Our partnership with Snap Finance enables us to bring buy now pay later services to even more customers, leading to greater conversion success for those retailers with our platform. In the first part of our retail finance interview with Snap’s UK MD Andy Smith, he tells us about the company’s success in the US and how the partnership with us at Deko is offers crucial benefits for the merchant community...
How did Snap Finance get started?
Snap Finance was born in the USA in 2012. It was founded and set up by Matt Hawkins, the US and Global CEO. He identified a gap in the market for people who needed credit to get the things they needed, for example to furnish their houses or put new tyres on their cars, but were being turned away by mainstream lenders.
He launched Snap Finance for the purpose of filling that gap with a product that could help customers who needed credit but were being turned away. Very quickly, the business developed a network of several hundred to several thousand retail partners in the US that accepted Snap Finance as well as their own mainstream lender, to help those customers that were being turned down by those mainstream lenders. In the US there are now over 30,000 retail partners across all states.
And when did Snap branch out into the UK?
In 2016 Matt and one of his VPs flew out to the UK for a feet-on-the-ground market evaluation, as well as working with some consultancies to understand the macro picture.
I was hired in 2017 to launch Snap Finance into the UK. We provide financial services and point of sale finance to consumers who might not own a home or earn a high income so that they can get the things they need in their day-to-day lives. In 2017 we built systems for the UK, onboarded our first retailers and wrote our first loan.
Since then, we’ve been growing our retail partnership network in the UK to the point where we have several hundred retailers who can offer Snap, retail finance, working on a very similar premise.
Can you tell us a bit more about that premise?
We know that many of the mainstream point of sale finance lenders don’t have a risk appetite and won’t lend to the people who actually need credit.
Anyone on a low income, which can be up to £20,000 per year, or if you’ve got a slight blemish on your credit file it’s highly likely that you’ll be declined for those awesome 0% deals. Then the consumer and the retailer are both left dissatisfied. The retailer hasn’t been able to close the sale and the consumer hasn’t been able to get that thing that they want or need – and that is where we step in.
Naturally, because we take on more risk, we charge the consumer an interest rate for that ability to say ‘yes’ when other people are saying ‘no,’ but with all our products they come with an interest-free period as well. Our mission is to help the group of customers that is underserved by UK mainstream point of sale finance lending.
What are the key benefits of the Deko and Snap partnership for merchants in the UK?
We’ve learned a lot since launching into the UK. One of the consistent things we hear from merchants is that they are disappointed with the approval rate they get from point of sale finance providers.
They might have the slickest platform or best-looking backend system but when it comes to actually approving customers whether face-to-face or online, we know that there’s a lot of frustration from the merchants about the number of customers that get turned down.
That’s where we can step in and get traction with merchants by saying:
“If you’re getting 70 out of 100 customers turned down at the point of sale, what if we could actually get 20 of those approved for you so you can go ahead and complete that sale?”
The additional thing we’ve found is that many merchants in the UK are dissatisfied with the service they receive from their point of sale finance provider. During lockdown and pre-Covid, I’ve heard many stories of retailers having to wait an hour to get through to somebody at some of the mainstream competitors, just to be able to find out when they’re going to get funded or set up a password.
We pride ourselves on being there for the merchants we work with, and Deko shares this ethos. We have face-to-face account management and a call answer time of less than one minute, often below thirty seconds.
The main thing that stands us apart is that we can approve more customers – the customers that are getting declined. You don’t need to replace your primary lender, you can bring us in alongside them and we can pick up some of those declined customers.
How does your relationship with Deko fit into that?
Deko is a good fit because it takes that customer journey, which can be somewhat clunky, and automates it. From a consumer point of view, it just makes it seamless. In those examples where a retailer is disappointed with the approval rate, the consumer will fill out an application form from a mainstream lender, get told they’re declined and then the retailer will say: “Don’t worry I’ve got this other great programme called Snap Finance who might be able to approve you, why don’t I run you through their application?”
Many customers will go ahead with that but it’s not a great customer experience.
Deko enables us to automate that into one single journey and at the point of decline by the primary lender, they’ve already been eligibility checked for the Snap product. The retailer can have a much better conversation with the customer, which would be more like: “Hey, really sorry you’ve been declined for the product you applied for at 0% but you’ve been pre-approved for Snap Finance, here’s the terms of that loan, would you like to go ahead?”
With Deko we are stitching those two individual journeys together into one seamless customer experience.
Want to find out more about the Deko multi-lender approach? Click below to visit our retail finance product to get all the information you need and to get started with us.