Blockchain in Auto Finance: Reimagining Floor Plan Financing
Transform auto floor plan financing processes with blockchain
Auto floor plan financing is a complex process that requires banks to continuously monitor the status of vehicles financed by them to ensure effective credit risk management, timely disbursement and settlement, reconciliation and so on. Lenders currently undertake physical audits at dealer locations to monitor the status of each vehicle, track unsold and deteriorating inventory and initiate suitable action, which is a resource-intensive, time-consuming and expensive process. Adopting a combination of telematics and blockchain in auto floor plan finance can help address these challenges and deliver benefits like enhanced transparency, reduced credit risk, and quicker disbursement leading to better cash flow for dealers.
Adoption of blockchain in auto floor plan finance is not without challenges; however, the benefits far outweigh the difficulties. Before embarking on full-fledged adoption, banks must
- Consult all the stakeholders on crucial aspects
- Build a cognitive analytics framework to derive insights from telematics data
- Run a pilot to identify and resolve teething problems