Driving efficiency in auto lending: The power of AI and automation

Solving the manual auto loan funding challenge with a single, secure, AI-powered document management platform.
If anyone understands scale, it’s auto financiers. If you are one, you may know that worldwide, an estimated 92.4 million vehicles were sold in 2023. About 80% of new US vehicles are financed. That means each year, you process and fund millions of auto loans and their supporting documents — often still in paper formats. Unfortunately, this also translates into millions of manual processing hours spent on the 40- 80 pages of paperwork per loan, as well as checking that paperwork for completeness, corrections, and compliance.

On average, your auto financing process can easily require two-plus manual labor hours per loan. Those two hours include entering data manually, making copies, verifying identity, validating Know Your Customer (KYC), and signing, reviewing, and filing the documents. At scale, manual and labor-intensive loan processes cost you millions of dollars in operating expenses each year. Simultaneously, these lengthy, inherently error-prone manual processes can degrade your employee and customer experiences and introduce incremental compliance risk, further increasing costs. In addition, physical documents cannot scale, limiting your potential.

That’s why auto financiers are accelerating their adoption of end-to-end digital and AI-powered, smart automation. After grappling with manual processes and physical documents for decades, AI is rapidly advancing solutions and urgency. It’s becoming clear that change is imperative to future viability — to reduce cost, gain efficiency, and achieve scalability. A Deloitte survey reveals that 86% of financial service IT leaders believe AI will be very or critically important to their business’s success in the next two years. For auto financiers, digitization has now become mission-critical.

Racing ahead — cautiously
As digitization races forward to transform the auto lending process, adoption is being met with thoughtful caution. Data ingestion, when automated, can save 30–40% of the hours spent on manual data entry, bringing AI-powered process efficiencies and the ability to automatically enter, summarize, and translate data. Yet the perceived risks of data transparency and validity from external artificial intelligence (AI, including generative AI) sources persist. Using an abundance of caution, auto financiers often start AI-powered digitization with internal processes versus external, customer-facing ones.

This caution stems from a good place. Customer experience is a top priority for auto financiers. Financiers, steeped in a highly competitive industry, recognize that money is personal, making trust essential. Ironically, the full-scale implementation of AI-powered deployments can elevate customer experiences and augment personalization and responsiveness. Yet, customer-facing processes are often the last area to see AI deployments.

At the same time, auto financiers face strict regulatory requirements and must safeguard data privacy and ensure compliance. This is underscored by the need to protect customer personally identifiable information (PII) in a heavily regulated industry that deals with escalating risk levels of fraud and cybersecurity. Often, auto financiers leverage human-in-the-loop (HITL) to make their workforces more efficient with automation while minimizing customer experience vulnerabilities. Other guardrails, built into modern, end-to-end digitization solutions, help to mitigate risks, bolster security, and streamline processes.

Learn more about an end-to-end toolkit for auto loans,
Iron Mountain Digital Auto Lending solution