The automotive finance industry will undergo significant transformation in 2025, driven by digital innovation and evolving consumer needs. The global automotive finance market, valued at approximately $300 billion in 2024, is projected to grow at a CAGR of 6.2%, reaching $554.1 billion by 2032. Digital platforms are now at the forefront, enabling online loan applications and approvals, enhancing customer convenience, and streamlining operations.
Emerging markets like Asia-Pacific and the Middle East are leading the charge, with China dominating electric vehicle (EV) adoption, with a 42% YoY growth. The surge in EV sales, which approached 16.7 million, a 19.2% increase in global units, has compelled financial institutions to offer specialized EV financing options, aligning with the shift towards sustainable mobility.
Additionally, advanced technologies such as AI, Machine Learning, Blockchain, Cloud Computing, are being leveraged to enhance credit risk assessments, ensuring faster and more accurate lending decisions. This digitization wave is revolutionizing automotive finance, reshaping it for a tech-driven future.
With the increase in consumer demands in vehicle sales, the demand for vehicle finance is also growing. Banks and financial institutions are getting ready to meet the evolving needs of the market. In common with other industries, digitization is changing the way consumers behave and the way automobiles are marketed and sold. Seamless digital experience, omnichannel customer engagement, paperless lending have put digitization in charge of the lending process.
The adoption of digital technologies in automotive finance has been relatively slow as compared to other retail services , automotive finance involves vehicle valuation, insurance, and regulatory compliance, making digitization more challenging. Additionally, customer demand for digital services has historically been lower. However, the sector is evolving by offering innovative solutions like EV-specific financing, AI-driven credit assessments, pay-as-you-drive loans, and subscription-based models. Predictive analytics enables better customer targeting, while blockchain ensures transparency. Fully digital onboarding and integrated ecosystems are transforming the industry, addressing these challenges, and creating customer-centric, agile lending options.
Finance companies need to be able to offer end-to-end digitized services across channels, quickly launch targeted customer centric products, implement agile business processes backed by flexible workflows, and leverage predictive analytical capabilities.
FinnOne Neo® for automotive finance, from Nucleus Software, is designed to digitize the complete loan lifecycle for automotive finance industry. The solution combines the widest and deepest functional coverage with a sophisticated, agile architecture, which enables automotive finance companies to create market leading products in a matter of minutes. FinnOne Neo® helps deliver a seamless customer experience. The solution’s advanced workflow components and seamless integration with credit scoring systems ensure effective credit risk management, while significantly improving the efficiency. The solution helps reduce Non-Performing Loans in a systematic way, focusing agents on the highest priority cases first.
Predictive analytics backed by insights from past data can help identify the right target segments, enhance credit decision making, reduce customer churn and increase recoveries. FinnOne Neo® supports multiple line of business’ including Auto Loans, Retail Loans, Mortgages and Credit cards. FinnOne Neo® has helped leading automotive companies in streamlining operations and boosting profitability across multiple countries while providing for seamless integration and faster implementation.
The customer is one of India’s most diversified non-bank financial institutions with more than 20 products across 5 lines of business. It is the largest financer of consumer durables in India with over 133,000 dealers in more than 3000 locations nationwide.
The Financial Institution (FI) wanted to leverage the power of technology to fulfil their long term vision of transforming into a bank for providing easily accessible loans for retail customers and attain their near term aggressive growth plan in vehicle finance. The FI needed an advanced technology platform that would enable a unique customer experience, improve business agility and reduce time to market. To establish a new benchmark in customer satisfaction while expanding their business quickly, the FI wanted to digitize and automate their lending processes. With their existing lending platform, they had several constraints, which included manual and disintegrated processes, errors which in turn lead to rework, data reconciliation, delays in new product launch and limited scalability. The company needed a well-integrated, scalable and robust lending solution that would help drive efficiency in loan processing and boost growth.
After an extensive assessment of the leading lending solutions in the market, the FI chose Nucleus Software’s FinnOne Neo® which offered a workflow-based design, seamlessly integrated processes and end-to-end digital capabilities. FI was keen to benefit from Nucleus Software’s three decades of domain expertise and the proven market leadership of FinnOne Neo®. The FI chose to deploy FinnOne Neo® on cloud for its flexibility, reliability, cost optimization benefits, advanced data security capabilities and ease of operational access. By following a unique approach in deployment and project management, the solution was successfully implemented across all business units, streamlining operations, improving efficiency, and delivering measurable business outcomes.
Today, our lending solution is used at more than 550 branches and accessed by 1,500 users every day. Over 6 million active loans are managed by the system and we offer more than 100 products and 33,000 schemes. Our customers have recorded a 140% increase in its Net Interest Income while the net NPL has reduced by 50% to 0.45% (over the period of 4 years). Net Profit of the company also grew by 3 times during the same period.
500,000 users process 26 million transactions every day on our systems $1200 billion value of loans is managed globally on our systems.