August 11, 2025 Boost Back Office Profits In An Uncertain Economy

Lenders who invest in back-office transformation today, will be better positioned to deliver sustained growth, even in a volatile market.

By James Powell, Head of SaaS Transformation & General Manager Specialized Finance at SBS

In today’s uncertain economic climate, financial pressures on auto lenders are mounting – persistent inflation, market volatility, and ongoing tariffs have created an unpredictable lending environment. The Fed’s recent decision to keep interest rates elevated has placed strain on every part of the auto financing value chain, from lenders to dealers to consumers. The higher the Fed holds the rates, the more auto loan costs rise, which significantly impacts affordability and demand.

Because of this, consumers are pulling back and purchasing less, and therefore, dealerships are seeing slower inventory turnover and wholesale lenders are operating with tighter margins. But many lenders are still relying on highly manual, inefficient and costly back-office systems that can significantly affect their profitability.

While much of the financial services sector has embraced digital transformation on the consumer-facing side, with things like mobile apps and automated customer service capabilities, many core back-office operations, like inventory audits and loan risk management checks are still rooted in outdated, manual workflows. These processes are often overlooked during early transformation efforts due to their perceived complexity, lower visibility, or strategic prioritization of the customer experience. But in a high-rate environment, these operational inefficiencies can have a direct impact on profitability and lower competitive advantage.

To remain competitive, lenders should modernize their back office with technologies like cloud-based platforms, AI, and real-time data analytics. These tools not only reduce costs and improve efficiency for lenders, but they also result in an improved customer experience.

As lenders begin their digital transformation, here are three key areas where back-office modernization can deliver value.

Digital audits reduce cost, improve speed, and minimize risk.

Most equipment audits are still completed through traditional processes that require a person traveling to a physical location to count inventory. This process is not only time intensive but can be costly for lenders. But thankfully, it doesn’t have to be this way.

Digital audit platforms can streamline these timely and resource intensive manual processes by enabling remote inventory verification with dealership self-service, GPS tagging, and real time photo submissions. This has been shown to rescue costs by more than 50% and cut audit time by over 40%. It also enables more frequent and risk-aligned audits, which can help lower total cost of ownership due to decreased frequency of physical audits.

While physical audits do continue to play an important role in certain high-risk scenarios, digital audits provide a scalable, consistent solution for more routine verifications. In those cases, digital audits allow lenders to cover more ground, more often with less operational strain.

This has led to many lenders adopting hybrid audit models that integrate both digital and physical capabilities to improve flexibility and risk management. This blended approach enables faster, more informed decision-making, while supporting lenders through a scalable and more modern approach to auditing.

AI-powered onboarding and underwriting tools enhance decisioning and accelerate processes.

Many onboarding and underwriting processes are manual, time intensive and inefficient. They require a lot of time spent going through hundreds of documents, reviewing submissions, and assessing vast amounts of financial data to make informed decisions about an applicant’s creditworthiness or determine their risk. This is especially concerning in times of high market volatility, as these methods are prone to human error and data oversight that can lead to poor policy decision-making and missed business opportunities.

AI-powered onboarding and underwriting tools are transforming this process. By analyzing large data sets from various sources like financial records and claims history, these solutions help lenders accurately predict an applicant’s creditworthiness to reduce defaults. These tools also streamline the application process by automating data verification and minimizing manual document collection. This leads to faster decision making and a better borrower experience. According to the 2023 World Leasing Yearbook, these technologies also lead to a 35% reduction in time spent onboarding and a 20% increase in acquisition rates.

Looking ahead, as open banking gains traction in the US–which will allow customers to consent to sharing relevant financial information from one party to another third-party–customer onboarding and underwriting will be simplified even further. Open banking allows lenders to directly access a customer’s verified financial data directly. This eliminates the need to gather documents manually, reducing friction for the borrower, and ultimately accelerating how quickly lenders can approve financing and dealers can bring new inventory to market.

Real-time data integration and automated reporting improve visibility and reduce risk.

Disparate data remains one of the biggest barriers to operational efficiency for lenders. Information is often stored in different formats, across disconnected systems, and managed by siloed teams, which can slow down even the most basic tasks like data collection for reporting. It can also create compliance challenges, as fragmented systems make it difficult to locate accurate data. This can lead to inconsistencies in reporting and missed deadlines, operational disruptions, increased risk of fines, and more.

By integrating data sources into a single, centralized platform, lenders can eliminate manual data gathering, reduce errors, and gain consistent access to reliable, real-time information. This increased visibility empowers teams to make faster, more informed decisions.

Automated reporting tools can then generate real-time dashboards, to provide employees a live look at metrics like audit summaries and compliance reports to reduce risk. This automation also frees up teams to focus on higher-value tasks, like using data insights to improve operations or tailor the customer experience.

Modernizing the back office doesn’t just benefit the lender–it unlocks value across the entire auto lending chain leading all the way down to the end buyer. Lenders who invest in back-office transformation today, will be better positioned to deliver affordability, efficiency, and sustained growth, even in a volatile market.

About the Author:
James Powell is Chief SaaS Transformation Officer and Head of Specialized Finance Strategy at SBS.

Subscribe to Industry Today