Last year, Divido partnered with Novuna to drive checkout finance growth. The move combines Novuna Consumer Finance’s 40+ years of retail finance expertise with our award-winning technology to enable merchants to provide competitive finance to their customers.
We caught up with Novuna’s Head of National Sales, Phil Alltoft, at Divido’s summer party to hear how the partnership is going from Novuna’s perspective. Here’s a snippet of the conversation between our CRO Edo Volta and Phil.
Edo: Phil, thank you so much for joining us. Can you tell us a little bit about yourself?
I’m Phil, National Sales Manager for Novuna. I’ve been at the company for just over 18 months now. I’m relatively new compared to everyone else but I’m quite an old head in the industry.
I’ve been in payments for just over a decade now. I started out in card processing, then as Head of Sales at Deko, and then spent time at Etika to help grow their enterprise team. And now I find myself at Novuna running the new business team, which has been fun.
What is it that made Novuna want to work with Divido?
Novuna were originally Hitachi. The majority shareholder changed to Mitsubishi just as I turned up. At that time, there was a big effort (and a lot of money) put into our technology. The story was always ‘Hitachi is a dinosaur. Good at lending, but no technological ability.’ Mitsubishi invested heavily into our new CM3 platform, which allows us to have the modern APIs that can integrate with companies like Divido, and push our technology forward.
So when we, Novuna, were looking for people to partner with, to find quicker ways to market, Divido obviously came up.
We feel you have the most mature tech platform in the industry. Rather than the traditional cascade effect lending other tech companies offer, we were more impressed with the regional expansion option that Divido will deliver, as this fits well with our message and retailers.
We like the idea that spreading into new regions can help our merchants and retailers grow, rather than simply finding new ways to approve poorer quality customers. That’s really what makes this partnership work for us. It’s great.
Who do you work with at Divido and what’s your day-to-day interaction with us?
Quite a few people. Jack, (Divido’s Head of Merchant Sales), Ory, (Head of Customer Success), and Dimi, who is our Account Manager. We speak to Dimi most of the time. Obviously, we have Matt (Business Development Director) who’s helping with the new business push as well. So for me, there’s quite a few people that are involved, which makes it really easy. There’s always someone to speak to.
Then, obviously, we’ve got the tech side. At Novuna we have Elaine, who is a genius, and she works really closely with Lizet (Divido’s Technical Project Manager) and other people in the team.
There are lots of different ways that we interact that make the partnership nice and smooth. We’ve not come across many bumps in the road and they’re usually resolved really quickly.
What do you think we do well at Divido?
I think you are bringing new ideas to the table. To build a platform that serves multiple regions is a big challenge. I think everyone in the market has said they want to do it at some stage, but have never actually done it because it’s extremely difficult. It’s your ability to push the boundaries and say, ‘actually, we can do this and deliver that’. And so far, you have delivered everything you said you were going to.
Even with our first Minimal Viable Product (MVP) launch – sometimes an MVP is a little bit ropey, to say the least. But this was a true MVP and it worked from day one for a big retailer like BOXT. It went live and it’s going extremely well.
And what can we do better?
I think it’s just that understanding that lenders can move slower than tech companies.
The regulations that a lender needs to adhere to means that some processes take time to ensure everybody is acting in a compliant way and that we are always putting responsibility and our customers first. We have industry leading controls and risk teams that keep us in line with market expectations, which is extremely important for retailers today. Although sometimes it can be frustrating we cannot compromise on our quality of work in this area, especially with the new consumer duty coming in. Matt is always pushing us to be quicker and we understand the speed we need to work at to keep retailers happy.
I think it’s the understanding that Divido can run quicker than we can run. And I think that’s the same with every tech platform and lender.
So if you had to then make one thing better, would it be taking the time to educate each other on the process?
I think you’re correct. The education piece probably needs to come from us a bit better.
Although, I like the idea that you push us. I wouldn’t want you to stop saying ‘you need to be quicker’ because we do not want to rest on our laurels; we want to continue offering the best service in the market. There is a good balance between people like yourselves pushing us to be quicker, but also the understanding that some things take time.
What are you hearing from merchants at the moment? And what are some of the challenges that you are facing in this current economic climate?
The biggest challenge at the moment is the cost of funds. There’s no hiding behind it. The cost of funds has risen astronomically in the last two weeks, let alone the last year. We’re pricing people in initial discussions, we’re saying ‘here’s what it’s going to cost’, and by the time it comes to go live, prices have more than likely increased.
Retailers are looking for ways to better understand this so they can better forecast their margins, rather than have random price hikes. It’s again about educating the retailers, to tell them why it’s happening and where we think it’s going to go.
And I think we’re in a good place to educate retailers. Not a lot of our competitors have been through this type of market. They started maybe five, ten years ago and they’ve had zero cost of funds in that time. But interest rates have gone up so that’s no longer the case. Cost of funds is now the biggest overhead.
We’ve been trading for forty years. We’ve been through this before, which I think gives us a competitive edge in the market. I do think we’re doing well at educating the retailers and making them fully aware and forecasting better.
But this is the number one conversation, it’s really shaken up the market. Everyone’s prices have risen and that’s the number one reason a retailer will then go and look elsewhere, to check the market to make sure their price is competitive. But that’s also brought us a lot of opportunities that we have done well out of.
Why would a merchant choose Novuna compared to other competitors?
For us, it is our technology. Like the Finance Matcher that you (Divido) have recently launched. It makes a difference to everyone that we’ve won recently; having advanced soft search, being able to build a loan around a customer’s affordability rather than just declining them like the market has been doing historically.
Normally, if a customer applies for a loan that’s £25 a month too much, they get declined. But now we can come back and say ‘if you can pay a bigger deposit then we have an option for you’. Retailers are spending so much money now, to get customers to their front door or to the checkout online, that they’re looking for ways to ensure that their utilisation is as high as possible and they’re not having customers drop out. We feel this is unique to Novuna.
We know what we’re offering is a real game changer and it is being received very, very well. We’re pleased that you (Divido) have it now as well, so we can offer it under the provider platform.
We’ve talked about Divido Connect. What does it mean for Novuna? What about it are you excited for?
Divido Connect gives us something new to offer the market. At Novuna, we like to be unique. We like to have things that other people don’t. And to partner with Divido gives us the ability to offer our retailers other regions. For instance, we recently signed a kitchen company who are ten times bigger in France than they are in the UK. All of a sudden we have this huge retailer that has 600 branches in France, and we can then offer them one solution rather than saying ‘we only do UK lending’. So for us, it’s a real game changer.
And it also helps us with retention. We can now provide finance for retailers that are considering other regions under one roof. We’re looking forward to that product being mass market and being able to really talk about it.
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