HomeChoice’s fintech pivot drives more than R25m AI annual investment

14 Aug 2024

HomeChoice International shareholders saw a 36% increase in their interim dividends this week, walking away with 95c per share on the back of the company’s successful Weaver Fintech, which includes the PayJustNow and FinChoice brands.

FinChoice offers personal lending, insurance and value-added services while PayJustNow is a payment solution, and a buy-now-pay-later BNPL provider.

PayJustNow boasts 1.8 million customers generating GMV of R1.5-billion and fees of R73-million for the six months to the end of June 2024. More than 2,400 merchant partners, including popular names such as Cape Union Mart and Superbalist, are seeing increased basket size, and accessing real-time shopper data and analytics through the buy-now-pay-later BNPL model.

PayJustNow chief executive Craig Newborn says the company is onboarding just north of 100,000 customers a month and fully expects to hit the two million customer mark within a few months. One of the interesting insights that has emerged is that 63% of customers are millennials and Gen Zs. According to Easy Equities, BNPL providers expanded marketing in March 2024, with nearly 45 million millennials projected to use mobile payments this year.

However, the innovation at HomeChoice in particular has continued with the company’s use of data to drive a new marketing division.

“We are investing quite heavily in helping our merchants understand their customers better through the anonymised data we are able to give them. That includes information like how frequently they shop, different shopping patterns during the day. So, we’re launching marketing as a service. We currently have pages where customers can view deals at stores, and merchants pay to be included – and to be listed in our store directory. A customer can type in a product such as, for example, a particular brand of hair conditioner and the store directory will tell them which stores stock the product,” he says.

That will bring in a percentage of marketing revenue for the company on the back of data analysis – which seems to be a popular move. Checkers embarked on a similar marketing venture using data from its Xtra savings loyalty programme. However, it’s still early days (pilot phase) for the PayJustNow marketing model and Newborn says the target is for the marketing revenue to account for 10% to 11% of total revenue next year.

The company is also forging ahead with investments of more than R20-million to R25-million a year in AI. “We primarily use AI for financial forecasting, and of course, for fraud detection. Our fraud detection AI is an internally built model that we think is one of the best out there. We currently have two engineers that are exclusively tasked with researching AI tools and how we can use them to improve our business,” Newborn says.

Is there a BNPL bubble to worry about?

While international critics have voiced their concerns about a BNPL bubble, Newborn is confident that the South African BNPL market does not face the same threats. The Wall Street Journal, for example, has reported that BNPL users are 11% more likely than non-BNPL borrowers to have a delinquency of at least 30 days on their credit records. “The key difference is that South African BNPL providers use the credit bureau data. We ask for your consent when you sign up and your BNPL approval hinges on your affordability. The number of customers who present a risk or don’t repay the money advanced is about 2% of our client base or two out of every 100 customers,” he says.

A new retail instalment credit product, PayStretch, is being piloted and will be launched in the broader market later this year. Newborn explains: “For example, you could choose to make the payment in full, or maybe you want to stretch the repayments over 12 months rather than just three.”

Between its fintech and AI ventures, it seems the sky’s the limit for Weaver Fintech, which has R1.1-billion in cash and undrawn funding facilities to fund continuing growth. “Weaver Fintech is positioned for sustained high earnings growth. We will achieve this by expanding the product range and cross-selling these products within the growing ecosystem,” says executive chair Shirley Maltz. DM

Categories:

Tags:

DM is much better if you are signed in...

Business Maverick

Is there a BNPL bubble to worry about?