What happens when an investment bank and an international insurance service provider team up with Europe’s largest used car dealer?
The answer is “Auto1 Fintech,” a company whose goal is to provide financing solutions for car dealerships by utilizing distributed ledger technology. Through this three-way partnership, Deutsche Bank AG, Allianz SE, and Auto1 collectively own more than 50% percent of the young car financing blockchain platform, Auto1 Fintech.
As a used car exchange, Auto1 buys and resells used cars from individuals to dealerships while offering the opportunity for loan refinancing. Conventional methods make this process quite tedious, however, integrating blockchain technology helps to simplify the process and reduce costs. This is because the blockchain is capable of eradicating many back-office expenses including costs incurred on IT services, regulatory compliance, record maintenance, accounting, clearances, and settlements.
Auto1’s new company, Auto1 Fintech, is now offering a car financing blockchain platform which focuses on providing loan refinancing and insurance for car dealerships that purchase Auto1’s vehicles. Auto1 Fintech will enhance the speed of approvals, automate transactions, and free up capital previously tied up due to reduced liquidity associated with paper-based processes which slow down productivity.
In an interview with Bloomberg, Auto1’s co-CEO, Hakan Koc, stressed that the Auto1 Fintech initiative would benefit all parties involved. According to him:
“We are freeing capital and our customers are more liquid as a result. It’s a win-win.”
With this in mind, Auto1 believes that their new blockchain platform will not only improve the company’s sales volume but will also encourage customer loyalty and help the company to expand its range of offerings with regards to finance and insurance services.
Auto1’s ultimate goal is to establish itself as a major car-based internet platform. Currently, the company has a firm footing in Germany, but it has announced expansion plans into countries like France and Poland later in the year. A report by Bloomberg has revealed that Auto1 is valued at €2.9 billion. The company is growing fast and is attracting a number of investors. In 2017, Auto1 secured a €460 million investment from Soft Bank Vision Fund, an international firm consisting of investment experts who seek to make investments in the technology sector, with particular emphasis on innovative, disruptive, and emerging technological prospects.
Auto1 isn’t the only automotive company pursuing blockchain solutions. All over the world, companies in the same niche are now expressing interest in the technology and are investigating blockchain-based applications suitable for the automotive industry; these applications range from financial transactions to self-driving communication support.
For instance, Ford Motors, a leading multinational automaker, filed for a patent in March which describes a method of vehicle-to-vehicle communication that utilizes cryptocurrencies to help manage traffic flow and curb the issue of congestion. Similarly, Mercedes parent company, Daimler AG also launched a blockchain based system geared towards rewarding eco-friendly driving with certain incentives. IT giant, Hewlett Packard Enterprise wasn’t left out of the action, in May, they teamed up with Steamr to develop a data management solution for smart cars which utilizes the blockchain platform.
As blockchain adoption continues to gain traction, experts have predicted the emergence of more business-to-business initiatives and direct-to-consumer options as businesses compete to take advantage of the technology and provide better services for their customers.
Deutsche Bank’s venture into the blockchain space is unsurprising since its competitors like Lloyds Bank and Barclays are already working on several blockchain initiatives. Back in March, the investment bank announced a plan to launch a blockchain securities platform with the aid of R3 technology. Allianz isn’t new to blockchain applications either, in 2017; the insurance firm was reported to have successfully implemented a blockchain prototype for the global captive insurance market. The combined investment and expertise of these two companies could eventually help Auto1 reach its goal of becoming a leader in providing car financing blockchain solutions for the automotive industry.