International Personal Finance plc (IPF) Earnings Call Transcript & Summary

Hello, and welcome. My name is Gerard Ryan, and I'm the CEO of IPF. And today, we're broadcasting the fourth in our insight webcast series on our business and how we do business and who we do business for. Now if you haven't already seen it up on our website, the first 3 are there. So we did one webcast on Poland, we did one on Mexico, and we did one on our digital business. And today, I'm delighted to be here in Leeds talking to our Chief Marketing Officer, Tom Allder, and we're going to talk about everything customer. So we're going to talk about customer needs, the products we deliver to customers, how we deliver to customers and how we satisfy them. So over the next 35 or 40 minutes or so we're going to discuss all of those things. Now while we're doing that, and you're watching this webcast, you have the opportunity to type in any questions you might have. And then at the end, Rachel is going to come up and join us and hit us with all of those questions. Equally, you'll have an impromptu chance at the end to question us as well. So Tom, the first thing we've done on each of the previous webcast, it's a little introduction. So why don't you tell people about the man?

Thanks, Gerard. First of all, very excited to be here today to talk about these important subjects. I started working in financial services when I was 17-years old. I was a bank teller in my native Canada in my last year of high school and then throughout University and have remained in financial services ever since. So I'm just passing 33-years working in financial services, and it's been really a passion of mine for all that time. In particular, marketing, product, customer and credit and lending, in fact, is one of the key themes. I spent 16 years at American Express in Canada and the U.K. focused on their credit card business primarily, but also their insurance business in Europe. And I've been in the U.K. for 20 years now. So I feel very at home in Europe and in our U.K. home market. I worked -- as I said, 16 years at American Express, but 10 years ago, I switched in terms of career path and started to work in smaller more non-standard lending companies. I was the Chief Marketing Officer of a couple of FinTechs in the U.K. And then over the last 4 years before I joined here at IPF, I was the Customer Director at Vanquis Bank looking after all things, customer and marketing.

Fantastic. Now Tom, by our standards, you're a relative newbie in our business, so give or take, just under a year. But we've been going for 1/4 century. And I know it's one of the things that attracted you to our business. So let's talk a little bit about what we've been up to over that period.

Absolutely. I mean I think really the 25 years that we've been serving this customer segment has developed within us a really strong and deep customer insight and knowledge, which is unparalleled, frankly, in the industry. And we've been able to use that to build a really long-term competitive advantage because throughout the entire marketing and product and proposition process, we infuse everything that we do with that deep segment and customer insight. So whether it's the propositions we designed, whether that's the brand and marketing we undertake, whether it's the way we go into market, how we convert customer demand and the tools we use to do that, it really is a cycle, a complete cycle that is infused by that deep experience of our customer segment. And if we look across our markets, we operate in 9 markets currently, we've really got a broad array of products and propositions. They start in the more traditional home credit installment loan space, but all the way up to a mobile wallet proposition with a linked Mastercard. And they're really about tapping into different customer segments and customer needs within our core segment of the underserved market. And I think really that's the most critical piece I would emphasize is that regardless of our market or product or a proposition, it's still focused on this underserved segment. That's where we have the deep experience, and that's really where our core competency is. And we really do believe across our markets and our propositions, we can continue to expand that product and proposition footprint and drive even better growth.

And everything we do is about building financial inclusion. So let's give people an idea of, let's say, our target markets to a customer, but at a very high level to start with.

Absolutely. So as I mentioned, we operate in 9 markets. The population of those 9 markets is about 235 million people and about 70 million people, we'd say are in the underserved segment. So that would be our target audience within those 9 markets. Over the medium term, we're aspiring to reach 2.5 million customers. And really, our customers while we operate in 9 markets that vary all the way from Australia to Mexico in terms of demographics, et cetera, the customer -- the core customer characteristics are similar in those markets. They are underserved by traditional lenders. They find it difficult to obtain credit for a number of reasons. it could be because they have income that's unpredictable or they live in the cash economy or perhaps they had trouble with credit previously. There could be a whole host of reasons, but a defining factor is that difficulty in obtaining credit from, say, what we call a mainstream bank.

And interestingly, in some cases, they don't go to a bank because they don't trust a bank which I know for a lot of people, it sounds like a peculiar concept, but they've had bad experiences in the past. And so they don't want to go back to a bank.

Yes, absolutely. That can be the case, certainly, they may have had a bad experience or someone in their family had a bad experience. Banks in these markets have perhaps a different attitude or way of treating customers that means that some of our customers feel like the last thing they want to do is go to a bank for help. And we are able to offer them that help and be there when they need us. I think when you look at our customer base, demographically, 30 to 50 years old, and our proposition serve that breadth of demographics, and they're in income groups that are typically low to medium income. That's a pretty consistent characteristic. But again, these are consistent characteristics across these markets. There's a big opportunity in the markets in which we operate, and we've got aspirations to significantly grow.

Now one of the dangers of a business like ours is that we tend to think about it being a homogenous population under banked, underserved, but we've gone out of our way to think about discrete segments of customers and their needs.

Very much so. So instead of deciding on a product response immediately to a particular opportunity, we start with understanding the customer and really deeply understanding the customer segment. So we do lots of research around things like what are their worries? What are their financial concerns? What are their aspirations for the future? What are their core wants and needs of a product or a service? And we then use that to develop a product or a propositional response. And a consistent propositional response that we have regardless of the product or service is simple, fair, affordable and reliable products with flexibility built in. Flexibility is really important. Our customers' lives are a bit unpredictable and they really value the ability to slightly alter payment patterns or payment schedules to reflect their up and down economic situation. And we built in features that help with budgeting and more importantly or most importantly, in some ways, make them more financially resilient to other shocks that might happen in their lives. And so we take that understanding of customers and then we think about, well, what is the product or service response to that. And really, we think about that in 3 categories or 3 pillars. The first is about addressing core borrowing needs of our customers, and that's through things like installment loans, credit lines and credit cards, and we'll speak more about the credit card in a moment. The second is about making customers' lives easier. So, how they manage their relationship with us, how they interact with our service and with our agents. We're investing more and more in digital capabilities to improve that experience and save them time and save them energy around that relationship. And finally, and very importantly, is how do we, beyond their core borrowing needs and making their life easier, increase their overall personal and financial resilience. And that's through things like our value-added services, medical insurance, income protection, life insurance, even some education-related benefits that we offer customers. And that's a really important pillar of what we do because, as I said, we can address the core borrowing need, and we will always do that. But if we're not also helping customers in their broader lives, then I think we're not doing what we should be doing to promote financial inclusion. And so for example, in Mexico, this year, 1,200 of our customers have used one of our insurance benefits to get new eye-wear. And in fact, if you've been to Mexico as I was earlier this year, you can understand that that's actually a really significant benefit for these customers. In Poland, we've sold more than 9,000 online language classes to our customers. Most of the time, the course is in English and most of the time, they do that on behalf of their children. So this is broadening their own children's opportunity by being able to learn another language and effectively speak in another language. So we take that part of our purpose and our marketing strategy very, very seriously.

Well that's -- well, I think it was about 8-weeks ago, you and I were in Poland, and we actually took the whole PLC board there. And one of the things they wanted to do was to ensure that value-added services were being sold responsibly. So as you know, what we do is we arrange for them to go out and to a company -- a customer representative to go and see a customer or a customer transaction. And particularly ones where we're going to sell value-added services. And I have to say they come back, and it was unanimous. They were very, very happy with the process and the value that we were presenting to customers.

Yes, our customers are actually delighted with those value-added services. Absolutely.

Now Tom, obviously, you mentioned credit cards. And for us, this has been a fantastic year because we launched credit cards in Poland, and it's very young yet, but it's been a huge success. So let's talk a bit about credit cards.

Definitely. Some of you may recall, Ag, our country manager from Poland was standing on a stage with you about a year ago talking about the imminent launch of credit cards, and we were very excited at that time, a little nervous about how it might all go but we're really delighted with what's happened with our credit card in Poland. We've issued more than 100,000 cards in the first year. And our customers are providing us with excellent feedback around the proposition, as well as our customer representatives who are actually the ones selling or offering the product to our customers out in the field. And there's some really unique aspects of this card product. So the first one I just mentioned, which is we offer it through our customer representative network, which I think is unique globally in terms of distribution of credit cards. And we're finding that actually that is very, very effective way, not just to offer the product, but as we'll talk about in a moment, this is a new product for a lot of our customers, and that representative can really educate the customer on how to use it, et cetera. And that's proven to be very effective. But also the product itself allows a customer to take an initial draw on the credit line in cash and get free ATM withdrawals. So, for a segment that operates quite a bit in the cash economy, that's extremely important. But equally important is the card now gives them access to the broader global payment network, so they can shop online. They can go to a shop, obviously, when they don't necessarily have the cash and be able to purchase in a store. And this is actually important element of financial inclusion. It's not just about getting access to credit, but being integrated into the broader financial system, and this card is doing this for our customers. There's no penalty fees on the card, which again is another benefit. It's something our customers have told us is very, very important and we're really finding that this product is something that continues to perform actually ahead of expectations, and we think there's a great opportunity for it in the future.

And Tom, I know it's only less than a year old, but are you satisfied that our customers understand the functionality and are using the functionality?

Yes, absolutely. That was clearly something that was a bit of an unknown a year ago, but we're finding that customers are not just taking that additional drawn cash, but transacting on the card product. They're going to shops, as I mentioned. They are taking subsequent ATM withdrawals. So they're clearly using it in a way that is beyond how they simply use an installment loan, which is very important. And then we're finding how they repay the product is very similar as to how they would repay our traditional home credit product in that market. So they understand the dynamics of payments of using and paying on a credit card. And then as I said as well, all of our customer research suggests that they're extremely satisfied with the product.

And for many of them, because you gave me a statistic the other day, it's their first card?

Yes, absolutely 2/3 of these customers in Poland that have taken the credit card, this is their first-ever credit card. And so being the company that's able to do that for them actually is something we are very proud about and I think rightly so, but also it comes back to this broader mission of financial inclusion. We're offering customers who really haven't had the opportunity to take a credit card in the past to be able to take advantage of the benefits.

And I was having a conversation with somebody outside of our business, but in the card space recently, and I asked them about whether or not we should go straight to virtual card and skip the piece of plastic? And the feedback was very, very strong, it said, no, no, that for your customer segment, the physical card is -- it's an aspirational thing and being able to pull it out and use it is very important.

Yes, absolutely. I mean I think ultimately, ability to link the card to a virtual payment method, it makes total sense, and that is part of our plan over the long term. But certainly in Poland actually to have that physical plastic. It's a nice looking piece of plastic. You can see it on the screen. There's an element of pride that's involved with showing that when you go to a shop, et cetera, and makes it feel really real and tangible for customers.

And going from the physical to the more virtual and digital, I know you've been spending a lot of time working on some of our digital offerings. So let's talk about our mobile wallet.

Yes, our mobile wallet is -- actually had a very exciting year in 2023. It's been actually transformational for that proposition. We've actually grown our user base 3x this year. We have about 40,000 users and one of the great milestones of the year was launching the Lite version of the mobile wallet in Mexico, which is our largest digital market. And the take-up there has been very strong. Our mobile wallet is a progressive proposition. So the basic offering is essentially like a mobile app where you could manage your credit line and make payments and withdraw from your credit line and place funds in your bank account. And then progressively, you can move up to our full mobile wallet, which includes a built-in payment account and a linked Mastercard. So in many ways mimics the functionality of a credit card tapping into the payment network, et cetera, but drawing on your credit line. And we're continuing to infuse all those levels of the proposition with new benefits. So for example, very soon, we're going to be launching some value-added services embedded in the mobile wallet, which will add even more value. I think beyond the great customer experience, one thing that we're very excited about is how customers actually use the product and how they behave. So for example, we found that customers with the mobile wallet are 50% less likely to call us. So there's a lower cost to serve. And that tells us that the features that we've added in the mobile wallet are of value. Secondly, they're utilizing their credit line more, so 11% higher credit line utilization, which is very important. And then finally, it creates stickiness in the relationship. So they're actually staying with us longer, which is improving lifetime value. So we feel not only are we seeing some great results at a customer level, we're improving the proposition, and we do feel that there's even more opportunity for growth of that.

So my take on it is that we're giving the customer more and more control or facilities to control their balance on their loan or their credit card. And the payback for us is that they are more satisfied, and we have less servicing costs.

Definitely, it's -- I mean you don't get many win-wins, but it's a win for the customer, makes them happier. Obviously, they engage more with the product and it's a win for IPF as we benefit from their higher engagement and obviously, the lower cost to serve.

Yes. And tell me, if there's a unique facet about our business, it has to be our customer representatives and I think it's one of the things that's most fascinating about the business and people would be keen to understand. So let's talk a little bit about that.

Yes, our customer representative channel, if you will, is really our not-so-secret weapon. We have 17,000 customer representatives operating across our markets. And they represent 70 million-plus customer touch points in any given year in terms of that one-to-one relationship.

70 million?

70 million. Yes. Many of our -- obviously, our relationship is a weekly or biweekly relationship of payments and issuing new loans. And so each of those touch points is an opportunity to build the relationship and also gather data and understanding. So it's extremely important for us. But our customer agents, which again, is our unique model, a unique element of our model is not -- it's deeper in terms of its impact than you might initially expect. So for example, our customer representatives live and work in the communities they serve. So they have a special empathy and understanding of our customers that is very, very important to maintain and improve that relationship. And secondly, they provide a very, very valuable element of additional judgment when it comes to the credit decision. So we found time after time that a customer agent or customer representative is able to make a better decision on how much to lend or who to lend to than just a scoring model alone. And that's extremely important for us. And also important is our customer representatives are mainly compensated on the repayments they receive. So that gives them an extra incentive to make sure they're being very prudent in terms of who is actually granted the loan to begin with. So very, very important and valuable aspect of our channel. And really, it's the reason why we can profitably -- and serve this segment and grow in this segment where so many others struggle. It's a really key element of our model. And I think the other thing that's really, I think, gives us a lot of pride is how the 17,000 customer representatives all represent employment opportunities for these representatives in these markets. And some of them are self-employed, some of them are employed depending on the market, but we're providing that great level of opportunity and our customer representatives are extremely passionate about serving their customers every day. So much so that we're finding more and more of them are actually moving into management levels in the organization. So moving up into management levels in our field sales force. And so we feel it's a great model, and it's a great delivery of financial inclusion, but also a great benefit to the employment opportunities of those people.

And as you know, I was in Puebla last week, and I had an opportunity to meet with a lot of development managers who manage about 8 to 10 customer representatives. But the joy of the meetings was that these development managers had previously been customer representatives or [indiscernible], as we call them in Mexico. And they were quietly ambitious about their career prospects. And for them, the step-up to DM was really important because not alone was it a higher salary and more benefits, but also they got a car. And one of the interesting things I discovered was that one of the first things we had to do when we promoted them was to give them driving lessons because for most of them, they had no means of getting a car. So this is really very, very aspirational and a huge boost for them and for our business. Tom, one of the things that people do talk about our business is the cost that we charge for our product. And I think people would like to hear a little bit about how we do this.

Absolutely. So pricing clearly is a key factor in our products and propositions. And we have various elements that we think of when we think about pricing. And it's important to note in almost all the markets in which we operate, we operate under a certain regulatory environment that usually involve some form of price caps or price guidelines. And so wherever that those exist, we make sure that we're fully compliant with those guidelines that goes without question. But in terms of pricing, it's the balance that we're trying to strike always is between how do we make sure that we live up to our purpose of financial inclusion, which means offering our product or service to as many people as possible. How do we reflect the risk inherent in our business model and our segment and our pricing? How do we drive a reasonable return for our shareholders? And what is the competitive environment? So those are all the factors that we consider when we talk about pricing. And we also make sure always, always, always that whatever pricing we offer and whatever loans we offer, that affordability is key for our customers. So we never put them in a position where we're pricing at a level where there's certainty that they will be unable to afford those payments. But it's a complex scenario where we look at all those factors to drive pricing. Obviously, when you look at these rates, there are different than, say, mortgage rates in the U.K. but we operate in very different markets and very different segments, and it's really about balancing those factors when we look at pricing.

And for people looking at this chart, they might particularly look at Mexico and say that's very expensive. But I suppose there are a couple of factors worth considering. One is it's much higher risk in Mexico. And the other is that our loans are much shorter term. So as you compress the term, the effect of APR increases.

Yes, definitely. And even in Mexico, that rate would appear high, but in reality, short-term lenders in the U.K. even charge rates that are even higher than that. So we feel that it's very appropriately priced for the market and the environment.

Okay. So Tom, we talked about the product, the customer needs the product and the pricing. What about our opportunities to grow? And I'm thinking here particularly about Europe because that's probably most familiar to some of our viewers.

Yes. And I have to say, when I joined, one of the things I was most excited about was the range of products and propositions that we are offering across our markets and the opportunity to further expand those. So when we look at Europe, on one end, we've got Poland, which has pretty much all of the current products and services that we offer. But across Europe, there's still a lot of white space where we can expand products and services. We talked about credit card, for example, digital lending in those markets is also an opportunity. And finally, actually, retail finance, which is a new business for us, but we're starting to get some traction in some markets on that point. So when we look at Europe over the coming months and years, we expect to fill out a lot more of that white space where appropriate and where we think there are suitable returns and where there's a customer need. Highlighting again, Romania, digital loans are imminently launching in Romania, which is to the same segment, the underserved segment. But in a country of 19 million, 20 million people, such as Romania, the home credit model isn't right for everyone. So we're tapping into a slightly different need state in that case. And also in Romania, we very recently launched, as I mentioned, a retail finance proposition with Flanco, which is one of the largest electronics retailers in that market. And early days, but that's going well. And that's another scalable opportunity across Europe. So very much the focus of myself and my team is how we find the next and right opportunities for this great set of propositions that we have.

So as we think about those growth opportunities or white space, I think you call it, how do we attract consumers to us rather than allowing them to go to the competition?

And I think that's very important. So we've talked about customers and products and how we think about proposition and pricing. But then the other side of the equation is exactly as you say, how do you make sure that customers even know you're out there and that you're available? And how do you attract them, and once you attract them, how do you convert them efficiently into a customer. And really, there's sort of three elements to that for us. So one is we build and maintain strong brands, and we'll talk a little bit about that in more detail. As you might be aware, obviously, we're part of International Personal Finance. But in the markets we operate, we have consumer brands such as Provident, which is our home credit core brand and Creditea which is our digital brand in the markets that we operate. We attract and convert demand through sophisticated digital channels. So where we are -- have 8 million-plus visits to our websites across the world on an annual basis. And most of that's on mobile devices. So we focus a lot on the mobile digital experience for customers. Because of our scale and scope, we're a preferred Google partner. So we get access to some of the tools and toys that Google has on offer that others don't have access to and get special support there, and that actually allows us to share best practice very effectively across markets. And then finally, as we attract that demand and as we get inquiries and leads, really what swings into work at that point is our demand conversion process or lead conversion process where we take that opportunity. And in the case of our home credit markets, we send that opportunity to the field, and we connect that customer to a customer representative. And in that case, in Europe, 70% of our customers are contacted within 15 minutes of submitting an inquiry. And then, for example, in Mexico, our customer agents with our ProviDigital app, our customer representatives with our ProviDigital app, we're able to conclude the entire loan agreement in 17 minutes. And so one of the things that I'd say is even though in home credit, it's still a customer representative meeting with the customer, the experience around that is very digital.

Yes, which is fantastic because it plays to both the existing generation and the younger generation, which is really positive for us.

Absolutely.

And we're going to talk a bit about brands?

Yes. So many of the people that may be watching this webinar don't live in markets where we offer our product. So in Central Europe and Mexico, for example. So they might not be aware how powerful our brands are in those markets, Provident in Europe, in Czech, Poland, Romania and Hungary is one of the best known and most well-recognized financial brands in those markets. We've got 80% plus awareness, really strong consideration, a very well-established brand, again, based on 25 years of investing in that brand. very difficult for a competitor to come in and get that kind of awareness quickly and certainly a huge investment they need to make to do that. So we're very, very proud of our brand building in Europe. In Mexico, where we have a slightly different business in terms of the coverage, it's not fully national in Mexico, as you would have seen in the previous webinar with David Parkinson, the brand is more street level and social. And I participated in that myself that I have photographic evidence of me handing out flyers in Mexico to customers. And but that's very important in that kind of society in that market. It's a very street level, almost visceral brand in terms of the experience, and we use a lot of social media in that market as well, both for our own promotion, but even our customer representatives, we give them social media assets that they can use to promote their own products and services. And then finally, we've got Creditea which is our digital brand, and it's kind of more of an emerging brand. So we've invested a lot in it in the last 12 months in terms of the look and feel and we're starting now to promote that more above the line in Mexico and the Baltics. Even to the point where in Latvia, we're one of the key sponsors of the X Factor, Creditea is, and we're seeing really good results in terms of building awareness of that brand in that market. And also making the brand see more of a normalized brand, just a trusted brand because of the association with this very popular television program.

Do you know who's going to win X Factor, Tom?

I've got my guesses, but I'm not sure.

Okay. And I think we're going to have a look at one of our advertisements live?

Yes, absolutely. So as I mentioned, many of the people watching this webinar will not have seen how we actually market ourselves in the markets in which we operate. So I thought it would be a great opportunity to really show two examples. The first example we'll see is a purpose-led ad in Hungary. So it's very much a brand-building ad, which is about making -- communicating the message that we're there for customers, we've got their back, and we understand their lives and situation. So that will be the first one we watch. And then the second one is an example from Mexico for our Creditea brand, which is more of a direct response ad. It still promotes the brand very effectively, but that's -- the purpose of that really is to drive demand and get customers to respond.

Okay. And these are only about 30 seconds each, so you don't have time to run off and make a cup of coffee here. Okay. So let's watch these then. [Presentation]

Those are fantastic Tom. Great examples for people, as you say, who don't know our business. And the other thing we should say is that International Personal Finance, IPF, is our corporate brand. But actually, we don't use that in any market other than where we're talking to people in the U.K., just for clarity.

That's right. Yes.

Okay. Now in the previous slide, you talked about conversion demand. What is conversion of demand in a consumer finance business?

Yes. Well, I mean many of the audience may have heard of the conversion funnel, and it's basically the process by which you move a customer from being interested in your product all the way through to them agreeing to take out a loan, for example. So they officially become a customer. And we call that sort of our conversion funnel. And our conversion funnel is very similar to most lenders. Although we do have in home credit, obviously, the endpoint is the customer representative meeting with the customer. But we very much focus on the efficiency of this funnel. So our objective is to make sure that for the investment we put out in the market, we turn that into as many customers and many of the most profitable customers for us but also with the right outcomes for the customer at that investment. So we're working on this funnel all the time. A lot of our effort is in terms of making it less friction for our customers. So that's where we talk about digitizing certain processes or involving live chat or other aspects into the funnel to improve that. And we -- my team across all the markets in which we operate, spend a lot of time improving this funnel and which helps us from an efficiency perspective, but also serves a customer need in terms of making it simple and easy to get one of our products or services. And in our digital businesses, often in as little as 15 minutes from the point of application a customer can receive the credit line availability in their bank account for our home credit model because there is that customer representative meeting with the customer, it takes a little longer, but in most cases, it's within 48 hours. They are able to receive the funds from their loan. And frankly, that's better than the banks and most of the markets in which we operate. And one of the things I'm really, really excited about, it actually has been a phenomenal development in Mexico this year is our use of WhatsApp. Now we all know WhatsApp and we use it to contact our friends and family and maybe we have small social groups we use WhatsApp with. In Mexico, it's been supercharged into an enterprise level activity. And we've been using WhatsApp for a little while in Mexico for a couple of years for customer service queries and some various other things. But just this year, we've linked WhatsApp into our marketing channels, specifically into Facebook. And what that means is one of our customers can inquire on Facebook about one of our products or services through Provident and that seamlessly flips over to a WhatsApp conversation with our customer service center. When I say customer service center, I'm really talking about a chatbot-enabled interaction for the first questions that we ask the customer, which are sort of standard questions to make sure the product or service is appropriate for them which does mean that we can service multiple customers simultaneously. So the cost to serve or the cost to ask those questions is much smaller. And then that whole process takes about 5 minutes, and then it's immediately integrated into our field sales force, and they are contacted by a customer representative or as we call them in Mexico an [indiscernible]. And what's so amazing about this process is with the same investment in Facebook in 2023 as we had in 2022, and it's a big channel in Mexico, we've increased the leads 166% and we expect to have 2 million conversation on WhatsApp this year in Mexico. And we're very excited about we've now extended that capability directly into our website. So now when people acquire on our website, they will flip seamlessly into that whatsApp conversation. And of course, we don't want to keep this in Mexico. We're very excited about this, and we're looking at replicating the same types of processes in our other markets.

And I go to Mexico on a regular basis, and I can absolutely confirm that WhatsApp is more or less a way of life. It's integrated into everything that the Mexican population do. And the fact that we can now tap into that is tremendous. I said at the start, you are a relative newbie. You've only been here 11 months, but one of the things I want to credit to you for is that when you arrived, you gave us a bit of a kick and said, are you really walking in the shoes of your customers? Do you understand the pain points of your customers? Talk to us a bit about the journey you're taking us on.

Yes. I mean, I was really pleased when I joined, that we had multiple programs and initiatives in place to address and improve customer experience. But I've really tried over the last year approximately to push that even further. And so we run a program across our business called Think Customer, and there's really two elements to it. One is deeply in a data-driven and research-oriented way, understand customer pain points, understand their expectations and understand how we're delivering against those expectations. And once we do that, we then build plans too. If there's any gap between customer expectations and delivery, we take initiatives to close that gap, and I'll talk a little bit about that in a moment. But the second element to it is that we make sure that the entire culture of the company is customer oriented. So whenever we do anything, we always think about what the customer impacts will be, we think, initially of any product or service around what problem or challenge are we solving on behalf of the customer. And so that's really, really important from a culture perspective, and we'll talk more about that as well. But this is a cross-company initiative and it is something that we're really proud of. And actually, I think from our employee perspective, they're getting very excited about how we're delivering for customers. And to be honest with you, the results have been very strong. So our NPS scores are really best-in-class, plus 69, and our customer satisfaction at 91% is extremely strong as well, and it's continuing to improve in both those metrics.

Tom, the 91%, do you really believe the 91%? Because I don't know any business that scores 91.

I can absolutely confirm those are the responses that we get from customers throughout their journey with us. So those are actual satisfaction scores, and it's over a large sample size. So it's definitely a robust number. I would say we're not complacent about that, though. I'm sure we have blind spots. And also, it's important to satisfy your customers, but we always have to be thinking about the customers you don't have and what are they looking for. So part of our effort is to how do we make ourselves more accessible to the customers who maybe would be in our segment, but at the moment, having considered us as an option. So we're thinking about those experiences as well. But through this focus, this data-driven focus, we've been measuring and focus on some of those pain points. And for example, about a year, year and a half ago when a lead went to the field for a customer representative in Europe, it took about 4 hours on average for that customer to be contacted. In most cases, you say that's okay. It certainly same morning, same afternoon. We've now got it down to 29 minutes. And again, that's because we realized for customers, they expect a quick contact. And now we know that, we understand that we're actually delivering on it. And secondly, actually on top of that, 72% of customers are contacted within a mere 15 minutes of their inquiry. And then we've surveyed customers and ask them, do you feel like Provident values your business values you as a customer? and 86% of them are telling us that they do. We're not complacent about these things. We're not saying good job done. There'll be much more work on it, but I think we're heading in the right direction. And culturally, we've really elevated our focus on rewarding colleagues and employees that go one step beyond for customers. And we've got a program called the Think Customer Heroes where, on a quarterly basis, they're really recognized for what they do.

Yes. That's a fantastic program. I really love it because whenever I talk to people around our business, they refer to it and the fact they aspire to deliver for it. Tom, that's been a great run through all aspects of our customers. So we've talked about the markets we are in, the scale of the markets, the customers that we serve there, particular needs segment by segment, the products that we use to deliver for them, how you're addressing the pain points, but also how technology is playing an increasingly important role in the customer interaction, but it's always with the human touch. And I think that's one of the things about our business now is that we're saying that we want to be data-driven, technology-enabled but always with a human touch.

Yes.

So why don't you wrap up for us, Tom, and then we're going to go to questions.

Yes, absolutely. I think if you go back to the very beginning of the presentation, we talked a lot about our 25 years of experience servicing this segment and how that infuses everything that we do around customer, marketing, product, brand building, customer experience. And we really talked about how our customer representative channel is a differentiator for us that is very, very difficult to replicate and adds an incredible amount of value. So those are some of the important messages. But I think as well, we really want to emphasize that even where we have a customer representative meeting a customer in their home, that experience is very digital. The inquiry happened perhaps through Facebook and then was mediated by WhatsApp and then the actual credit agreement was facilitated through an app on the customer representatives phone. So the experience around that, although it is person to person, is a very digital experience, and we're continuing to invest in those experiences. I think as well, the opportunity to expand our product footprint is enormous. We've got the credit card now in Poland. That's going extremely well. We're looking at opportunities to expand that mobile wallet we talked about additionally and retail finance. So we don't need to go out and innovate and create new things. We've got the set of products and propositions that we need. It's about expansion of that across our geographies. And then finally, as you mentioned, it's really, really important to us that regardless of the channel or the experience that the customer has, it will feel human. It will feel human because there's a customer representative who understands them. But even in our digital experiences, we very much look at what are the pain points or challenges our customers have and how do we solve them.

Fantastic and everything to build financial inclusion. Tom, thank you so much for the last 35, 40 minutes. That's been really, really interesting. And what we're going to do now is we're going to go to questions. And hopefully, Rachel has been receiving questions. as we've been talking. So if you give us 2 seconds, we'll get Rachel up here to throw those at us.

How are we doing on question?

Yes, we've got a handful here so far. So we'll start with those and see what else comes through. Let's start with tech. So with a focus on technology and process improvements, are there any ways to use AI to improve efficiency and also maybe accuracy of underwriting criteria?

Sure. Absolutely. I mean like every business, we've been very interested in how we can deploy AI effectively across our business. I would say when it comes to credit scoring and credit modeling, we actually had a presentation this week by our Chief Data Scientist, and he was keen to emphasize that we've been using AI and machine learning for quite some time in terms of how we develop those models. So we've been on the cutting edge of some of those techniques for quite a while. But clearly, as a company, we are continuing to look at how we deploy AI, not just in credit scoring and underwriting. So we provided the example of the WhatsApp chatbot experience, but clearly, AI can support a conversational type of deployment across our websites and other assets as well. And finally, in my particular area, in marketing, we've already begun to run a number of tests using AI to create marketing content which appears to be very successful. So we will continue to embrace AI and start to roll that out across the business.

Because, Tom, you took me by surprise the other day when you showed me what you had actually created, you had actually asked AI to create a whole sort of advert or something for you?

That's right. I mean we asked AI to create a storyboard for a television ad and actually it was very effective at doing that. I don't want to make our agencies too anxious. But the point is there will be ability to lower costs in a lot of these areas as we start to deploy AI in all facets, frankly, of our business, and it's actually a really exciting time.

Great. Now moving on to how would you prioritize the various opportunities in your European markets that you've identified? Do these opportunities mean that geographic expansion is less important?

You want to do the start and then...

Sure. Absolutely. Yes. So great question. We talked about the opportunity to expand our product footprint across Europe. And we have a very good, clear idea of the way we prioritize. So we're really looking at things like is there a customer need in that market? Is the opportunity material? So can we scale it up to a level where it's meaningful to the business? Can it leverage our existing regulatory frameworks and licenses and being able to passport that? Is the state of the market such that they have -- they could absorb the opportunity and do it justice? So some of our businesses are -- have a lot on their plate, and they're driving growth within what they've currently got. And so we would look to perhaps other areas to deploy new capability at that stage. But we've got about 8 or 9 criteria that we look at to decide where to take something next. And for example, the digital launch in Romania that I mentioned is based very much on the digital launch that we had in Poland a few years ago. So very much we're employing a build once, use many concept when it comes to deploying new capabilities across our markets.

And Tom obviously talked earlier about the white space, the areas we can expand into. So as regards to geographic expansion, our view has always been we should take the existing product set that we have and spread it to all of the countries we operate in. But we are still interested in geographic expansion beyond that. But I would say for anybody watching in, you should probably think about that more as a '25 or later because we have so much space yet to grow. And we shrunk by 1/3 during COVID, which means we have to grow back by half to get back to where we were at the end of 2019. And we're well on the way to doing that. But we've got plenty of room for growth, but we will think about geographic expansion probably in '25, I think.

Okay. Just talking about markets, we just had a question in. I didn't hear an update on the Baltic region. Is this region still of interest to IPF?

It's a fantastic region. So it's hard in 35 or 40 minutes to cover everything, and we thought we'd cover the ones that might be of most interest. But yes, the Baltics is a fantastic and really important region for us, highly profitable, very well developed and has -- generates a lot of our new products thinking and new marketing ideas. The reason we didn't cover them today is because each of those markets, there's only a few million people, and we wanted to spend our time on the biggest markets but great markets.

Okay. On to retail partnerships, actually, how successful is the test being in Romania? And would a Klarna-style business model be appropriate for IPF?

Well, certainly, I don't think we're ever going to do a Klarna-style model because their model is pile the customers high and monetize it later. And that's not our model. Our belief is that every loan we make should make a return for our shareholders. And also the customer needs to understand that the reason of such thing is free finance, and we want to be responsible. So when you borrow money, there is a cost to that. So no, we won't be doing the Klarna model. And then to go back to our experience in Romania with partnerships there. Well, we did an off-line test, and that was okay. The quality wasn't great. So we've moved on from that, we're in our second iteration now and that only launched about 10 days ago, and that's proving so far. It's only 10 days old, but that looks like it's going to be really successful. And then the one thing that we didn't mention today is that we're following that up with Mexico, and very soon, we'll be making announcement about partnerships in Mexico as well. So lots of good news coming out of the partnership space.

I have a few questions here from Stuart Duncan at Peel Hunt. On the potential market size, is the target segment that you mentioned of 70 million underserved customers. Is that a growing number?

Well, I think a very good question, and we have to be candid that a lot of those 70 million are in Mexico, which is by far our biggest market in terms of population and it is growing there because that is a growing population. And we just looked at some stats that the number or the percentage of customers there that have a bank account is kind of stagnating at around 50%. So there is still plenty of opportunity and growth there. In our European markets, I'd say it's more stable, but it is still a significant part of those populations. But the countries themselves are fairly stable from a population perspective. We don't see a huge change in the percentage of the population that would fit in our segment.

Okay. Do any of your competitors have the same level of digital capability?

Yes, for sure. Because there are a lot of FinTechs' out there competing in the space. But there's a difference being -- just being a FinTech and coming to market and saying, "I'm going to lend into this sector" and actually having the brand, the leadership team and the experience with a score card because it's very easy to lend money. The trick is getting it back and getting it back up over a reasonable period of time. So yes, we have plenty of competitors in the FinTech space, and they have all of this technology but they don't necessarily have, as Tom discussed earlier, the brand or they don't have some of the innovation on some of the things we're doing like the credit card or the mobile wallet. So plenty of competition, and we feel comfortable that we can compete with the best of them.

Okay. And this one is around application and conversion. What proportion of applications end up resulting in a loan?

Well, it's a very good question, and it really depends on the market and the channel. So in our digital businesses, like all digital businesses, by the way, the percentage of conversion is low. You get a lot of people at the top of the funnel. Many people try to apply multiple times, and you've got people who you simply wouldn't do business with, but they still start to apply. So that conversion rate at the bottom is quite small, but it's about the efficiency of the funnel. So you're talking in the 10%-ish range. If you look at our home credit markets, we follow what -- something we call the lead to loan conversion. And that's generally in the 40%, 30% to 50% range depending on the market. So 30% to 50% of the customers who we send out to the field for -- on the -- as a result of marketing activity end up ultimately becoming a customer. And the remaining ones often we find for very good reasons, such as I mentioned during the presentation around the judgment of the representative, for very good reasons, we decide not to follow through with that, but it's generally a 30% to 50% conversion.

And if you think about those statistics, so on digital, let's say, 10%, which means we reject 9 out of every 10 applicants. Now a lot of those applicants would actually be very good customers for our home credit market. And we are the only business anywhere in the world who has both home credit and digital under the one family. So we are the only people who can say to people, "I'm sorry, today, we can't offer you a digital loan but we could get a customer representative to come and see you and see if we could provide you with a loan that way." And we're spending a lot of time and effort on working on that.

Another one on competition, little actually in pricing. Can you talk about whether there are any competitive pressures on pricing?

Yes. I mean it's intensely competitive. It's -- there are a lot of people who want to serve consumers with loan. So it's always a competitive space. And as Tom said during the presentation, when we look at pricing, we look at caps on regulation, we absolutely consider affordability. That's our #1 criteria. And then we look at where we're positioned in the marketplace. So I would say there's always competition on pricing always.

Okay. We've got a question from Gary Greenwood. To what extent would a new customer be replacing the product of a competitor versus a customer who is getting a product they didn't previously have?

Very good question. I don't know if we've got specific statistics that I can quote on that point, so I wouldn't want to say anything based just on gut feel. But we do know, I think, as an example, as I mentioned, on credit card, 2/3 of those customers did not have another credit card. They've never had a credit card. So we're really providing a product -- we're not replacing something in their wallet in that case. We do know that our customers have relationships with other lenders for various reasons. For example, we don't provide auto finance. So some of our customers may borrow in that way. And there are -- there is competition out there. So there would be other products and services from our competitors they use. I think the key thing for us is trying to stay really close to our segment and be one of the key providers to that particular segment and not be tempted to stray into other types of segments because actually, I think we've got a really solid proposition in our core segment, and that's where we'll remain.

Okay. And this is the last question that we've got in actually today. What's the time frame? Do you expect to reach the 2.5 million customers that you mentioned within the presentation?

I would say -- I'll prefer not to put a year on it, I would say, medium term. And if you think about what Tom presented earlier, that, let's call it, the white space. There's a huge amount to go after there. And we're also obviously very, very optimistic about what we're going to do in Mexico and Australia as well. So I would say, over the medium term, we would expect that to be our target, 2.5 million. And the really important thing here is we don't have to create a whole suite of new products or new delivery channels to be able to get to 2.5 million. What we need to do is take what we have in some of our markets and spread it across all of our markets.

Okay. And that's it for today in terms of the questions.

Thank you. So to everybody who tuned in today. Hopefully, you found that interesting. This will be up on the website within...

Yes, within half an hour.

Within half an hour. Fantastic. So that will be the fourth. And we will come back and we will do another one. We haven't decided exactly what we're going to look at next, but keep an eye on the site, and you'll see that. So thank you very much for taking the time. And if you have any questions that you'd like us to follow up afterwards, please just contact Rachel or Tom and myself, and we'd be more than happy to engage with you. Okay. Thank you for that.

Thank you very much.