in-car transactions could become a standard feature.

The traditional concept of car ownership is evolving with the rise of the on-demand and sharing economy. Services like Uber, Lyft, and car-sharing platforms have popularized flexible vehicle access, which has also spurred growth in digital leasing and lending. Companies such as Maven, Canvas, and Fair offer subscription-based vehicle services, allowing customers to rent cars with included maintenance and insurance, catering to the modern consumer’s need for flexibility.

Automotive manufacturers are increasingly adopting subscription and usage-based pricing models, moving away from one-time transactions. This shift requires significant changes to existing infrastructure and business models. Some manufacturers have partnered with FinTech startups like Aria, which provide cloud-based platforms for managing these new revenue streams.

As the automotive and financial industries continue to intersect, more innovations are likely on the horizon. From telematics impacting insurance to the expansion of digital payment solutions, the future of Auto FinTech is bright and full of possibilities.