JPMorgan wants millennials to buy cars

New York - Millennials, countless surveys will tell you, are not fans of big banks. They are smart, price-sensitive consumers who are far more likely than older customers to switch lenders if they find a better deal.
They are also a huge, irresistible demographic for the financial industry, which is why banks are doing everything possible to ensure these digitally native customers stay loyal once they’ve pinched their nose and opened an account.

That means sophisticated social media, nimble mobile banking platforms, and now in a bid to gain some real fintech street cred, an end-to-end car-buying smartphone app.

That’s the latest offering from Chase, the US consumer and commercial banking arm of JPMorganChase Chase Auto Direct, in partnership with digital car-buying service TrueCar, is layering auto financing onto online car shopping.

Approved borrowers that applied via their smartphone or computer are routed to a network of Chase-affiliated dealerships that have the car they want, and walk in to find their paperwork ready.

Chase Auto Direct is available for Chase customers in 30 states and will roll out to all 50 states next year.

“The reality is that customers are shopping for everything online, even cars," said Bruce Jackson, head of retail lending at Chase Auto Finance. “By pairing online financing with the car buying experience, we can deliver pre-approved customers to our dealers, and dramatically simplify the car buying process."

Millennials have started to buy cars, but they’re more deliberate and frugal than their elders, said Steve Szakaly, chief economist at the National Automobile Dealer’s Association. The average new car buyer is 52 years old and makes about $80 000.

More millennials will break down eventually, he said. Perhaps when they have kids and discover a diaper box doesn’t fit on the back of a bike, for example. While the car app idea isn’t new, the scale may be.

USAA has an online car-buying service that works with TrueCar, letting its members choose and finance a vehicle online, with the option of getting insurance, too.

Unlike USAA, Chase serves about 14 000 dealerships in the US through its indirect auto lending business- meaning it lends to the dealer, who then lends to you, tacking on a few basis points to the interest rate.

Chase’s dealer network may take issue with being cut out of part of the process, but the bank stresses the service will be a big lead generator - and sellers are paid a fee for closing deals.

"Customer financing at their dealerships will continue to be popular, and that won’t change anytime soon,"said Jackson. "But we want to be ready for where customers might be down the road.'

A majority of the checking customers Chase picked up last year - 57% - were millennials. And as everyone knows, they live on their phones.

Almost 80% of Chase’s millennial audience use its mobile banking app, versus 38% of those age 36 and up, said Patricia Wexler, a bank spokesperson.

With this in mind, last year Chase paired with OnDeck Capital to offer an online lending platform for small-business clients that it said would shorten approval and funding time to about one day versus one month or more.

A car-buying smartphone app may help keep millennial consumers engaged with Chase - deepening the relationship and making it more likely they will consider it their primary bank. Historically, the more accounts someone has with a financial institution, the more likely they are to stay with them. In bank-speak, they’re "sticky."

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot