Original text here from Patrice Bernard (LinkedIn)
When Tesla introduces a new financing option in its electric vehicle purchase process, one can always expect some level of innovation. In this case, it’s a brokerage solution that enables small American "credit unions" to enter a market that was previously more or less inaccessible to them.
Fundamentally, the mechanism employed isn't particularly novel as it allows prospective vehicle owners to apply for a loan during the online ordering process, seamlessly and without leaving the manufacturer's environment. However, until now, such options typically relied on a partnership with a single financial institution (some brands even created a subsidiary for this purpose), with fixed terms and conditions.
In the version developed by technology provider Origence and carried by a dedicated subsidiary with a specific license, we're looking at a kind of marketplace open to all "credit unions" wishing to seize the opportunity. Essentially, a client seeking a loan completes an application that is forwarded to FI Connect, which validates it, then acts as a broker to find the optimal credit for that specific request and concludes the deal with the chosen partner.
Subscribe to our newsletter:
For Tesla, and other merchants who adopt this model, the main benefit is unified access to products from a financial ecosystem where the cooperative model leads to reduced costs. More importantly, each institution can meet specific needs, ensuring a better match for each customer and situation. This approach guarantees preferential treatment for almost everyone, potentially stimulating sales.
From the perspective of "credit unions", which typically have regional reach and rarely compete with each other, the prospect of expanding their market to national retailers is enticing. However, it's important to note that their operational model, which requires pre-membership before engaging in business, introduces a break in the customer experience, likely offset by their favorable commercial conditions.
Even in countries like France, where the banking industry is dominated by a few large groups and where FI Connect’s approach isn't directly applicable, the underlying idea is worth noting. It suggests a new dimension to embedded finance, where it’s not individual institutions marketing their products, but a broker integrating transparent advisory expertise...
