Podcast: Managing payments pressure

Whitney McDonald 0:03
Hello and welcome to The Buzz a bank automation news podcast. My name is Whitney McDonald and I’m the editor of bank automation News. Today is November 2 2023. Joining me is Chief Executive of FinTech Sunit Arad Levertov. He is here to discuss payments disruptors, leveraging AI and Gen AI today and the future of the payments landscape. he co founded Sunday in 2016, and has been in FinTech since 2009. Thanks for joining us.

Arad Levertov 0:30
Thank you for having me. Happy to be here. I’m Arad Levertov. I’m the co founder and CEO of Sunbit. Sunbit is a financial technology for Real Life. We are based in Los Angeles, and we have about 500 employees across the nation. Many people are familiar with the pay overtime functionality, or the Buy Now pay later. And usually the this happens in the online sun beat we have two main products. The first product is a pair of real time functionality that is used for where people needed the most. So when you go to fix your car, or when you go to the dentist or to to get an eyeglass, we help the customer to get the service they need and pay overtime. We are right now operate in about 7500 locations of car repair services, which is about 40% of the market of authorized car dealerships. So if you go to fix a car in the authorized car dealership, there is four out of 10 chances that you will see us. In addition, we are in dental, as I mentioned that eyeglasses places overall over 20,000 locations, and we are adding five to 700 a month. Our second product is the sun beat card. And the Sunday card is a product that we announced in 2022. And basically brings the best of credit, debit and buy now pay later into the hands of each customers. And the customer can use it in with a physical card, or with a virtual card. In over there, we’ve processed over 300 million transaction and customer uses 60% of the time in everyday purchases like gas, food, and groceries. And basically we allow the customer to choose each transaction, how they want to pay where it’s like a debit, which means paying full credit, paid only the minimum or split into 236 or 12 months like buy now pay later. Our products are focused on the customers, we are inclusive, which means we have to have more customers, and we never charge any fees.

Whitney McDonald 2:43
Great. Well, thank you again for joining us and for talking us through some bit. I’d love to get started with just setting the scene for today’s payments industry. What are you seeing today kind of where to where do we stand within payments today?

Arad Levertov 2:58
That’s a good question. Because when you think about where we are today, you you cannot ignore the macro economics condition. Right. So you know, the Fed increased rates starting last year. And the current interest rate is super, super high, which impacts the entire economy, but mostly the payments and the FinTech companies. So today, when the interest is I customers are struggling more to make payments and customer struggling more to make purchases. And that actually it’s an opportunity and also I call it a stress test for every company, especially companies that are in the payment spreads, which also got impacted by the by the increase in interest rate. And when it when I look at this stress test, each company needs to ask itself like three basic questions. One, do I really add value to consumer? Two? Can I make profit out of it? And three? Can I do it? With the same core values and promises? I promised the consumers the employee like you know, three, four years ago when things were easier. So what does it mean? It means that especially in the payment space, when interest is high in customer struggling, our customers still willing to take my product and pay money for it? In our case, it’s like you know, the customers and the merchant Do they really value needs? Second, can I do it while I my cost is lower than the revenue which is super important these days? And three Can I do it with the same core values and promises? As I promised to my employees, we promise to customers we promise to invest up to three years ago when the market was different. So I think that the payment space today is in in a stress test and in the good news that eventually it will differentiate the I call it the real value companies from the free riders companies that were riding on the payment Space. Two, three years ago when interest was low, and everybody was, you know, money was easy.

Whitney McDonald 5:06
Now you talk through the stress that’s in the macroeconomic environment today, maybe you could talk us through where technology comes in to address these pain points within payments.

Arad Levertov 5:20
So this is exactly where technology technology, but only if it’s kind of in the fundamental of the business is coming into play. Because at the end of the day, in order to both serve customers, and make profit, when you’re you know, basic costs increasing, you need to think about scale, and scale comes with technology. So, when you are able to operate with, you know, with more technology, better underwriting, smarter decisions, better go to market or you know, something that is pretty famous right now, what we call the CAC, to LTV, the customer acquisition costs, and the lifetime value of the to get from the from the from the customer, the CAC to LTV ratio. This is where technology comes into play. So you can actually operate in scale without the additional cost of you know, manual costs or travel costs or stuff like this. And this is happens in the entire world. In many, many industries. I mean, right now we’re sitting in a recording of podcasts, which was never like 2030 years ago, there was no podcast, people actually listen only to what comes to the news. Now people listen to us because they want to focus on something personalized. In the payment space. Specifically, it’s a little bit delayed because of regulations because of other stuff. But now when you get to the technology around regulation, this is where you will be able to win for the long term.

Whitney McDonald 6:56
Now, when it comes to payments, companies like Sunday, it’s not a traditional means means for payments, how do companies like sun bet, disrupt the financial services industry, if you could kind of talk us through that that would be great. Course.

Arad Levertov 7:18
So there are many people talking about FinTech over the last literally 10 years, which is great. However, still, the biggest, biggest player in the markets are the credit cards, right. And consumer credit, people use credit cards, everybody has credit card in their hand, and credit card are easy to use many people you know it is to pay, but it’s horrible experience to apply. approval rate is really low there, you know, sometimes only 50%, actually of the people get approved, people get declined. By the way, I personally got declined for credit card after moving to the US when applying at point of sale at one of the retail places. And the most important there are many, many unnecessary and hidden fees. And when you think about this, in general financial market, they focus on making a lot of money, and they less focus on the consumer. fun bit. Try to innovate for good and put the customer in the center. So for example, one of our our main mission was from day one, eliminate financial waste and pass the value to the consumers. And one of our values innovate for good. So what does it mean? We try to be better to be more personalized for the customer. So your rate should be different in my rate, right? And end it up. But both rates should be transparent. No hidden fees, no fees at all. Actually, exactly. You know how much you’re gonna pay. We want to be more inclusive than the competition because we use more under more sophisticated data, more machine learning, and we use it across the across the business to get more customer into the door. And if we do it well and these customer pay back, we can get lower rates for everybody. So use technology across the entire spectrum. How do we get to the merchant? As I said, we are adding five to 700 new merchants amongst we choose them to make sure that we do it with the right operating costs. So we add them right the sales calls, of course, how do we handle customers? How do we treat customers? And how do we run the operation in general, we use technology. However, I would say that this is not enough. Technology is amazing in the most sophisticated under artificial intelligence, and machine learning is being used across the nation across the business. However, in addition, one we put the customer in the center, which is super important, we remember that it’s all for the customer and to we never get blinded by the numbers. You know at some beat we sell have millions of customers and posts of billions of dollars of loans. But we remember that behind these numbers, there are people that at the end of the day, wanted to fix the car and go back to work, wanted to get the root canal. And you know, and get out with the pain and go back to the life. And when I’m able to, to help these customers, split the purchase, over three months over sometimes 12 months without paying any interest and still make money because they make from the merchant, I see that I’m doing the right thing. And using technology to help people, that’s the basic of what we do we never forget about it.

Whitney McDonald 10:42
Now I know they said it’s not the most important part. But technology is is a key player here for some but can we talk through the application of data and machine learning and AI to accomplish all of this?

Arad Levertov 10:56
Of course, yes, technology is the basically enabler that helps us actually get what we do, right. So when you think about some between when we think about machine learning, you know, all the big world machine learning AI data science, we from day one, and we started in in 2016, decided to put it really across their operations. So because we work with mostly physical locations, we have retail operations, which means we need to get to the stores, we need to sell to them, we need to implement our solution into their systems into their API’s into the system. And we all need to do it in a smart way because it costs money. So we build technology and data that basics, give us feedback on how does the how the how much time it takes to get the store how much data you’d like these stories better than the other stories, these vertical versus that better than the other vertical. And we get this data and get better and better and better. And then we need the stars to keep using us and working with us and working with the customer. So again, here, use underwriting use technology to get the feedback about these customers and how they do versus the store to get better and better and continue when you serve the customer, you want the end user customer to have seamless experience when they take the loan when they pay for the loan. And if they want to, you know to change some time and they have some challenges not paying the loan, give them the best experience. And we use technology look at the entire system, from A to Z with technology with underwriting with AI, and then go back with the focus on the customer.

Whitney McDonald 12:41
Now, of course, you’re in the business of innovation in payments, wondering if you could give us kind of a look ahead as to where the payments market is heading in the next year as we look into 2024.

Arad Levertov 12:56
So I think that the first thing I will try to look is look even farther, like even, you know, 20 to 2030. Because, again, I mentioned that you and I are doing right now podcast, which 20 years ago was nowhere, right. I mean, when I was a kid, we used to read newspaper like literally newspaper. When you think about the payment and you know, financial financial industry, it’s still closer to the newspaper and to the podcast that we are doing right now, which means it stuck many years ago, because customer gets the same, the same many customer get the same, the same products, and it’s all personnel is not focused on the customer. So I think that you know, 10 years from now or whatever, in the long term, it will have to change because customers deserve more, they deserve better product more personalized, and actually cheaper, right? So the companies that will be able to do it are the companies as we mentioned that, you know, focus on technology, put the customer in the in the center, and of course, make profit because if not, you’re not going to survive. So this is the long term, the next year is still going to be challenging, because the interest is high. And this is the new reality whether it’s ends or stuck, you know, easing in end of 2024 and 2025. I don’t know I treat right now this the current situation is the new normal. So it will actually, as I mentioned, be a stress test for all the companies in the space to see if you can get through this and keep growing and you know, doing it while while building profitable, profitable business. You will definitely be the winning for the long term. And you will do it if you focus on technology customers and in Detroit and this is what we try to do they have today.

Whitney McDonald 14:51
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