Humm Group Ltd (HUM) CEO, Rebecca James

Humm Group Ltd (HUM) CEO, Rebecca James speaks with Tom Piotrowski about the company's half year results, initiatives aimed at simplifying the BNPL business, as well as plans to expand into the Canadian and UK markets.

14 Apr 2021


Humm Group Ltd (HUM) CEO, Rebecca James

[MUSIC PLAYING] TOM PIOTROWSKI: Thanks for joining us for the Executive Series, and I'm Speaking with Rebecca James who is the CEO of Humm. Nice to speak to you again, Rebecca.

REBECCA JAMES: Yeah, great to meet with you too Tom.

TOM PIOTROWSKI: Now I'm just interested in your thoughts around the story of Humm. Because essentially you have reorganised and redefined the business over the course of the last couple of years. Where are you in that regeneration story?

REBECCA JAMES: Yeah, well I think it's been about nine months since we last had a chat. And we've made significant progress in that amount of time. We've rebranded the organisation to Humm. We've launched a new product, Humm Buy Now Pay Later for small business called Humm Pro.

We've added half a million customers to our platform. And we had a really strong half year profit of $43 and 1/2 million, which is up 26% in the last year. So we've really come a long way.

TOM PIOTROWSKI: In terms of the story, compared to Flexigroup, one of the points that you make is the extraordinary simplification in terms of your service offering. Just draw a line under that compared to where you were five years ago.

REBECCA JAMES: Yeah, you know, five years ago, Flexigroup had about 23 different products and very much you know in the White label space, so no strong consumer-facing brands. And we have simplified the business quite drastically, but it's important to remember that we're not a monoline business.

And so through that simplification from 23 products down to 4, we still are very much focused on our three areas, Buy Now Pay Later in which we have a very strong differentiated product, revolving credit, and SME lending.

In the Buy Now Pay Later product space, we believe that we've got one of the most flexible products in the world. We're the only provider to go up to $30,000. We cover both consumer finance as well as now business finance. We can finance little purchases, large purchases. And we give the greatest breadth and choice for customers in repayment terms whether that be five months or 60 months. And that enables us to play in areas where our competitors can't.

Our big focus verticals are anything to do with the home and home improvement. Health, we had 34% growth in health and automotive. And it's that differentiated product proposition that we're taking into the UK and Canada.

The other key point of differentiation for us in this diversified model is not only does it triple the size of our market opportunity from growth, but we're profitable. And I think it's important for people to know that we have the ability to self fund the growth and the expansion into these markets. We don't need to keep picking up the market for equity. And so we're working off a very strong base from that perspective.

TOM PIOTROWSKI: You mentioned the UK and Canada as potential growth vectors offshore, because that's such a dominant theme in general. What was behind the choice of those two geographies in particular?

REBECCA JAMES: With the United Kingdom, really great opportunity. We're seeing a mega trend, which is really a shift towards fixed term instalments as a form of payment. And that's really what consumers are gravitating towards. And yes, Australia has led the charge, but we are absolutely seeing that this is now a trend that is happening right across the globe.

The United Kingdom is just makes complete sense for us. We've got a really strong business in Ireland. We're leveraging that base from an operations perspective into the UK. And the strong retailer base actually that we have in Ireland means that when we launch in the UK, which will be shortly, we're starting with a business that's got quite considerable scale in the United Kingdom. So we'll be launching with about 400 or 500 merchants from the get go.

TOM PIOTROWSKI: In terms of the technology, that gives you a lot of insight into customer behaviour and how you can structure products, how you can make the most profitable outcomes for your organisation. How is that change for Humm compared to where you were a couple of years ago?

Look I think we're very proud of the investment in the technology and the payback that we've been able to get from that. So firstly, from a customer experience perspective, what people may not know is that we now have a leading customer experience in the Buy Now Pay Later space, which is fantastic. A lot of hard work went into that.

Yes, through use of data now in the investment that we've made in technology, our arrears and losses within that product are at absolute record lows. And they continue to get better month in, month out.

And the third thing, which is what you have picked up on is, yes, the data play. The amounts of data mean that we can provide maximum flexibility and benefit to consumers and value to consumers, but we can also apply that benefit to retailers as well. And that's in a number of ways, whether that's us sending them customers that we know are going to appreciate the services that they offer based on what we know about that customer or whether that's through offering greater affordability. Giving that customer a greater time frame to pay it off. And also approval rates, which for retailers mean that there's less card abandonment.

Now what's interesting is the way that, particularly in Australia, given that the unemployment rate held up reasonably well, the consumer and their spending habits have been extraordinarily resilient. What are the observations that you can make from your line of sight into your, as you'd say, your data pool about the way the consumer and the household sector's holding together more broadly.

I think, again, I feel there's been a switch to this fixed term instalments as has been key. I think customers like the certainty of that type of product. Because even though you're absolutely right, the economy is held up exceptionally well. I still feel there's a tinge of uncertainty kind of in pockets and fixed term instalment products give customers that level of certainty.

We're definitely seeing people want to spend money and invest in their home. And I think we've gone through the early surges which were setting up home office and those types of things. But I think if you're not going to be taking that overseas holiday this year, you're getting a new couch. You're putting in an outdoor barbecue you're doing those types of things. And we've definitely been the beneficiary of that.

TOM PIOTROWSKI: Now in terms of the use of capital, you're in a growth phase at the moment in terms of your overseas ambitions. How does that compete with the outlook for returning capital to investors in the form of dividends, for example. How are you prioritising that over the course of the immediate term.

REBECCA JAMES: Look, we've taken-- through the pandemic-- we've taken a prudent approach to Capital Management both in terms of understanding with the removal of job keeper, is that going to have any impact on the unemployment rate? So we've been prudent with that, and also knowing that we were wanting to invest in these overseas expansion.

I think at the full year, we'll reflect. We'll have enough data with regards to unemployment rates, projections of losses, and the board will come to a decision with regards to the dividend policy moving forward at that point.

TOM PIOTROWSKI: Rebecca, it's always a pleasure to talk to you. Thanks very much for your time.


TOM PIOTROWSKI: And Thanks for joining us for the Execute Series.

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