Flexigroup Ltd [ASX:FXL] will soon be no more…
Instead, this fintech small-cap is rebranding itself as ‘humm’ [ASX:HUM], taking on a hip new name to fit its hip new agenda.
Fortunately, it’s not a name that customers or shareholders will be unfamiliar with. Humm was (and still is) Flexigroup’s leading product brand. A ‘buy now, pay later’ (BNPL) product that is closer to a loan than a deferred payment.
With a limit up to $30,000, this is certainly not just some Afterpay knockoff. Providing a unique BNPL offering that can be used for much larger and infrequent purchases.
Granted, it can also be used for small payments too. They’re not going to pass up on the opportunity to get in on the BNPL frenzy. After all, it would be silly not to.
And more importantly, they’re going after the far larger US market. Teaming up local neobank Douugh Ltd [ASX:DOU] to make it happen.
Let’s delve into the details…
Humm and Douugh Going Stateside
Together humm and Douugh have embarked on a joint venture. Aiming to develop and market a new BNPL service within Douugh’s platform.
Users will be eligible to withdraw up to $1,000 from a virtual ‘Credit Jar’ to meet their needs. Utilising the service to meet any ‘urgent expenses’ whilst paying back the money over six weekly instalments.
In this regard, it’s very similar to a payday loan — albeit without the predatory interest gouging. And they’re clearly not shying away from the fact that this is a ‘credit’ product. As Douugh CEO Andy Taylor notes:
‘Credit Jar is very different to traditional point-of-sale BNPL offerings and represents a step change in the model, because we are treating it as a credit product, which is what we strongly believe it should be,
‘Our solution will actually help boost a customer’s credit score when repaid on time, and will only be made available to people who can easily service it as part of their everyday budget via our responsible lending criteria.’
Clearly Taylor is calling out Afterpay and their ilk here. Calling into question the ongoing debate around whether BNPL should be considered credit or not.
For humm and Douugh though, that won’t be an issue. Perhaps hoping to get ahead of the competition in anticipation of potential changes to BNPL classifications.
We will have to wait and see.
Either way, it’s clear that this joint venture is aiming to take advantage of a ripe market. As well as exploring new areas and avenues for growth.
Rebecca James, humm’s CEO had this to say on the matter:
‘Today marks another big milestone for the business as we rebrand to our most recognised and loved brand, humm. The rationale for the rebrand is clear. From a standing start 18 months ago, hummm has become synonymous with easy, digital, interest free finance with over 2.2 million customers across Australia, New Zealand and Ireland.
‘Our mission is to revolutionise the way people buy. With a single platform serving everybody from Generation Z and millennial spends through to young families and SMEs, humm finances everything from life’s little luxuries through to significant purchases.’
That’s a bold goal, but one that this fintech pair will now try to seize.
And for investors, the market response is precisely what you’d like to see. With humm shares trading 2.92% higher at time of writing, while Douugh has soared 15.09%!
What’s next for the Humm and Douugh share price?
The challenge for these two small-caps is to now deliver on their objective. Following in the footsteps of not only Afterpay, but a range of other fintech success stories.
For this reason, it may not be easy, having to go head-to-head with many established brands already.
However, if they can differentiate their offering and provide genuine value, they definitely have a shot. After all, the BNPL sector hasn’t slowed down at all amidst this pandemic. And in the US, the boom may only just be getting started.
That’s why, as an investor, it is still worth paying attention to the fintech space. Because while we’ve already seen some incredible gains, there may still be more on the table.
If you want to learn more about this sector — and three of our favourite small-cap fintechs — check out our newest report, right here.
For Money Morning