How Plenti is using tech to its advantage to disrupt the consumer finance market and drive growth
CEO Daniel Foggo says says Plenti’s 2020 listing came at the right time to accelerate growth across its key verticals.
With record increases in revenue and new loan originations, fintech lender Plenti (ASX:PLT) has been on the fast track since its September 2020 listing, recording the $1 billion mark in cumulative lending and achieving 60% three-year compound annual growth in its loan book.
Plenti has built strong foundations for growth since it launched in 2014. As the company builds market share, Foggo is focused on leveraging a proprietary tech advantage to underpin the next phase of growth.
Speaking with Stockhead recently, Foggo said that extra time in the market has worked to the company’s advantage as it looks to leverage its strengths in four key areas; technology, borrower reach, funding partnerships and data analytics.
“One of our primary strengths is technology. We control our own integrated platform and we’ve got around 30 domestic staff and another 15 offshore — all focused on tech and product,” Foggo said.
“So that tech capability is really starting to show, primarily in the quality of the products and experiences we’re able to deliver to our customers.”
It’s a similar case for borrower reach, where time in the market has allowed Plenti to execute on a multi-channel lending approach across three key markets – personal loans, automotive loans and renewable energy finance.
“We’ve built that expertise in different digital channels, built relationships with thousands of loan brokers, and developed a network of other referral partnerships ranging from energy companies to law firms. And these things don’t happen overnight, you really need a number of years in market to build credibility with those distribution networks,” Foggo said.
And with its in-house tech platform, Plenti also has a leg up on competitors in its data analytics function.
“We have been in business long enough to build a large pool of own our data, which allows us to sharpen our tools in terms of our credit assessments, and we see that as a real advantage,” Foggo said.
“So we consistently leverage this data to update our credit decisioning models and pricing, and that’s not something that you can do effectively until you’ve done over $1bn of lending.”
With a number of advantages in the market, Foggo said the strategy is to leverage them across Plenti’s multi-channel approach to reaching borrowers.
“If we start with automotive finance, we recently announced we’ve booked over 270% annual growth, and that’s really reflective of us just taking market share,” Foggo said.
“It’s still a very large market where banks are continuing to exit, so we see a long runway there in being able to sustain growth.”
Foggo said that along with automotive loans for consumers, Plenti is also rolling out new commercial automotive offerings for tradies and SMEs, which comprise about half the total automotive market.
“While we might be doing $25-$30m in automotive loans per month to consumers currently, we’d expect to bring our commercial lending up to similar levels so you can see how that helps underwrite confidence around growth.”
At the same time, “there’s different strategies for achieving growth across our between lending verticals”, Foggo noted.
A good example of that is Plenti’s move into BNPL finance for its renewable energy customers.
“BNPL for us is really specific to the renewable energy space, given its the predominant form of financing there. But it is potentially quite transformative in terms of our scale in renewable energy lending,” Foggo said.
Foggo has experience in the BNPL space, having co-founded Partpay, a global BNPL business which was ultimately acquired by Zip Co, and which Zip used to cornerstone its interest in QuadPay – so he has advanced industry knowledge of its prospective use-case.
Plenti’s renewable’s strategy is evidence of its capacity to build in flexible options for customers in each part of its business.
“And the format for that is likely to be interest-free. So you can see why BNPL is the predominant form of finance in that space.”
As Plenti scales up for its next phase of growth, Foggo also highlighted the unique advantage of the business with respect to its competitors – Plenti’s proprietary technology platform.
And that will be crucial as the fintech sector continues to take a bigger market share in personal finance.
“What we’ve seen over the last 12 months (in consumer finance) is some of the large incumbents starting to pull away, and an acceleration in market share that fintechs have been able to take,” he said.
“In that sense, the tech component is really important. You can see that across fintech globally, where the best tech solutions tend to be the industry winners.”
“So we put a strategic focus on investing in our own platform, rather than using third-party software. And now the benefits of that are coming through,” Foggo said.
“We’ve got another quarterly out early next month. Our last few quarterly results have consistently shown strong growth reflecting the tech advantage our platform provides.
“Our platform gives us scalability, efficiency, speed and the ability to innovate rapidly – all of which will support a high-margin business at scale.
“Ultimately, this is a tech platform business,” Foggo says.
“So what we have now is a platform where as you double your volumes and monthly originations, our business can scale cost effectively.”
“And that’s what we intend to show the market in the months and years ahead.”
This article was developed in collaboration with Plenti, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.