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SIMON BROWN: I’m chatting now with Sean Wibberley, CEO at Weaver Fintech. Results for the six months ending June saw revenue up 30%, Heps up 45%, dividend up 47%. Sean, appreciate the early morning. You changed your name from Homechoice International in late July to Weaver Fintech, as it really now is the core business. How much of your business is now the fintech operation as opposed to the homeware operation, which was sort of where the business started initially?
SEAN WIBBERLEY: Yes, good morning. The Fintech business now does 98% of the group’s contribution to PBT [profit before tax].
SIMON BROWN: Okay. So it is now what you are. Hence the name change. You’ve got a couple of components there – the buy-now-pay-later [BNPL], the insurance, the lending. The buy-now- pay-later really is the PayJustNow. But you’ve also got PayStretch. This is not just sort of me buying something small online and paying over a couple of payments. You’ll stretch that out to a full 12 months for bigger items.
SEAN WIBBERLEY: Yes, exactly. Our intention has always been to start small with the buy-now-pay-later product, which is a free service for customers – no interest, no fees. You can split the payment three ways. And then for larger ticket items to stretch those payments over six, 12, 24 months last year we launched the 12-month version, and that’s starting to scale. We are getting good feedback and we are in beta mode with our six-month product right now.
SIMON BROWN: Is that typically where you will first meet a client at that buy-now-pay-later, and from there you can go to stretch payments, you can go to insurance and sort of lending as well.
SEAN WIBBERLEY: Exactly. That’s the ultimate strategy of the business. So we are acquiring over 90% of our fintech customers directly into the viral BNPL product, [customers who] come into the ecosystem, who prove themselves by way of payment behaviour and then get exposure on our digital platform to our other products. So typically Pay Stretch would be an obvious next product, and then the lending and insurance products.
SIMON BROWN: That’s an important point because by the time they get to [your] lending and the like, or the longer-term lending, you’ve got a very good sense of who they are. You’ve worked with them in a sense. You’ve lent them some money; they’ve paid it back – maybe there’s some insurance in there as well – and you’re starting to get a good feel for who that customer is.
SEAN WIBBERLEY: That’s exactly right. So the customer – we’ll get a feel for her because of the data that she provides us with when she transacts. I say ‘her’ because two-thirds of our customers are female. We build up this profile, this relationship, her trust in our digital platform, and then we use the data to personalise our other product offerings, which then get exhibited to her on a sort of pull basis when she comes to visit our platforms and then gets a personalised offer that fits what we know about her.
So the offers are quite personalised and relevant. For example, if we offered a loan, we wouldn’t say, ‘Get up to R50 000’. We’d say, ‘You qualify for R7 000’ and more or less that’s the number she would get, based on the data we know about her at the time.
SIMON BROWN: How many merchants, how many customers do you have at this point in your books?
SEAN WIBBERLEY: In the group we’ve got 3.7 million. As a fintech business, we’ve got 3.3 million customers and we’re booking 120 000 a month into the ecosystem, 110 000 into the buy-now-pay-later product, about 10 [000] or so into lending and another 20 [000] into the retail business. Then merchants just over 3 100, covering about 11 500 points of presence online or in stores around the country.
SIMON BROWN: Okay. I keep forgetting that this is in-store at the same time. I imagine the majority is online, but it is also that in-store environment. I can do it at the till point, almost.
SEAN WIBBERLEY: Yes. Well, actually more than 50%, about 60% of our transactions with BNPL and Pay Stretch are done in-store.
SIMON BROWN: Oh, wow.
SEAN WIBBERLEY: So customers are able to scan a QR code at checkout in store, and effect the transaction that way or online, checking out with buy-now-pay-later or PayStretch as the option.
SIMON BROWN: You obviously need cash behind you. The loans to individuals might be small, but 3.7 million customers adds up fairly quickly. Your capacity for lending? Have you facilities for future growth?
SEAN WIBBERLEY: Absolutely. We have R5.5 million worth of facilities from a consortium of banks, of which we’ve R2.1 billion in cash at the moment, or on access in the moment for future growth. And yes, we are well funded by the banks. The banks are liking the fact that we collect far more in a year than we actually disperse by way of disbursements or GMV [gross merchandise volume]. In the last half we collected R7.6 billion as a group, and our net debt is R3.4 billion.
So the high-yielding books are reassuring for banks in terms of our being able to support the loans going forward.
SIMON BROWN: And that growth of course feeds into it.
Last question, which is probably on everyone’s mind, what are the impairments, the bad debts like? These are smaller loans, shorter term, even on your PayStretch. How are you finding the impairments?
SEAN WIBBERLEY: The impairments in the lending business – the key thing with lending is to make sure that you have consistent non-volatile bad rates, that you can price and manage your book effectively. So our bad rates have been very consistent. If you see our vintages – as in over time – which customers roll into a write-off state, they’re very tightly range-bound.
In fact we’ve been focusing quite a lot on existing customers strategically which perform better in order to manage through our innovation cycles as we roll out the PayStretch product. And then we will start to open up a little bit where we do this cautiously. And it’s nice having a short-term book because you learn quickly, and you can adapt to market conditions very quickly.
SIMON BROWN: I take your point. It is that short term, and you get to know who that customer is.
We’ll leave it there. Sean Wibberley, CEO of Weaver Fintech, appreciate the early morning.
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