Five Questions With is a monthly Q&A segment on AutoFinanceExcellence.org that offers a glimpse of what senior industry executives are thinking about outside the boardroom. Read on to find out.

As the Chief Operating Officer of GM Financial, Kyle Birch leads all origination channels and servicing in North America for General Motor’s captive finance arm.

That level of responsibility is earned, and Birch attributes reaching such a high point in his career to the strong relationships he has built and maintained throughout his 35-year tenure in the auto finance business.

“It’s harder to repair bad relationships — you can always invest and make technology systems better, but if you don’t earn respect from partners and customers, that’s a harder fix,” Birch said. “Building relationships in your career and having flexibility is the best advice I can give anyone.”

Auto Finance Excellence asked Birch five questions to find out what his company goals are, advice that helped him earn top management roles, and a surprising fact that his colleagues would never suspect.

Auto Finance Excellence: What are your company goals in 10 words or less?

Kyle Birch: I’ve got 14 words. I hope that is OK. For us, it’s about being the captive finance company for General Motors. That means: drive sales and marketshare, enhance customer experience and loyalty, and contribute to enterprise profitability.

As we continue to evolve as a captive, we want more customers in our portfolio and to hopefully drive more sales for GM dealerships. For the customer experience loyalty side, we want to stay on top of that and continue to provide excellent customer experience for consumers through the ways they want to be serviced, whether it’s a dealership or through our website. Also, we play a big role in GM’s profitability, and we want to continue to contribute to that.

Those 14 words from a company standpoint are the driving force for what we are trying to do in 2019 and going forward. That’s our core business.

AFE: What is your favorite piece of leadership advice you’ve ever received?

KB: Leadership begins with confidence, commitment, and passion. I’ve always had the mindset to surround myself with great people and earn my way as a trusted leader. I talk to a lot of groups about leadership, and those three things always come up. If you don’t have confidence and commitment people see that, and of course passion is big — you have to like what you do. People need to know that you are not just a robot leader and you’re committed and passionate and have fun with what you do. You have to enjoy the business you are in and enjoy the people around you, that’s what I’ve learned from my career. I’m selective of people around me because a good leader means having the right people around you, and that is going to make you a better leader. I’ve been blessed with that since I’ve been around GM.

Also, I always kept a list over the years of my top ten leadership traits and what I think makes a great leader because it evolved over my career, and it’s changed to some degree. The list evolves, and it’s part of learning from my strengths and weaknesses.

AFE: What do you think is the most underrated trend in lending practices?

KB: I’ll start with the most overhyped trend. There’s a lot of conversation about digitization and automation in the industry —  the adoption is critical to our industry because it’s what our dealers and customers expect.

All of that is really great, but an underlying counterpoint to that amid all this digital evolution is the question: ‘Is your organization still laser-focused on the basics?’

By that, I mean being disciplined. Does your organization have consistent approaches to your underwriting and funding practices through all economic cycles? We’ve been fortunate for the past 10 years to be in a good cycle for the auto finance industry, but most of us lived through 2008, and some things got companies in trouble. So the best advice is to stay focused on the basics when it comes to your processes and policies and what your expectations are from a risk standpoint.

Have well-trained and courteous people as the touch points for dealers and customers. We talk to dealers every day and with all the automation and digitization — my biggest concern is how we come across to our customers from a relationship, professional, and caring standpoint. Relationships are still fundamental to our business. Even as tech evolves, the success of our business is really driven by the strength of the relationships we have with our dealer customers and consumer customers. That’s an underrated trend.

AFE: What person has had the most significant influence on your career?

KB: My mother and father were both born into poor families and made a good living for my brother and I. They’ve always provided me opportunities and avenues for my career path to be productive. They instilled in me the importance of a job, education, and flexibility in my career. They drove a lot of those points home with me – and I’ve carried it forward through my 35-plus year career.

On the funny side, if you believe in the Six Degrees of Kevin Bacon theory, this is mine. There is a good friend of mine — Lee Daniells — he believed in me at a young age, and he connected me with all three major companies I’ve worked with in my career including the Federal Deposit Insurance Corporation (FDIC), First Merchant Acceptance in Chicago, then finally AmeriCredit and GM Financial. So it may not be the six degrees of Kevin Bacon, but more like the three degrees of Lee Daniells.

It’s funny because it goes back to the previous question. If I had not built this relationship with Lee Daniells back in 1981-1982, earned his trust and let him see what I could do as a worker — he would’ve never referred me to the FDIC, never would’ve given me a call and asked if I wanted to work with him at First Merchants Acceptance. He had relationships with AutoNation and CarMax, which is what ultimately got me the job at Americredit and ultimately expanded into a 22-year career with Americredit and GM Financial. You have to have the flexibility to do things outside of your comfort zone.

AFE: What’s something all of your colleagues would be surprised to learn about you?

KB: I’m pretty transparent as a leader, and I’m good friends with a lot of the people I work with and who work for me — not a lot of surprises.

They all know me as an ex-athlete. I played sports in school, but I think they’d be shocked to know I sang a solo in choir in seventh grade, and I received a number one rating. [My colleagues] would all probably laugh at that because they’ve heard me sing lately and it’s not so good.

I won the competition — I got the highest score of any person there at the competition. Trust me, my singing, it’s not so good now.

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Auto lenders are increasingly relying on nontraditional data as they hone underwriting to gain a competitive edge. Alternative data can open the door to unbanked and under-banked consumers, enabling lenders to extend beyond their typical customer base without assuming too much risk.

“[Lenders] have to broaden their mind to incorporate alternative data,” Chuck Berend, senior vice president, chief risk officer at First Investors Financial Services Group told Auto Finance Excellence. “There is certainly more to the way you lend and operate than saying ‘yes,’ ‘no,’ or ‘under what rate.’”

On top of that, Berend urges lenders to keep in mind that alternative data is quickly advancing as data providers are getting more sophisticated. “The universe of alternative data is really dynamic,” Berend said. “If you are not actively managing [alternative data] then you run the risk of having stale rules in place and miss opportunities — it has to be actively managed.”

In this episode of The Roadmap, AFE chats with Berend to discuss how lenders can navigate the pain points of alternative data and leverage nontraditional credit markers to sharpen decision-making.

Have any questions, podcast ideas, or looking to get involved? We’d love to hear from you. Please contact us here.

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SAN DIEGO — Technology is changing the way lenders engage with their customers, prompting lenders to hone their value propositions, Westlake Financial Service’s Senior Vice President of Marketing Mark Vazquez said at the Auto Finance Sales & Marketing Summit this month.

Vazquez’s delved into tips on effective communication with consumers through both traditional and non-traditional avenues, as well as the importance of keeping those lines of communication open with dealer partners.

“As lenders, we hold a very large role in the whole evolution of auto finance and sales because of our position in the market and our resources,” he said, revealing how financiers’ involvement can shape the industry and how following a few simple rules can transform pain points into opportunity.

Act on the Data 

For lenders on the up-and-up in the auto finance industry, the following statistics Vazquez shared during his presentation may sound familiar:

• 87% of consumers dislike something about car shopping at a dealership
• The average customer spends 15 hours shopping for a new vehicle
• An average sale takes four hours once the customer arrives at the dealership

To improve the financing process, lenders must first understand how consumers feel about the car-buying process. “Every time I see that kind of data, I always see room for improvement, which means there’s a problem we can solve and address,” he said.

One of the most valuable elements of this step is knowing where the customer is shopping, not just who the customer is. Vazquez said 60% of buyers’ time is spent online shopping — and a lot of that action takes place on mobile devices.

“We need to cater to the online buying power,” he said. “We have to be where [the customer is] at. From a marketing perspective, that’s very important.”

There’s a lot of data out there, Vazquez said, “but not acting upon it is the worst thing you can do.” He said it’s no surprise that consumers are increasingly spending more time on their cell phones, yet, “you’d be amazed at how often we understand this but don’t take action upon it.”

Identify Marketing Channels

Choosing the right marketing channel is a critical piece to successfully communicating your value proposition to customers. Even with the rise of technology and mobile buying power, Vazquez revealed that Plain Jane marketing tactics — direct mail and email campaigns — are Westlake’s most effective communication tools.

For example, email campaigns that offer consumers a rebate off their down payment generate a near 20% conversion rate at Westlake, Vazquez said.

The Irvine, Calif.-based subprime lender starts marketing to existing customers when they have paid off 50% of their balance; Westlake pushes the marketing efforts even harder when customers are at 75% of the balance. “A good way for [customers] to return is by offering them money,” he said, adding that the company’s retention rate has doubled in the past couple of years.

Have a Clear Message

Once the channel has been identified, the message communicated must clearly direct the consumer to an action. “You’re trying to drive them to visit one of your current websites where you can prequalify them, or [get them] to visit a list of preferred dealerships — whatever it is, the message has to be very clear,” Vazquez said.

For instance, if it is difficult for a consumer to engage in an email on a mobile device and act, almost 50% of the time they’ll stop, Vazquez said.

Part of maintaining successful communication with customers means having dealer partners echo that communication, Vazquez said. Lenders need to leverage technology and train sales reps to communicate those expectations.

Westlake, for one, uses an in-house website that the sales force and dealerships share to keep updated on which offers and products the lender is currently pushing.

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