Installment loans in retail are not new – they’ve been around in some form for the last three or four decades. But as Divido co-founder Christer Holloman told PYMNTS’ Karen Webster in the “In Their Own Words” podcast, innovation in the area had been almost completely stalled when it entered the segment three years ago.
Consumers could gain access to payments over time at the point of sale, he told Webster, but it was a very paper-intensive process that involved a lot of redundant paper forms and a need to be present in a physical location with all that paper to apply.
And worse than being merely inefficient, Holloman noted, is the fact that it was unnecessarily so. Technology has evolved, the space just wasn’t evolving with it.
“Now, people can apply online for different products, we can identify them properly so we know we are offering credit to the person we want to be, we can do credit search in real time. What was obvious to us is that we bring all that innovation to POS finance.”
Because retail, particularly the big-ticket items that Divido specializes in serving –is an extremely competitive world, Holloman noted, and what Divido offers gives its partners a competitive edge – the ability to offer instant access to credit to customers.
“Which means we help retailers close the deal on those big-ticket items, up-sell to customers and build an ongoing relationship because they that instant access.” Holloman said.
And offer that access across channels – online, in store, on mobile, so that retailers aren’t looking to deal with two and three providers and can instead offer their POS financing under a single banner.
But not, has Holloman noted, a single lender – which ultimately limits how much of their consumer base Divido’s retail partners can service.
“We have curated a marketplace of national lenders in each country we are in, and those lenders are competing to provide credit. What that translates to is acceptance is driven up, and costs are driven down. Moreover, we are multinational by original design, which means our partners have access to our local lenders so they themselves don’t have to go source in each respective market,” Holloman told Webster.
And the global focus from the word go, he noted, has been really a value since Day One, when Divido was first being founded in London, which as a key global finance hub was a great place to launch a journey that was always intended to scale out across the globe.
“We started here because this is the market we were most familiar with, we built the company, which from Day One was conceived as multinational, built for multiple national regulation, multiple currencies, so it would be able to scale across countries. This is a human and global need, and the desire to have a choice to do this is everywhere.”
And it was the breadth of that vision that eventually drew Divido into Mastercard’s Start Path accelerator program.
Divido, Mastercard And A Mutual Learning Experience
Start Path, as conceived by Mastercard, is designed to identify later-state start-ups that are ready to rewrite the future of commerce and bring them into the Mastercard fold with a six-month virtual accelerator that will see Mastercard and its start-up partners work to develop three to five projects.
Some projects are developed further within Mastercard in beta tests for future offerings. Others are developed out as educational modules designed to help start-ups move from their home markets to the wider world.
“In terms of Divido, we brought them in in February because we are really looking for business that is relevant to financial tech and commerce – and also who is really bringing something scalable and really novel to the table. Divido checked all those boxes,” said Amy Neale, Mastercard’s vice president of Start Path, when she joined the conversation with Webster and Holloman.
As one of five participants in the class of 2017 Start Path, Divido was chosen for a solid tech and financial services background, winning team and the fact that three years in, it could point to a track record of positive results.
“They actually have traction in the market, which is very interesting to use at Mastercard. They have proven something out, and they have demonstrated a need with target customers That means we can bring Mastercard’s global network to bear and usefully work with them as they think about scaling internationally.”
Moreover, Neale noted, Divido really distinguishes itself with its three-pronged value proposition – for merchants and vendors it brings to its platform a matchmaker – and for the consumers who now have a bigger world of options opened to them because of the commerce the Divido platform comes pre-built to enable.
“From a Mastercard point of view, we think the future of commerce from a consumer’s point of view will be all about choice and experience, and that is what they are bringing in to the payment experience – which is really an exciting value proposition for us.
Working with Mastercard, Holloman noted, has been an interestingly eye-opening experience for Divido, because it has also been an opportunity to really consider widening the purview of what the company is doing.
“We have always been very focused on the lender and the merchants, but what Mastercard has helped us with is to see the potential with collaboration with other intermediaries and other stakeholders that are crucial to the ecosystem.”
Specifically, he noted, by working with Mastercard – and thus its massive issuer network – Divido has been able to expand its plans for building to scale in terms of using its lending platform to offer those issuers yet another way to work with their own customers.
“As we have been introduced to some of the largest issuers and banking partners they work with, we are seeing many expressing an interest in our solution. And we are thinking about licensing the platform as a white-labeled product powered by Divido so banks can leverage the platform to make their own offers under their own branding.”
And, of course, Divido is as always focused on growing a larger and more complete global footprint – so it can bring in more clients, and better serve the ones it has. Which, both Holloman and Neale, noted, will be a large part of the work Mastercard and Divido will do together.
“Stay tuned,” Neale says. “Lots of exciting news about Divido’s future is yet to come.”