S07E15: The BNPL Reality Check with Sabrina Flunkert - CEO at Ratepay

Speaker A: Like, do we need so many BNBL players? Do you think there's still consolidation? I think consolidation is always something to be speaking about in payments.

Speaker B: So yeah, let me tackle, because it's basically two questions you asked. Like, first of all, do we need so many buy now, pay later players? I don't think so, to be honest.

Speaker C: Hello and welcome to a very special episode of in check with FinTech recorded at WIN 2020 Europe in Amsterdam. Today we have the great pleasure to be joined by Sabrina Flunkerz, CEO and Managing Director of Ratepay. Having joined the company as the CFO in 2019, Sabrina played a key role in Ratepay's strategic realignment, enhancing its market position and strengthening partnerships with financing providers. With over a decade of experience in banking and private equity, she has led acquisitions and exits, including IPOs, and has built high performing teams. Her expertise spans digital transformation, strategic development and risk management, making her a driving force in Ratepay's growth and innovation. Enjoy listening.

Speaker A: Well, welcome, um, on this external location also for Incheck, with Fintech, obviously in the money pot. In money, uh, 2020. Uh, and welcome to my home city, Amsterdam.

Speaker B: Thank you so much. Very happy to be here. Not only on the money 2020, but also this lovely city. Uh, an exciting vibe actually, I have to say over the last two days. So happy to record right here where this stuff is happening.

Speaker A: Yeah, it feels like the city is flooded with, uh, Fintech people everywhere you look. And I always question outside of the um, uh, venue, obviously people don't wear the tags, so I always wonder. You look like a fintech person.

Speaker B: So, yeah, it's a, it's a clear bubble right now. If you arrive at the airport, there's like marketing for all payment companies already if you get off the plane. So it's everywhere right now. It looks like it's crazy.

Speaker A: It's the economics of money 2020, I guess.

Speaker B: Right, Absolutely.

Speaker A: Um, cool. So, yeah, so maybe to get into things, I mean, uh, we obviously know each other, uh, pretty well, but um, for people who don't m. Who are you? Um, and what does Raypay do?

Speaker B: Let me start with, uh, Ratepay, actually. So Ratepay is the leading buy now, pay later player in the Dach region when it comes to white label solutions. We have been around for 15 years, so, uh, even 16 now, I have to say. Part of Nexigroup, one of the leading pay techs in Europe. And what we actually do is we help our merchants to grow, to make their customers happy and we stay very much in the background being white label, offering seamless good buy now, pay later solution with a focus on paying 30 days.

Speaker A: Great, okay, we'll talk about that. I'm sure that brings its own challenges being a white label player. So that's uh, that's interesting. Now we'll dive into that.

Speaker B: And to my person, who am I? Um, I'm Sabrina, Sabrina Flankart. I'm 40 years, um, mother of two lovely kids. I have to say. Uh, it's also important for me to mention that if I'm talking about myself, um, I've been CEO of Rapid now since a year, have been with the company since six years and what really drives me is to scale companies in a very sustainable way. Sustainability and profitability is key from my perspective. Um, I've been sort of like in retail and finance for the last more than 20 years now nearly, um, really focusing on creating good experiences and sustainably grow businesses.

Speaker A: Did you have a VC background?

Speaker B: I have a private equity background. Um, bit of a difference I would say. Yeah, definitely both investing but with a bit different mindset I would say. But coming from investment banking, I started in M and a nearly nearly 20 years ago, then moved into private equity and eventually ended up on the, on the management side which uh, has been an exciting journey I have to say.

Speaker A: Yeah, because you started as CFO in Ray Pay, right. And now obviously you're the CEO.

Speaker B: Yes, correctly.

Speaker A: Um, how has that kind of um, investment banking PE background helped you to transition into a company such as a tech driven business such as RayPay?

Speaker B: I think from my perspective, very well, it doesn't sound like so in the first instance if you hear the different stages, but there is a lot of uh, common themes these three stations have in common. I think investment banking teaches you to jump on different projects very quickly, to get into complex matters, to do storytelling, thinking ahead, thinking strategically, but then also have a lot of attention to detail. And in private equity it's more about really driving business performance thinking for the next four years, developing plans, how you want to increase valuations and also fix problems because at the end of the day it's all about you need to have a product market fit. And if you then look into Fintech, it very nicely combines the aspect of sort of having a consumer focus because that's key, understanding how banks are working, building a story around it, building a product which at the end of the day is digital and maneuvering in a very complex world of regulation, regulation, finance, consumer overall economic behavior. So I think it's exactly at the sweet Spot also if we talk about retail, because that has been sort of, I would say one of my passion areas since early childhood. So I grew up in a family business which was kind of connected to retail. So I would say I have retail in my blood somehow.

Speaker A: Yeah.

Speaker B: But then connecting, that was the experience I gained in finance is a very, very good thing, I would say. And um, tech nowadays, it's something which should be on the top of all of our minds in our daily business. And clearly combining these two aspects has been key for me.

Speaker A: Absolutely. Yeah. Well, I mean I know Ray Pay is a quite a tech different driven business given the investments you do in terms of product and engineering. So I think you can definitely label yourself as a, as a tech business. Um, from. I mean, because you do see it happen every so often, I guess. First starting as cfo, then becoming CEO. What was that transition like? Was it. Did you always have the ambition to become CEO one day? Uh, I mean, when you were younger?

Speaker B: I would lie if I say no. Um, I think also that one, it's sort of like ingrained in my DNA. Like having grown up in a family business, I learned pretty much early on what it means to take responsibility and to take decision and also, um, yeah, building teams. So I think it's something that that sort of like started early on was how I grew up. And I sort of developed that passion for leadership during my career because investment banking, private equity works very different, to be honest. With small teams it's a different setup. But I realized early on that building relationship, building teams, um, and sort of growing myself in these roles was something that excited me a lot. And also building companies. That's also, at the end of the day, why I moved from investment banking to private equity. Because I wanted to have that longer term view, not only jumping from one project to the next and then also from private equity into moving into a management role. It was about really being entrepreneurial, building companies, being in there for the long term and building up a strategy. And obviously that is very close to a CEO role. Though I have to say being CFO of a FinTech has a lot of components of that already. So it was more of a natural transition from a CFO into a CEO. Even though there are different challenges, I have to admit that. But they are great. So I'm super, super happy where I am, what I do, and it feels pretty much, much right to me.

Speaker A: You talk about the entrepreneurial bit, I guess for you just said that, um, obviously you're owned by Nexi. Uh, I guess from an outsider's perspective. I can see that there's definitely entrepreneurial challenges, but I guess that you have a different challenge or a kind of different dynamic in the sense of there's also an owner that probably wants to see results. And of course you have your entrepreneurial spirit and it's great. You have to take ownership and accountability, but I'm sure they also want to do something.

Speaker B: But I have to say for me, one doesn't exclude the other. Right? Everyone, even if you're entrepreneurial, you need to act responsibly and you need to create value. And if we talk about value creation, it doesn't matter if you run your own business or if you're working for a larger shareholder. I think the good thing is we have a lot of freedom on the ground on what we decide and how we are run, just because we are, uh, a bit different from a business model perspective. So we have our own systems. We are end to end standalone as a company, but we obviously benefit from having a shareholder like Nexie, which provides a lot of stability, um, a lot of good know how whenever we need to tap into it. That's great. But otherwise I would say I more feel like being helped by an investor rather than a big corporate. And I think that is a super, super good sweet spot to have that experience that we can leverage to leverage on, on merchant contacts to really sort of provide solutions for our merchants by being part of such a big group. But we do it very selectively and of course have their own, own drive to make this business, uh, continuously successful and drive it forward.

Speaker A: You just spoke about, um, leadership. So picking up on that, how would you then, I mean, given indeed your background from a very early age, born in kind of retail in your blood, then growing into investment banking, pe. Um, how did that kind of influence your leadership style?

Speaker B: How did it impact my leadership style? I think overall what you see with the different stages is I love to go out of my own comfort zone. M Sometimes I don't know, until I get myself into that situation, that I move beyond my comfort zone. But it's something I like to push myself. That's also probably how I lead my teams. I like them to grow and to push themselves and not sort of stand still. So constant movement, never stand still is something. It's more than a concept for me. It's really sort of like pushing me. I wanted an executive MBA two years ago, which was super important for me because I really. I'm sort of fascinating about developing myself and growing my skills and that Also shapes my leadership style. I'm very much sort of like, trying to go beyond what seems to be possible, having that growth mindset. And, uh, people who work with me, they know a lot the question about don't ask if it gets done, but how we get it done. So trying to make the impossible possible and finding ways also in a very much quickly changing world is something that, um, also defines my leadership style.

Speaker A: Does it mean you kind of try to instill what you put on yourself in terms of pushing people as well, outside of comfort zone?

Speaker B: Yes, but in a good way. I think, um, in a good way in terms of making them realize how they can grow and also putting them in different spots in the company. I have some cases where people started in finance and now running the commercial function, so a very different mindset needed. But if you spot sort of like where the talent of people lies and sort of like get them to move into these new roles, even though sometimes they are themselves a bit reluctant, saying, do you think that's the right thing to do? I mean, sort of like giving them some comfort and also allowing them to make mistakes. I think that is something which, uh, it's a bit cliche, but people say in America it's more normal than in Europe that you're allowed to make mistakes. I think it's super crucial that we allow ourselves to make big decisions, to make mistakes, and to grow by the experience we gain. And giving that stage to the team, for me is super key. It's something I had to learn, though, I have to say. I have people saying, I used to be on the micromanagement side, but that's also something I worked on over the last years to get, uh, to get away from that one.

Speaker A: How did that change then? Was there a leader that didn't do that to you? Or how did you go from micromanagement to, indeed having more, I guess, accountability, Entrepreneurship.

Speaker B: I think if you work in certain financial industries, I would say also investment banking, you're pretty much micromanaged at the beginning. It's just the way the show is run, I would say. But, uh, it also showed me how it potentially should not be done and step away. As a cfo, you're a lot focused on numbers. You need to be very much into the details. But having that mindfulness and being aware of it helps a lot. So I set myself learning goals, really. Like I have that little reminder in my calendar, if I, if I might say so, and it says how, like, I want to develop on certain goals and reminds me every morning What I could do a little bit better the next day. And that's pretty helpful, that is.

Speaker A: So you have every morning kind of a reflection on the day before.

Speaker B: Yeah. And also my calendar, it says like, listen more, speak less. That's something I had in my calendar for years and I think by now I understood what it means. I try to be more on the sort of like asking the right questions instead of trying to give the answer. And it's not coming naturally, but over time it's sort of like ingrained in my daily habits.

Speaker A: Yeah, but I think that's what leadership is about, right? Continuously learning, as you said, get out of your comfort zone and at least being having that growth mindset, I guess, to, um, pick up on things. Maybe on double click on your, um, uh, comment about micromanagement. I think micromanagement especially is easy to step away from when things go really well. If things don't go well, then it's easy to fold that back to that because you want to be kind of that wartime CEO. You want to be the forefront in the trenches, but it also means you want to make sure that people are doing what they're asked to be done. Is that fair to say? Also in your case, kind of, was it difficult or is that difficult if it gets challenged?

Speaker B: What you just said? Okay, it's a very natural, logical sequence, what you described. I would turn it around and would say in particular, in difficult times, you need to make sure your team is properly operating because you need all hands on deck. And thinking that you are the one knowing best in the room is probably wrong. So having even more diversity in terms of opinion, having even more sort of challenges in the room in difficult situations for me is key to actually really look at different opportunities, where you want to go, what is a different perspective and to allow people to speak up. So we also, we have a very open communication culture at Rapay and the management team, how we bring things on the table and we are also very transparent on who takes which decision. That helped us immensely. So when we formed the new team, we were not so clear on that one and I think it hold us back. But now we are very clear who is taking which decision, who is having which accountability. And that helps immensely also in these times because you need to have these multiplicator effects in the company and you also need to gain speed. If you are slow nowadays, you're going to lose. So you need to have speed, you need to have accountability, sense of urgency, and focusing that on one person is not a good thing. To do. And for me, the proof of that we are actually quite good in spreading the responsibility is that I, uh, stepped away, uh, for, for a couple of months for, for maternity leave, getting my second child, and it worked perfectly well. We actually continued to really sort of launch good products, driving the company forward. And there was a best feeling that you can get that actually to see that in good as in bad times, it works. And I mean, there's a reason why there is a CEO. So I'm also happy to be back and to set the scene. But, uh, it's all about teamwork.

Speaker A: Were you anxious when you went into maternity leave? Because indeed, it's a great test for indeed seeing how your organization actually functions.

Speaker B: No, I was very comfortable with the team and I think what I left them with when I went on maternity leave was to say, take decisions, just take. Like taking decisions is better than taking no decision, even if you might have to revert some of that. Like trust your gut feel. Take decisions, Go ahead. Um, yeah, as I said, taking a bad decision is also better than taking no decision.

Speaker A: Yeah, so true. Yeah. I like the perspective. So you put things in place when things go well so that things don't go well. You already have the systems and the process in order to make sure that the operation runs.

Speaker B: And also trust. Right. People need to trust in themselves to take decision. And if you don't give them this learning experience to do mistakes potentially and do decisions themselves, they won't do it when they need to do. Because it's so easy to make decisions if everything goes right. But making decisions on the spot, in the moment, if something is not going right. Yeah, that's a hard call you have to make and you need to be comfortable with that.

Speaker A: True. Yeah. Yeah. Because, uh, I think ever since you started with Ray Pay, you've been through kind of the typical movements of any economy, I guess. Right. You had the up and let's look at Corona.

Speaker B: BNPL up.

Speaker A: Yeah, exactly. Yeah. And then probably end of 2022 is when things started to go down again. What would you say is the current kind of state of. Let's talk about bnpl specifically, um, in Germany, maybe wider Europe, if you have a view on that, like, um, with the economic pressures that are going on, do you feel BNPL is more under pressure, under scrutiny? Um, how do you view that?

Speaker B: So I think different sort of like angles we need to look at. I mean, obviously by now Pay later is heavily dependent on consumer spend, so it's a key driver of our revenue volume. It's It's a, it's a scaling business. Let's be very, very clear, by now Pay later is only succeeding if you drive it at scale because it requires a lot of capabilities. It's regulated. At least it should regulated. There, um, are some unregulated pay players around, but I'm a very, very big fan of By Now Pay later being regulated because you need to act responsibly. So consumer spending is, is one of the key factors and scale driving the industry. The second one clearly is, um, default rates. So if people are actually paying what they are buying, if they pay later.

Speaker A: Yeah.

Speaker B: And the third one is also which sort of Buy Now Pay later segment you're talking about? So there is the invoice classical pay by 30 days, which is a product RatePay is focusing on. But then you also have installment loans which is more going into consumer loan business. So I like to think about Buy Now Pay later as a convenient tool. The way Ratepay is doing it, um, we are not so much thinking about giving consumers credit. For me, the key proposition we are having was pay on invoice, which is a very dach German focused payment method. And by the way, it's used by every fourth consumer in Germany. So 25% of people online are paying by invoice. And why do they do it? For me, it's not because they need to have liquidity and they can't pay their pair of jeans. For me, it's more they want to have the goods, they want to look at it, they want to pay secure, they want to pay seamless. And potentially they also don't want to enter a lot of data like the Internet. For a lot of people still entering their credit card number, entering all their personal information, it's sort of holding them back in the checkout process. So I think Buy Now Pay later has a reason to exist, not only for financing purposes, but also for convenience purposes. But I have to say that people became more conscious about it, not only from a regulatory perspective. So there is a lot of regulatory noise around the consumer Buy Now Pay later directive, um, but also how people are using it. I think they become more aware and more conscious of how they use by Now Pay Later. So definitely from my perspective it's there to stay. Um, but it is impacted by the overall consumer climate of people spending a little bit more consciously on discretionary goods.

Speaker A: Uh, what was your view on or what is your view? Because I think still there's a lot of BNPL players out there, um, kind of around Covid when, um, there are a lot of startups getting a lot of funding. BNPL was one of kind of the hottest sectors I would say, in fintech, where a lot happened. What was your view at the time on that and what is your view on it now? Because like I said, I still feel there's a lot of BNPL players. Like do we need so many BNBL players? Do you think there's still consolidation? I think it's always something that's been speaking about in payments.

Speaker B: So yeah, let me tackle because it's basically two questions you asked. Like first of all, do we need so many buy now, pay later players? I, I don't think so, to be honest. I also don't think you need 10 payment methods. I think you need something that the consumer is willing to use, um, which is secure, as I'm saying, which has a meaning to exist and which is helping the merchant. So you need to solve a problem. Right. Just being the next buy now, pay later player without actually doing something different. M won't work. Which is also why I'm quite happy about the ratepay positioning. Because we don't try to attempt to be one of our very much known branded competitors. We can coexist because we are white label, so we are invoice payment, we are not having an app, we are not needing consumers to log in, share data so we have a very clear USP on where we act and how we actually help merchants to drive revenues because they have additional sort of conversion in the checkout process. But having the next branded one and the third and fourth branded one, I don't think you need it. You will go probably with one branded and one white label. I think that is a good thing to coexist but I think otherwise you will see probably consolidation. On the other hand, Europe is very fragmented, so talking about regulation, you have a lot of regional champions. It's still a very local driven business. If you look at the Edgewind and Switzerland or Ideal here, here in the Netherlands. So it's driven by consumer preferences in the end, but adding more and more payment methods, I don't think that this is the end game. It's more making it even more seamless. This is what I more believe in, making it more intuitive and more seamless to pay.

Speaker C: Yeah.

Speaker B: Rather than adding the fourth and the fifth wallet to the uh, to the checkout.

Speaker A: I totally agree.

Speaker B: Checkout process and talking about unregulated business, I think that's also another thing. Right. Buy now, pay later also pops up unregulated here and there, which is much easier to launch. But then the question is, how much of the value chain can you cover is an unregulated business? And how do you tap in, into the different players in the ecosystem? And launching a regulated business, it's not happening overnight. So I think it's also something which takes time and where you don't see that many players popping up on a daily basis.

Speaker A: But it's the unregulated, regulated ones who probably give BNPL bad replacement. Uh, I mean there's exceptions, I'd say the biggest, most known one to consumers, obviously Klarna, and they are regulated, but have still given BNPL a bad rep. Um, what I'm trying to get at is as an CEO of raypay, don't you get distracted by all these kind of companies popping up, regulated, unregulated, doing all these things?

Speaker B: We try not to. We try not to. I think that's also one of the sort of things you need to do to stay focused and to stay true to your values and true to what you do. I think if you look left and right all the time, you get distracted. And um, I also have to Admit, um, on LinkedIn you see a lot of noise. It's just incredibly. And I try to stay away for it, if it's for good or for worse, I don't know. But I try to stay away from the distractions. Of course you need to be aware of what's happening in the market, what trends are happening. I talk a lot to our merchants because I'm interested in what actually they need, what they are looking for, how we can solve their problems. But I try not to get distracted by other players in the market. And I try also not to get distracted by the bad noise around buy now, pay later, because we have a very, very specific segment we as Rapay are focusing on which is not, as I said, long running loan product. So I try to stay away from whatever noise that's happening on that side.

Speaker A: And I think the white label, specifically. You and I had an interesting discussion, um, a couple of weeks ago, uh, on the back of the report where I said I feel that a white label is more back end focused and they are front end focused. You kindly disagree.

Speaker B: I disagree. Kindly indeed.

Speaker A: Do you want to talk a bit more that maybe? Because I thought that was interesting talk.

Speaker B: I'm, I'm happy to do that. And I think we are in a very, very specific spot. Right. Because we are not only building for the consumers, we build for consumers and merchants and we need to see both groups of customers, the user of the product and the one actually having it in the checkout. But then again we are white label, so we are not branded. But we still have to think about the consumer because if the consumer doesn't want to pay by invoice, it's not helped by. It's a consumer at the end of the day who decides to use a product or to not use a product. So we need to be focused on the front end and we are building features on the front end, but in a white label look and feel. So the merchant has sort of like the stage to put their logo, to put their way, to communicate, to put their branding. But at the end of the day it needs to be super smooth, even more smooth than if you are not white label. Because you have the responsibility to position, position the merchant in the right way, in the right spot, very secure, very seamless. Um, and you have a responsibility towards merchant to do that well with the logo of the merchant. So for me, coming from a consumer perspective also to sort of like drive that passion. Because for me you only build great products if you are passionate about it, just to do it because it's cool, because you need to have a good platform that, that doesn't drive passion, not for your employees and not for the user. So you need to be passionate about a digital product, which is not easy. But if you put yourself in the shoes of the consumer and say, do I want to use that product? Do I myself think that this is a good product? Then you start driving passion all along the value chain. And that's important for me.

Speaker A: I mean, I love the PayPal invoice. I use it regularly, uh, um, myself when I go and buy clothes online. Um, but I don't see much difference between when I buy on one website versus the other. Is that fair to say, like is there? If you, if you look at your merchants, do they all have different requests in terms of what they want, different demands, what they want from the, from the product or how it looks towards the consumer?

Speaker B: Pretty much customized. I think we have of course a, uh, sort of like I would say a toolkit.

Speaker A: Yeah.

Speaker B: And every vertical, like say fashion requires different features than for example a home and living merchants. So we can sort of be flexible in terms of toolkits. So we're not focusing on one fits all approach, but we have a platform which allows us to be flexible in terms of what the merchant needs. And you as a consumer, you probably don't even feel it that much, but it Needs to fit the merchant profile. So for example, some merchants don't like to have consumers paying 30 days. They prefer 14 days because then you, you sort of reduce a period that customers returns are goods.

Speaker A: Yeah.

Speaker B: So you might not want to have 30 day return period. You want to have potentially 14 days. And this is something some merchants like to be paid out super quickly so we can pay out merchants the next day after the transaction. Even though the consumer pays in 30 days. Some merchants say it's super important for me to optimize my networking capital. Others are saying I don't care, I rather have a better price point and get my money in 30 days. So it's really about sort of like around that toolkit I would say.

Speaker A: Is there are any specific kind of product decisions you made that you see as particular wins for the ratepay product in general? Is it indeed that lever you pull to change payment terms or is there other things that stand out from you when it comes to product development?

Speaker B: I think you need to differentiate Again, again we are looking at two different groups. You have some merchants and I think on the merchant side, what is important for the merchant, it's to deliver uh, super reliable secure service. So as a merchant you never want to have downtime because that means it costing you revenues and true profits. So building a platform which is super secure and stable and we did a lot in that regard over the last years. It's important for me, quicker payout is the other thing. Competitive pricing is the third one. Because if you look at the economic environment, everyone is driven by generating profit and sort of trying ways to become more profitable. And payment costs is a key factor in that game. So we need to be competitive with our price points. So I wouldn't call it a product feature. But being competitive in terms of pricing required us to think about different things differently I would say. So how we do risk scoring, how we actually get our default rates down, how we run our financing. So all of these components was the ultimate goal to structure a secure and price competitive product for our merchant base. I think that has been quite key. And also looking in in different products like direct debit, paper, invoice. We'll launch another product soon. I don't want to sell more or tell more about that as a at the current stage. But we are obviously thinking about how we can expand and sort of give our merchants even better tools on how they can generate revenues. So that is, that's one part, but then also thinking about the consumer, we need to be easier to use. So we have launched a buyer or about to launch a new buyer portal now, which gives customers a better sort of access to see how much balance they still owe if the return has actually arrived at the merchant side. So it's also making it better for the, for the consumer and provide more transparency.

Speaker A: Yeah, exactly, yeah. Because I think one of the main arguments for offering bnpl, I guess conversions.

Speaker B: Absolutely. So that's our key argument, which we can also prove with numbers that as a merchant if you don't have the right payment method in your checkout, you have a 43% higher chance of people dropping out in the checkout and actually not completing the purchase. So it's important to have that and to intuitively.

Speaker A: Yeah, exactly. Yeah. It's interesting because you guys um, are predominantly, if not only focused on the duck market.

Speaker B: Yes.

Speaker A: Is there no use case for other European countries as well for rate pay or am I trying to.

Speaker B: Well, you see me smiling. Let's see, let's see. See there is a use case obviously because by now pay later is big in other markets as well. But if you talk about payment by invoice, you need to see that in Germany that payment method has been around for 50 years. Very long before the Internet and online purchases existed, people paid by invoice offline.

Speaker A: Yeah.

Speaker B: Also consumers. So it's very much ingrained into the German culture. Also in Austria, I would say in other markets it's a bit different because they come from the more longer loaned longer payment term products with pay in three, pay in 12. And so you need to adapt the product slightly to, to, to access other markets. But and also risk scoring is a big topic. Right. People are first of all having different payment behavior in different markets and also you have different sources and how you actually secure a good scoring in the background. So. But to answer your question, yes, there are opportunities and we will be looking into it.

Speaker A: Nice watch. The space is risk scoring the most complex part of it all. And he's deciding whether or not you can actually offer the BNPL method or something.

Speaker B: I think it's the most important part to set you apart on um, the one hand side, on the other side it's a basic that you need to fulfill. So I would say if people are asking me what we really need to be good at, I would say it's risk scoring because ultimately it drives our profitability. So how good are we and getting it right that the customer is really paying later then? And on the other hand it drives the conversion on the merchant end because you also don't Want to end up declining every second consumer in the checkout because you believe that consumer might not pay. This is not getting you anywhere. So you need to be very, very much on the point of getting the sweet spot of accepting as many as possible on the consumer side to make the merchant happy. But on the other hand, you need to sort of like keep your default rates under control. So getting the risk scoring right. It's super crucial.

Speaker A: Yeah. Because if things don't go well, that's when you obviously.

Speaker B: And you can't only tap into external sources. I mean, that is something everyone could do. But we clearly benefit from the fact that we have machine learning models which have been trained over the last years. I, uh, wouldn't say 15 years, because back then we did it differently. But, uh, over the last years. And you learn by doing. And that's also why I strongly believe that Buy now, pay later is a business that only works if you drive it by scale.

Speaker A: Yeah, exactly. Yeah. Is there a market in Europe that you keep an eye out with regards to where you see probably the biggest use case outside of the Dach region? Like, if I look at the Netherlands when I grew up, we also had. And I think that's where it came from as well. In Germany, um, you had Wacom. So you could order stuff from a catalog and then you can send an invoice to, uh, Wacom and they would deliver it to you. And so I feel that the Netherlands could be probably interesting.

Speaker B: And we are in the Netherlands, even though we are not proactively pushing it, but we are in the Netherlands. And you are fully right. It's something which comes most natural to sort of look left and right of where we are geographically? I think that that's probably the natural way.

Speaker A: How do you feel BNPL is intertwined to the broader payments in the sense of like, if you want to be good at pnpl, you need to keep an eye out. What else is going on in the payment space? Or do you see it as two different things? Let's look at card payment methods, for example, versus, uh, bnpl. Do you feel they're intertwined in some way?

Speaker B: You can't look at it in isolation. Right. Because at the end of the day, again, we need to come from, we need to solve a problem first of all, which is having a good, seamless way to pay. And if other payment methods are making progress, we also need to look at that one. Right. And to say, how can we differentiate? How can we basically drive usage and, and be even better and fulfill that Needs that some consumers have and you have different generations and, and, and they have different preference. I mean we need to look what is happening on the wallet side and also wallets which are offering within the wallet by now Pay later functions then. So it's super important to keep up to date and to see what's happening. But at the same time don't get distracted by it and focus on what you do. But expanding to the sides, I think that is also important to expand and to find these, I would say pockets of growth as you call it, because the market has become incredibly crowded by other by now Pay later players, also by other payment methods which are coming in. So you need to find a way to still grow and to expand. You cannot only stick to what you have. I think that won't make you successful in the long run. So you need to evolve but without sort of getting too much distracted.

Speaker A: If you. Is there something you're particularly excited about within the payment space? Like Obviously being here, Money 20 20, is there something that you try to get as much knowledge on as possible? I think there's a lot of talk about stablecoins AI in payments, agentic shopping.

Speaker B: Exactly. And let's put excited into perspective. Right. I think I said this morning. So my cpo, I'm not seeing so many new things here. I'm uh, not saying that in a bad way. Right. But you, you're having these topics which have been flowing around since months, since years, like stablecoins, crypto, digital euro account to account. It's, it's not super new for people who are working in payment. Let's also be sure we're in a bubble. We're in a total payment bubble at Money20 20 and in Amsterdam right now as you, as you said in the beginning. And we also seek to think about what actually ends up with a consumer on the street. So it, it, it takes time to adapt, it takes time to actually build products out of that. And I am excited about how much interest there uh, is in the payment industry. I think that's very, very good because it is and needs to be an ingrained part of the shopping experience. So it's great that payment are so much in the focus. But I'm curious to see what really will gain traction out there in the next couple of years.

Speaker A: Yeah, exactly. You say there's more and more, uh, attention towards payments. I feel that every year we take a step, but there's still also a lot of merchants. Let's say we still underestimate payments. I don't Know what that's like in discussions that you have. But do you feel that within Germany specifically and the merchants that you serve, like is it a mixed bag people, Some people understand it really well and have maybe dedicated payment teams, some have no idea at all. And you really try and educate them.

Speaker B: I think you're capturing it right. But I would also say they're very good means by now to um, for merchants to get smarter on the topics and they ask more questions. And that for me is a good sign. Right. People uh, asking more questions, um, wanting to know what trends are ongoing, what we are seeing in the market. So I think that sort of like hunger for more information about that topic. It's a good development. And for me that's also something which drives us as ratepay. We try to be a consultant to our merchants. We don't try to necessarily just sell a product but we try to sell a solution. And that is where you need to be in nowadays I think just selling a standalone product with get you very far. Today merchants are looking for easy solutions, um, for competent partners. And that what counts for us, long lasting relationships. And we are in contact with a lot of people and merchants and partners which nowadays are not partners of ours but we like to keep in contact. We just like to keep the dialogue, building up trust and building up that long lasting relationship which we are really believing in.

Speaker A: Yeah, I mean their success is your success in the end. Right. So you want to make sure that they're successful because that helps you um, ultimately. Yeah. To maybe do talk about one thing in BMPL and specifically because um, one of your uh, I wouldn't say direct competitors in the sense of white label but definitely within the BNPL space. Obviously Klarna doubled down quite a bit on AI. They now came back from that.

Speaker C: Exactly.

Speaker A: Um, um. How is AI going to impact your organization?

Speaker B: You think it is already impacting it. And to be very honest I think um, I heard the other day someone saying AI is not a differentiator, it's a baseline today. And I fully agree with that. AI is a baseline. You need to think about AI not only because there is the AI act out there coming into effect very soon. It's in everyone's mind but also there don't get distracted and follow the hive. We do AI, of course we use it when we sort of look at coding, um, how we will code going forward. So I think that will have an impact even more so in the future how we will ingrain AI into our whole coding structure and. But Otherwise we are working with machine learning models as a sort of core function of our business since a long time. So it's not new to us. We are using AI, very limited in customer service. Um, we are rolling it out but very, very consciously in terms of looking. What is the effect to the customer? Which use cases do we have? Because we do want to create a good experience at the end of the day. And I think we should not only use AI as a second Google, as some people like to see it, it's more how you ingrain it in your working process, how you recreate processes to really make use of it. And we do it, but we do it very step by step, consciously and not everywhere just because it's AI, uh, there need to be a good use case. And as I'm saying, we're using as a customer service. But for cases where customers have easy questions and want to have a quick answer, and when you do that you see NPS increasing because customers appreciate that they get an immediate answer. But for the more complex cases, I'm still a big believer of people want to have an individual, a uh, personal person sitting there and sort of like giving you an answer and taking care of your problem. Because if you call customer service, you have a problem, otherwise you wouldn't call. And talking to a machine and no matter if it's voice or chat, it can be frustrating. So we want to deliver good service and if good service means using AI, we will use AI. But if good service means having a person sitting there having a personal contact, we will continue to use the personal content.

Speaker A: I mean it's a fascinating technology. So uh, I think there's definitely a place for it. It's just how people use it. Yeah. All right, so to close things off, a couple rapid fire questions. Um, the CEO point of view, one thing you wished more people in Fintech understood complexity.

Speaker B: Building for scale and understanding. That's an ecosystem. Because very often people go in Fintech because they believe it's fancy. First of all, it needs to be profitable. That's why I say you need to build for scale. Just being in tech and in the long run doesn't help you if you don't find a profitable business model. So you need to understand how you can scale and build complex tech structures so that they scale. And on the other hand you also need to understand the ecosystem because fintech, at the end of the day it's very often, at least if you think about buy now, pay later, financing partners, merchants, consumers, and to harmonize that and to Be a good partner with good capabilities for all three players. And the regulator obviously also has a role in that. Um, it's super relevant.

Speaker A: The hardest decision you made as CEO.

Speaker B: Wow. Um, a lot of hard decisions every day. But, um, saying no, saying no to some opportunities to get us focused. And um, there have been opportunities where I said yes, where I should not have said yes, and that backfired. But, uh, yeah, being selective and being confident about your way, not getting distracted and saying no to some partners as well who wanted to launch with us, where we said no, it's not setting us up to where we go. It's too customized. It's not what we believe in. And to say no to that, what

Speaker A: you read, listen to, or watch for inspiration.

Speaker B: Well, um, I said before, I'm, uh, very selectively on LinkedIn, so I'm trying to stay away from the social media where some people get inspiration from. For me, it's much more important to talk to our merchants. And I'm not just saying that because it makes a nice tagline. It's really the fact I get inspiration if I talk to our partners because it reminds me of why we do what we do and also where we need to stretch, where we are not yet at a stage where we should be. And that inspires me to say and to see which opportunities are, uh, beyond what we already do to be a good partner. And that is something which drives me

Speaker A: and it sounds your morning kind of ritual of having the reflection of reflect

Speaker B: on myself and sort of like takes that time to sort of like also helicopter out, look at the business and also look at where we want to stand in two or three years time. So that's uh, something awesome.

Speaker A: With that. We'll close off. Thanks, Sabrina for being here. Thanks for being coming to the Money Bot. Um, yeah. Wishing you a great rest of the show everybody. 2020. Enjoy Amsterdam. Thank you so much and thanks for your contribution today.

Speaker B: Thanks for the great conversation.

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