#Financing

What is digital asset auditing for lenders?

Feb 01, 2024 - 5 min read
Leonard Burger, Product Marketing Manager at Sopra Banking Software
Dani McNabb, Product Marketing Manager at Sopra Banking Software
  • The flexible process frees up both dealers & lenders, and reduces the need for travel.
  • Cost reductions are substantial at an estimated 50%. Benefits include dynamic risk management, to help identify fraud attempts and real-time reporting.

Lenders and specialist financing companies operating in wholesale automotive and equipment markets have historically used a physical field auditing method to verify the location and condition of funded stock.  

However, there are several challenges associated with this method. Physical audits involve auditors traveling, often far distances, to visit a location to check the stock. This means there are cost issues to consider: physical auditing is expensive and is often an inefficient use of resources, while it is also plagued by human error.  

In our ever-increasing digitized world, having the ability to complete audits faster and provide access to reports in real time is essential to meeting market demands and exceeding customer expectations.  

Digital asset auditing in the asset financing industry is a process by which an auditor can review and check stock through a mobile app connected to an organization’s infrastructure. This flexible process frees up time and enables dealers to meet lenders’ requirements. Moving from physical to digital auditing also benefits organizations aiming to reduce their carbon footprint and costs.  

Digital auditing can reduce costs by 50% and contribute to decreasing carbon emissions, which are becoming legal requirements for lenders and other businesses. Another benefit of using a digital audit method is real-time, dynamic risk management, which helps to audit frequencies paired to risk, such as off-site units or fraud attempts.  

Infographic: Digital auditing can reduce costs by 50% and contribute to decreasing carbon emissions, which are becoming legal requirements for lenders and other businesses.

How does it work? 

The auditing process can generally be tailored to meet the needs of an organization. Typically, it will start with a dealer receiving an email notifying them of the audit’s start and end date, including the time it will begin.  

From there, the dealer will conduct self-audits via single or multiple audit sessions before finalizing the audit. Once submitted and synced to the cloud, it will generate real-time business rules and results, analytics, and detailed exception rule triggers.  

Some lenders will use a near-field communication (NFC) tag, where data can be transferred to a nearby phone or mobile device from the connected asset. The asset-tracking functionality enables quick updates of the asset details and captures other information, such as the date, location, user data, date and time stamps, and behavior analytics.  

NFC tags cannot be tampered with, are weatherproof, and auditors do not need them in their line of sight. They also offer unique branding and different styles to differentiate stock, among other benefits. Images or videos can be captured during the audit for “proof of life.” Sample images could include the serial number, odometer, exterior, interior, asset documents, or damage to the asset.  

The audit is similar to a physical audit, in which a person checks stock onsite. However, the difference is that an organization does not need to send an internal or third-party auditor to a location and bear the associated costs.   

This is not to say that stock should never be physically audited again. Organizations can use digital audits with less frequent physical audits to ensure continuity across all dealerships and ultimately audit their auditing process.  

What types of assets can organizations audit digitally? 

When we think of businesses that would benefit from a digital asset audit, some industries may immediately spring to mind, such as the automotive, aviation, marine, agricultural, construction, or industrial equipment industries.  

However, the market reach of a digital asset auditing solution can be used by any industry with a high volume of stock in single or multiple locations that need regular audits. 

Some businesses use digital asset auditing to check on stock such as wine, cheese, whiskey, or even livestock. This illustrates that the digital auditing revolution reaches far beyond the automotive and equipment markets it currently dominates and that the need for a timesaving, accurate auditing solution is a crucial part of many businesses reaching their desired business goals.  

The ultimate goal for organizations moving to a digital asset audit model is to keep accurate records of assets stored in various locations, increase collaboration across their business, and improve data transparency.   

Photo: Moving to a digital asset audit model allows to keep accurate records of assets. © Getty Images
Moving to a digital asset audit model allows to keep accurate records of assets stored in various locations. © Getty Images

Leveraging a wider floorplan platform 

By utilizing a digital audit solution that ties into a wider floorplan financing platform, organizations can easily manage risks, audit assets, recover assets, address bad debt management, provide auction access, and initiate loss recovery without having to re-key data, improve data accuracy, and keep all the data relevant to the asset stored in one central location. Businesses will benefit by reducing the time, effort, and costs associated with traditional audits and removing the risk of error.  

Organizations that make use of cloud or SaaS solutions have the benefit of being able to scale their operations up and down to meet their business needs seamlessly.

Another advantage is being able to tie into an API ecosystem, enabling businesses to select product features to support their internal processes and transform their customer journey. Using an overall floorplan solution will allow business rules to be set across wider processes, tailor workflows, and meet compliance and regulatory requirements.  

How Sopra Banking Software can help 

The Sopra Finance Platform is an ideal solution for businesses in various markets and sizes. The platform benefits from the experience of having deployed more than 500 product implementations for 200-plus clients in over 50 countries, supporting assets under management of more than $500 billion.   

Our customers have seen a cost reduction of over 50% and a time investment reduction of more than 40% when moving from physical to digital audits.  

Click the following links to learn more about the benefits of our Digital Audit solution and the Sopra Financing Platform.  

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