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Bringing the auto industry up to speed with digital titling technology
Long waits at the DMV or when buying a car seem like a fact of life—but do they have to be? This week on What's at Stake, Penta senior partner Kevin Madden sits down with Shane Bigelow, CEO of CHAMP Titles, to discuss the company's mission to modernize DMVs and bring digital titling technology to the nation.
Shane shares CHAMP's founding story and explains how their technology streamlines title transfers, reducing costs, improving efficiency, and helping DMVs better serve constituents in an age of online car dealers and autonomous vehicles. Kevin and Shane also explore the environmental benefits of going digital along with improvements in privacy and security for the auto industry.
Don't miss this in-depth look at how cutting-edge technology is reshaping the future of car ownership.
Welcome to this week's episode of what's at Stake. I'm your host, Kevin Madden. I'm a senior partner here at Penta. We're joined today by special guest Shane Bigelow. He was the CEO of Champ Titles, a company that is leading a movement to modernize the auto industry. Shane, thanks so much for joining the podcast.
Speaker 2:Thanks for having me, kevin, I appreciate it.
Speaker 1:So first I wanted to kind of give our audience a level set with what I think are sort of two elevator conversation questions First, what is digital titling? And second, why is the digitization of movable assets an important sector to be watching right now?
Speaker 2:Yeah, so you know, I think most people would presume that, just like the boarding pass, which has gone digital, or your baseball tickets or sport sporting event tickets or concert tickets have gone digital, that things that the DMV have gone digital. But they haven't. And the impact of that is pretty profound. Banks have more processing costs, so lending rates go up. Insurance carriers have more operational costs, so premiums go up. Insurance carriers have more operational costs, so premiums go up. Car dealers have more back office expenses, so cars become more expensive. And so, if you can take away all of the paper in the process, that's digital titling, that's the ability to move titles around digitally. Now, a digital title is actually the manifestation of a title in digital form, much like the boarding pass, when it becomes a digital asset as opposed to a paper asset, and when you have that digital asset, you can do more things with it.
Speaker 2:Now, the reason why you might want to pay attention to this space right now is that the way that cars are being used is changing. Just a few weeks ago, I was in Phoenix and I spent over two and a half hours going between meetings and I was in a Waymo on several different trips. And the future is here. I forgot that I was in a driverless car, that I was sharing a vehicle for two and a half hours with some other owner and using it to get from point A to point B without a driver in the car, and so the way that we experience our vehicles might go to fractionalization, it might go to sharing a vehicle with a friend, it might go to sharing an autonomous vehicle with somebody. Things will start to change, and with that change, you can't be burdened by a paper process.
Speaker 1:You need the quick transfer of assets to be digital, and so digital assets, starting in the DMV, is a great place to make an improvement that will impact consumers nationwide, so that process where, as a consumer that you've experienced, where you experienced a lot of friction with paper and you know that had to be a big part of how you saw your role and Champ's role in making a much, making it a much smoother process.
Speaker 2:Well, of course, I think that when we started the company, we spent a couple of years really trying to dissect what are the problems in the industry, what are the problems that car dealers have, auto lenders have fleets, have insurance carriers, have state governments, consumers, and what we realized was that everybody was slowed down and paying what I refer to as a time tax.
Speaker 2:They were using their time inefficiently in order to handle the paperwork and if we could eliminate that time tax, they could get that money back in their pocket, figuratively and literally, and save quite a bit and, at the same time, do some pretty interesting things like help the environment because they're not driving their car to a DMV and waiting in line or they're not spending a lot of time printing off paper and FedExing it around to different entities.
Speaker 2:The solution of moving to digitization is fairly logical and you've seen it in tons of industries, but the knock-on effect for the consumer is that the cost of your vehicle will eventually drop right. If you make it easier to own an asset, it's easier to then get a loan on the asset, insure the asset and the cost comes down, and you don't have to go too far to look outside and say, wow, cars are a lot more expensive than they used to be. I have to, you know. I have a son that's turning 16 and I'm looking at a used car for him and I'm blown away what the expense is to get a safe used car these days, right.
Speaker 1:So you mentioned state government, shane, some of the some of the real world examples where you've, where you've made a difference and Champ has made a difference, they have a great backstory. West Virginia and Kentucky, for example, are just are two really important case studies for your work. How has the work that you've done in those states really set the course for your, your overall approach to this work and the industry?
Speaker 2:Yeah. So we build technology for states. We try to empower the states to offer their constituents those car dealers, those fleet operators, insurance carriers, lenders, consumers we try to empower them to offer them technology that meets them where they want to be met. And in doing so we found some states like West Virginia and Kentucky and New Jersey and Illinois, who are willing to push the envelope for their consumers. They're willing to say, yeah, we need to move quickly into this digitization of our processes because that's what our consumers expect, that's what our constituents want, and we want to deliver that savings to their voters. And that's great.
Speaker 2:I mean, I love it when you see a government actually take into account what the voters want right and deliver to them at a very affordable cost, if not a $0 cost like our contracts. And so the benefit of introducing our technology into a state is that, the immediate uptick that you see in efficiency. So in West Virginia, for example, they started processing 10 times the amount of transactions in a day that they previously were. Literally within weeks of turning the system on, their processing times dropped from 45 days down to less than a few hours, and so now they're able to offer solutions that really move the state forward and they're a leader in the DMV space, and that's not something that you often associate with some smaller states, but you know, you see it in West Virginia and Kentucky and certainly now you're seeing it in the large states of New Jersey and Illinois lot of folks, when they think about having to partner with government, that they find that there's a lot of bureaucracy and there's probably not a lot of embrace of technology or disruptive practices like yours.
Speaker 1:Did you find that was the case when you were working through states, trying to partner with them and trying to modernize this process?
Speaker 2:I think that there's always a lot of pride of ownership when a state has previously built their own technology.
Speaker 2:You know, the joke that I say is that the biggest competitor that companies like us have is when a state decides that they're going to be a software company and build their own technology. But that's stopping right. That was sort of the practice 40 years ago, a little less so 20 years ago, and I think most states are realizing that the technological requirements of their constituents are far in excess of what makes sense to try to build yourself. It's better to partner. We've seen this in our personal lives with things like Netflix and Amazon, and we see it certainly in the DMV, where technologies can be brought forward to consumers and other constituents through partnership with the government. And so what I find is that the government wants to partner. They want to find a friendly partner who understands how to move at their pace and understand the complexity of their old systems, and you know that's something that we pride ourselves on, that we're really good at dealing with those old systems and transitioning into them, into the new world of current day technology.
Speaker 1:Well, it's clear you take a disruptors view of this, meaning that you're trying to find, trying to make inefficient process more efficient and oftentimes one of the challenges there is that you know state governments or any audience will see that they need for large scale transformation. How have you approached that? Have you done it in a large scale way or have you thought about you know the kind of the old saying like the one way to devour a whale is one bite at a time?
Speaker 2:Yeah, I think. Unfortunately, there were a few decades, probably starting in the late 90s, going into the early 2000s, where government thought, oh gosh, I have to throw everything out and start all over. That's just not the case. The technology does not require that. We went with a modular solution where we determined that if we broke our total solution which would look like a big modernization if you did everything into multiple components and we let the government say here's where our biggest pain point is.
Speaker 2:Our biggest pain point are transactions with the dealers. Our biggest pain point are transactions with the lenders, and we try to fix those things first while working with their older systems. That's a really palatable way for them to consume new technology and not feel like they have to take on a project that will take multiple years to deploy. You know, when I look back, when we started the company and I tried to size the duration it would take for a state to launch new technology, I came to a rough assessment of a little over four years is what it would normally take. We're launching our systems in six to nine months, and so that's an ability for a state to be able to implement technology and get it to their constituents very quickly and make a difference right away. So you know if you're an elected official and you get into office, you can absolutely make a change before you're back up for election.
Speaker 1:Are you seeing that a lot of these policymakers and elected officials are really embracing this process and it's started to change a little bit more of the culture in state governments, where they're looking to partner with private companies in order to do more of this and and just just and then just tout the benefits of, of efficiency to their constituents?
Speaker 2:Absolutely there's.
Speaker 2:There's been a mindset shift, I think, over the last five or six years, where government has realized that if they want to deliver a solution for their constituents quickly, they need to partner.
Speaker 2:And just think about the irrationality of modernizing an entire system and charging your taxpayers $80 million, which is the average price of a full modernization. The irrationalization of that is that there's a grandmother in some remote town who will never use the system, she will never buy another car and somehow she's paying part of the freight of that new system. That's just not fair. She shouldn't have to. The user should pay it. The lenders are happy to pay it, the dealers are happy to pay it, the fleets are happy to pay it, and the reality is that you can implement a system like that in a handful of months or quarters and make a difference, and you can do so without charging the taxpayers. You can do so by attaching a fee to the statutory fee and saying okay, every time you use the system, this is the freight you're going to pay to use the system. It's a very fair and equitable way for the users to pay for the system.
Speaker 1:Have you seen much of a domino effect or a ripple effect of your approach that goes beyond titling here.
Speaker 2:Well, certainly I think. When I go back to one of the reasons why we started the company, you know, I do believe that part of the benefit of a system like this is that you can really take it and look globally. There are countries around the world that could benefit from having these types of systems in place and we will certainly look to bring that to them. And the assets there are different. Right, it's not just the DMV, it could be all sorts of assets, and you know whether that's cattle, art, gold, minerals, other things.
Speaker 2:The problem in much of the developing world is that it's difficult to figure out the provenance of an asset. The systems of record just aren't as formidable as they are in the developing world or the developed world. Rather, we sort of take it for granted in the US that if I want to get a loan or want to get insurance, it's relatively easy because the lender or the insurance carrier can check on the status of the asset in milliseconds. Not so much in much of the world. And so, yeah, we'd like to bring our systems to the rest of the world, but we're going to focus on the US for now.
Speaker 1:So I would expect also that one of the ripple effects here would be forget about, just like, the point of sale or even a customer experience at a DMV. This has to be. You have to be seeing changes or you have to be seeing support from everybody across the auto industry. I mean folks at the insurance company, folks on the dealer lots. They've got to see this ripple effect affecting their business as well.
Speaker 2:Right, yeah, I mean, one of the things that makes us really proud is when you hear from customers who are using the technology you deployed in the state and they tell you how much it's changed their business. I was talking to a large dealer group top 20 dealer group yesterday and their statement was they'll never go back. They'll never go back to not using one of the pieces of technology that we deployed because it allows them to handle their inventory so much faster and increase the velocity of transactions. So let me explain what I mean by that. If you improve the velocity of the transaction the amount of time, the speed with which transaction or a car can turn over from one entity to another and you make it easier, what you've done is effectively lower the cost of that transaction.
Speaker 2:So if I'm a dealer and I buy a car from a consumer online and I can very quickly get a title in my name and then very quickly sell the title, I might sell the car and the title.
Speaker 2:I might be able to make an incremental margin without ever taking inventory of that car in my physical lot.
Speaker 2:That's a part of my business that didn't exist before, and so you are seeing dealers and lenders use this technology to enhance and improve their business in ways that just simply weren't possible in a paper world.
Speaker 2:And so, as we see those operational improvements and they talk about the savings that they're driving to their customers, it makes us really proud. And as that velocity increases, what we also witness in our states is that consumers in our states trade their cars more efficiently, and it allows the consumer to be empowered to say, yeah, I want to get out of this car, I'm going to trade it to my neighbor and I'm going to get another one. And because the process is easy and efficient, I'm not burdened by spending a half day at a notary or waiting in line at a DMV. I can do it on my phone and get back to my day and trade cars faster. And that's not something that most people wake up thinking they used to be able to do. But you can now, and as the use of cars changes from owning a car outright to maybe sharing a car or fractionally owning one, or using these driverless cars or, you know, sharing fleets, the need for that will continue to increase more and more every single quarter, every single year.
Speaker 1:By the way, can you talk also about a little bit about the climate impact here? I mean, I know a lot of people think it's, you know, in vogue to try to try to try to attach everything to some climate friendly initiative, but this, but this is very real. When you consider the amount of paper, the amount of waiting time, there are very real environmental risks that are being mitigated here.
Speaker 2:Yeah, to be fair, we didn't start the company intending to solve some climate issues, but we're delighted that we've now become part of the way to give back to the climate and help it a bit. So a couple of things. On average, in a state of a couple million people, we'll take their paper usage down 20 million sheets of paper a year, right? So immediately that's a savings to the pulp usage or the creation of the paper or just the mailing of that paper. All of that gets eliminated. What also becomes interesting is that if you don't have to show up at the DMV, you no longer have to drive to the DMV. You don't have to wait in line at the DMV, so you're not. If you're driving a combustion engine car, you're no longer using fuel, you're no longer costing yourself more than just the fees. You pay your state, right, every time we drive somewhere, we always have to remember we're actually paying for the gas, right? So? And we're paying the gas tax as well, and so you can eliminate that and your personal life if you don't have to go there. And this is a little bit more nuanced, but we're particularly proud of it. You know, now 25% of all insurance claims are total losses, which means you know if you get an accident or there's a natural disaster 25% of the time that car is getting totaled.
Speaker 2:There's so much technology in cars, it's really easy for that to occur. Well, historically, that car would sit in the salvage yard for 60 days. Well, we can bring that down to one day. And when it's not sitting in the salvage yard, guess what it's not doing? It's not leaking fluid, right, it's getting recycled. And one thing that's great about the salvage operators is they know that one of the few assets in this country that is 100% recyclable is a car, and they're really good at it. And so if we make it easier for them to recycle the car because they can't start doing that and they can't start selling it to folks that do that until that title is cleared, and so if we move that in a day as opposed to 60 days, um, there's a lot of of of environmental savings there and um, the, also the uh.
Speaker 1:the ability for this technology to create jobs is probably pretty significant as well.
Speaker 2:Yeah, I mean, I think, what you know the ability for new ways to use this technology to create businesses, to enhance your workflow it's. It is a. I think it is a game changer in terms of the types of people that can now get in the business of moving cars from, you know, one entity to another. So, as an example, you know, I could see a world where people buy a fleet of cars and rent them out. Right, you can sort of do that today on an app called Turo.
Speaker 2:I could see a world where you do that when you've got the driverless cars. You buy a fleet of driverless cars and send them out. Well, you can get a bank to finance that and you could own those cars, but you're going to have to trade them in and out pretty quickly and so you're going to need a way to handle all of that paperwork. And if you're dealing in a paper world, when you're dealing in a high velocity transaction like rental or short-term usage, it's going to be difficult to do. With our technology not so much. It becomes really easy to manage fleets. In this regard, there are new businesses, new jobs, new job roles being created all the time because people are using our technology to enhance the industry.
Speaker 1:So anytime you have a new technology like this, there's always a portion of the consumer world out there that it gives them pause because they worry about. With technological advances there's potentially some worries about privacy or security. This actually is a much more secure system that guarantees a greater level of privacy and security of people's information right.
Speaker 2:It is. So you know, conveniently, the federal government sets standards called NIST level two standards and they've got NSA level security standards and you have to meet all those in order to be a vendor in this space, and so it's not easy. It's particularly difficult to be that good at security, and the reality is that the amount of fraud in the digital space is considerably lower than that in the paper space. Right, it's much easier to take a pencil and try to erase something on a title and rewrite it, or create a fake piece of paper with a fake title, or steal the card stock and print some titles. That happens almost every day.
Speaker 2:It doesn't take much of a Google to see those crimes happening all across the country. In the digital realm it's much harder to do that, and consumers, I think, are sort of keen to the idea that digitization probably protects them a lot more not just a little, but a lot more than the paper world. That all said, if a consumer really wants paper, we still enable it Like we're not. We're not trying to tell someone that they can't go and have paper if that's what they really want, and I don't think states are in the business of doing that, but I do see that as soon as the digital offer is available, everyone sort of flocks in that direction.
Speaker 1:So you know, I don't think a CEO like you can survive nowadays unless you really are a dedicated visionary. And as we try to wrap up here, tell us a little bit about what's your vision for what's next for Champ Titles and where do you see the future of this industry going.
Speaker 2:Well, I think that the industry will continue to uh change. As governments get out of the business of building software, I think you'll see that governments will need software partners like us and others to help them mature into what their constituents are looking for. And knowing that constituent base is really important, right, we really take to heart what the car dealers, the fleets, the insurance carriers, the lenders, the consumers actually want. And, by the way, there's a whole series of service providers that work with all those industries and we have to take those into account as well. And so it's a complex level of change management and you need a company that understands this industry really well.
Speaker 2:My joke is that the hard part of starting this company, or the high barrier to entry, wasn't necessarily money, it was knowledge.
Speaker 2:My first startup was in this space 27 years ago, and we're still trying to solve a problem that I spotted 27 years ago, right. So the knowledge takes a long time to make its way through this industry, and, and here here we are, and thankfully we're solving it. But I do see that this industry is changing as fast as it's ever changed. The digitization is here, called eStart, where originally there were a dozen or so of us that got together and said, hey, why don't we create a coalition and come together and really advocate for digitization? And we're not trying to pass laws or anything, we're just informing states that, hey, these industry groups really want to have digitization. Well, before you know it, there's now over 110 members, and they're really large companies, small companies, medium-sized companies that are part of this, and I think that's going to be a hard snowball to stop rolling downhill. I do see that there's an opportunity as well to help the rest of the world and, like I said, we'll get there too.
Speaker 1:So how hard was it though? Because it's so. So the status quo, particularly in industry like this, is always an entrenched, and particularly when you have government involved. How hard was it, or how important was it, to really challenge that status quo, Because there's always a audience of folks that say, hey, this is how it's always been done, and this idea of digitization and the you know software and technology and the private sector coming in, it had to be. It had to be it. Probably. You probably had to have a bit of a confrontational attitude when it came to making sure that this was a success.
Speaker 2:I think initially we we we probably did have that and we had to realize that maybe that's not the most effective way to work with government. We had to figure out how to partner with them. Not the most effective way to work with government. We had to figure out how to partner with them. And our culture changed as well, where we realized that we had to have a lot of empathy for what the government is going through. They've got antiquated systems, limited budgets and it's a tough job. They've got a really hard job and if we partner with them, I think that changes the mindset that they have, that we have, about trying to develop the solution and bring them forward so that their constituents are happy.
Speaker 2:And you know, at the end of the day, I think most people take a job in government because they want to get back. And you get really disappointed when you go to work and you hear complaints all day. Well, it feels really good in our states when the folks at the DMV tell us hey, complaints are way down, almost non-existent. People aren't calling in getting upset anymore. This works. We're delighted, we actually delivered something positive to our citizens and that feels really good.
Speaker 1:So I have a feeling that there's a lot of change on this front that's still to come and CHAMP's going to be right in the middle of it. So, shane, can't thank you enough. I hope we can do this again soon and we can get an update on how Champ's leading the way in what is obviously a very fast changing environment.
Speaker 2:Absolutely. Thank you, kevin, I appreciate your time.
Speaker 1:Shane Bigelow. He's the CEO of Champ Titles. Thanks so much for joining us on this episode of what's at Stake.