Payix: FW firm’s app aims at auto lender-borrower relationship

A potential car buyer views a Fiat Chrysler Automobiles Jeep SUV at Suburban Chrysler Dodge Jeep Ram of Troy dealership in Troy, Michigan, on March 25, With several automakers having reported U.S. sales, companies say the industry is on pace for the best April ever.  Bloomberg photo by Sean Procter.

Payix was founded in 2016 and is based in Fort Worth.

One Fort Worth software company has just released a new smartphone application that aims to make the lender-borrower relationship less dramatic so that finance companies can maintain a closer relationship with their customers and work with them to remain current on their loans.

The company, Payix, was founded a year ago by executives who worked together at several auto finance companies.

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“Fintech [financial technologies] firms have worked wonders on the originations side of lending, but other than at the largest institutions, they haven’t focused on bringing better technology to the collections environment – until now,” said Payix President Chris Chestnut. “Payix has created collections tools and payment processing resources for any size financial institution or auto dealer to use so they can improve the way they connect with their borrowers and increase their ability to collect payments.”

The Payix mobile app and other collections tools give lenders and auto dealers better control of their payment channels. Such tools include web, interactive voice response and collector portal applications, as well as a client administration portal. In addition, Payix has built a one-of-a-kind, powerful borrower communication channel that gives lenders a new way to talk with their borrowers in real time.

The Payix app is designed as a white-label product, meaning that it can be used by lenders under their own identities and thus more readily gain acceptance by their customers.

Chestnut said the mobile collections app is particularly useful with what Payix calls smartphone-dependent borrowers – the growing number of millennials and subprime borrowers who want to do personal business online and don’t always have easy access to personal computers. So by choice or necessity, they increasingly turn to their smartphones to make purchases and pay bills.

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Some 95 percent of Americans now own a cellphone of some kind, according to the Pew Research Center. The share of Americans who own smartphones is now 77 percent, up from just 35 percent in Pew’s first survey of smartphone ownership in 2011.

Among younger adults ages 18-29, 15 percent are heavily dependent on a smartphone for online access.

Among Americans with an annual household income of less than $30,000 per year, some 13 percent are smartphone-dependent. In comparison, just 1 percent of U.S. households earning more than $75,000 per year rely as much on their smartphones for online access.

Payix has targeted auto lenders whose customers tend to be in those first two demographic segments. It set a goal to have two customer leads by this summer for the smartphone app but it has more than 10 in the pipeline.

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“There are a lot of apps used to make loans in the first place, but there has been nothing available for the customer service and collections functions in lending – until now,” said John Hoffman, a Payix executive.

The market for Payix’s services doesn’t seem to be abating.

Americans can’t get enough of that new-car smell or the smell of the money they’ll save by buying a used vehicle. Auto debt reached a record at the end of 2016 with $1.16 trillion on the books for vehicle purchases, according to the Federal Reserve Bank of New York.

In the past two years $244 billion has been lent to subprime auto buyers, those with credit scores of less than 620. Competition among lenders and the need for auto companies to move inventory have led to a loosening of underwriting criteria and, no surprise, a rise in loan delinquencies.

Auto finance companies are walking a fine line as they lend more to less credit-worthy customers while being forced to rein in some collection practices because of new consumer-protection laws. The Federal Trade Commission began an investigation in February of finance companies that have been using technology such as ignition kill switches, which allow debt collectors to remotely disable an auto’s starter, and GPS devices, which can allow them to track down a vehicle. The devices can also make noises to remind borrowers to pay.

In addition to offering collections tools, Payix also is rolling out payment processing options. The company is a registered independent sales organization of Deutsche Bank AG and is powered by First Data. It transacts e-commerce payments through its own proprietary payment gateway. Payix is also focusing on offering its clients business intelligence solutions to help them better understand their customers’ payment patterns and communication preferences.

The company operates with a handful of employees but is expanding as its smartphone app gains acceptance. And while the app is designed for the needs of the auto finance industry, Payix sees opportunities in a wide range of lender categories, including student loans or even pawn shops.

In April, Payix and Nortridge Software of Lake Forest, California, announce that they have formed a strategic alliance to help lenders connect with their borrowers and improve their ability to collect payments. The alliance allows Payix to offer real-time integration between its suite of collections tools and the Nortridge Loan System.