Business
In this episode of the Americas Series, David Yakobovitch spoke to Orlando Zayas, CEO of Katapult, about how pandemic has changed the way we shop, Katapult's role in the value chain, alternative credit scoring, and BNPL, and on going public with the SPAC Finserv. The pandemic transformed the way we shop forever: eCommerce rapidly expanded; it would have taken 5-10 years to reach its point today without the pandemic. Online shopping and BOPIS (buy online and pick up in-store) is a purchasing trend expected to become permanent. What people are buying has changed also; people are spending more money on electronics, home goods, and appliances while clothing and apparel decreases. Buying power also changed during the pandemic:Buying power changed overnight, lenders immediately tightened up, and even prime customers were denied financing. Beyond the pandemic, non-prime consumers don’t have the same buying power as prime consumers; they need options. For prime consumers, when lenders tighten up, you need to have other options. AI & Machine Learning: AI & ML are forever changing all of the technology, including fintech. We can gather a massive amount of data, and after analyzing, we continue to optimize our behavior model (Katapult’s proprietary scoring model). Our Katapult score continues to outperform the fraud point score by a third-party-the-shelf model. The ability to now gather data with AI & ML enhances the user experience and allows lenders to assess risk models better. BNPL is growing as rapidly as eCommerce:BNPL has expanded amid the pandemic as people found they needed additional financing options and retailers needed to capture a new segment of customers. Katapult focuses on the nonprime customer, which is one of our differentiating factors from Affirm, Klarna, etc. Going public via a merger with SPAC Finserv: The decision to go public now and what the process has been like from a virtual perspective. Orlando’s approach to revenue growth: Orlando joined the company in 2017 when revenue was at 17M and closed 2020 at almost 200M. Hiring the right people, make sure you have a CFO you can trust, keeping the “dumb” list of all the things to stop, having a vision is great, but you need to have a foundation and strategy to achieve your vision.