This unicorn wants to eliminate the cost of consumer credit, with Philip Belamant
“So how is it that we can make credit more equitable and affordable? The question hasn't changed, it is the answer that needs to change.”
In a traditional model, the end-to-end cost of consumer credit involves the merchant paying a commission to the credit card company for facilitating the payment, the consumer paying the credit card company fees and interest for maintaining a line of credit, and the merchant paying Google or Meta for presenting an ad to their audience. As a career credit guy, I’d only ever considered the first two, that in a low-risk segment where interest is lower then fees might compensate and vice versa. But that marketing spend is really the cornerstone, because people don’t borrow for borrowing’s sake, they borrow to purchase a thing or service.
“Now you can actually get in front of customers, and you know what they've bought in the past, you know what their affordability is, and you also know that they're spending in a sustainable way and that you, as a brand, are contributing to that sustainable commerce. And that's really where we think the sweet spot exists. Why don't we let brands rather pay our customers? In other words, use the brand's marketing budget to subsidise the cost of credit to our customer, and convince our customer to buy from that brand.”
Zilch is at home at https://www.zilch.com/uk/ (or find the app for Apple or Android )
Zilch is also on LinkedIn at https://www.linkedin.com/company/payzilch/ (plus Youtube, TikTok and Instagram with the PayZilch handle)
If you want to follow the work of StepChange, the Debt Charity that got a shout-out in the episode, they’re at https://www.stepchange.org/
You can learn more about myself, Brendan le Grange, on my LinkedIn page (feel free to connect), my action-adventure novels are on Amazon, some versions even for free, and my work with ConfirmU and our gamified psychometric scores is at https://confirmu.com/ and on episode 24 of this very show https://www.howtolendmoneytostrangers.show/episodes/episode-24
If you have any feedback, questions, or if you would like to participate in the show, please feel free to reach out to me via the contact page on this site.
Regards,
Brendan
The full written transcript, with timestamps, is below:
Philip Belamant 0:00
To eliminate the cost of consumer credit for good, that is what we hope to achieve.
The wealthy have the most access to credit and they pay the least for it. People who are not as well off, have limited choices where they can get credit, they pay the most for the credit, and they actually need the credit the most!
So how is it that we can make credit more equitable and affordable? The question hasn't changed, it is the answer that needs to change.
Brendan Le Grange 0:32
In January of 2021, a former client of mine reached out, he had been made redundant during a reshuffle at the lender he worked for. I didn't know him all that well, but both being South African we'd shared a drink and a chat or two at some work dinners and the like. And I also knew that our head of analytics was hiring at the time, so I passed his resume over with a request to give it consideration.
In other words, I did the bare minimum.
Now, there are a lot of layoffs happening at the moment. So you may have seen some of these job-hunting messages from contacts and contacts of contacts on your LinkedIn feed. Aesop did a better with his fable about the mouse and the lion with a thorn in its paw,but here's a little story that should encourage you to at least bump those up in the right direction, even if for purely self serving reasons.
On the 20th of May 2021, I sent Philip Belamant a cold email asking him if he would consider appearing on this, at the time not yet launched, show. It didn't work.
Which was no surprise. Not only did I have no audience, but Philip would have been exceptionally busy: Zilch, which had launched just seven months earlier, was already flying, having completed an investment round one month earlier, at a $500 million valuation. Luckily, I had a plan B.
Nepotism.
I learned that Philip had gone to the same high school as my brother-in-law. It isn't a big school, so I reached out to Alastair to see if he could call in some favours. That didn't work either. They were just a few years too far apart, it seemed, to share any mutual connections.
In the meantime, Zilch had become Europe's fastest unicorn, and then a double unicorn, and I thought I'd missed my chance.
But I'm delighted to say that I did not. Because today 102 episodes in. I'm speaking to Philip Belamant, CEO and co-founder of Zilch. What was the plan C, then, that worked?
Well, it turns out that that job-hunting contact of mine had not gotten a role with my former employer, but had instead signed on at ZIlch. And I was the one reaching out now to ask for a favour. He agreed to put me in contact with the right people.
And his assistance is what got this ball rolling. So if you don't do it often, go and check your LinkedIn now to see if anyone's there that you might be able to help in a small way. And while you're there, send me a connection request and follow How to Lend Money to Strangers with Brendan Le Grange.
Oh, and I'm going to be in Amsterdam next week, from the 5th to the 8th of June, recording a couple of episodes for the show live at Money20/20 Europe - if you're going to be there too, let me know and we can meet up. But more importantly, if you're going to be there, make sure you add Zilch's sessions to your agenda, because the big announcement that Philip teases at the end of this episode is going to be shared on stage there.
Philip Belamat, co-founder and CEO of Zilch, Europe's fastest ever unicorn, it is an absolute pleasure to have you on the show.
Philip Belamant 3:39
Thank you very much for having me.
Brendan Le Grange 3:41
You've been based out of London for about eight years now but our similar accents give a hint to our similar roots, and we've got our Rugby World Cup coming up in just a few months so, before we get into Zilch and the story of the dramatic stuff you've done there - who do you think is going to win that?
Philip Belamant 3:56
It's got to be between South Africa and, I don't know, maybe someone like Ireland, maybe that?
Brendan Le Grange 4:03
Yeah, it's an interesting one, I think the most open it's been in a long time so it'd be exciting to see. And yes, hopefully the Springboks can make it number four.
But yeah, let's get back to the actual subject of today. Philip, your last five years must have been crazy with the dramatic success of Zilch pushing you to the forefront of the FinTech scene, especially in terms of name recognition. But would you mind setting the scene a bit with your background in the industry and what you were doing before you started this company?
Philip Belamant 4:30
You know, I've always really been in financial inclusion.
Everyone talks about technology and how it can transform lives but it's very difficult sometimes to see that tangibly in real life. For me when that happened the first time anywhere, was in South Africa. On weekends, you would go to certain shopping centres and there'd be these really long queues and lines of people waiting for something. And you know, the one day I was like, there must be some sale, what's going on here?
So I went and I was having a chat with a few people in the line and, and very quickly you realise in fact that people are queuing either to get their social welfare payment or they were queuing to buy prepaid airtime or electricity or to pay a bill. You know, they're working all week, they get home on the weekend, and then they travel back to an urban area, if they perhaps live a bit further out, and they take hours out of their day to travel there, it costs a huge amount, which adds a premium to whatever they're buying. And then they queue for hours to buy that thing, just to then travel back.
And so that was the first real issue that I discovered that I thought to myself, wow, is there not something we could do through technology to help people change this, and let them spend more time with friends and family.
We would lend people the airtime or the electricity on their mobile devices on the weekend, and then they could pay for it in cash when they went back to work on the Monday because they were going to be there anyway.
It completely transformed people's lives and how they thought about their weekends, their time at home, and spending time with their family. That really got me hooked on both technology and financial inclusion. So that's the first business I started and where it all began for me.
And from there, building financial inclusion products, lending, etc, through Africa, was where I spent a lot of my time before of course, as you said, moving over to the UK about nine years ago.
Brendan Le Grange 6:18
You had that experience of building your own ventures from the day you left university, being very involved in entrepreneurship and financial inclusion, how did you come up with the spark to turn your energies into what you're doing now with Zilch?
Philip Belamant 6:32
The audacious vision for our business is realy to eliminate the cost of consumer credit for good. That is the audacious vision. That is what we hope to achieve one day in the future.
Let's remove auto loans and let's remove home loans for a second, let's talk about credit cards - across the UK and the US, customers have accumulated a trillion dollars on credit cards. Now, the scary thing about this number is that most of the rates are sitting around 20%. And so it's costing consumers across the US and the UK $150 billion a year, right?
Just think about that. That's $400 million a day. By the time we go to sleep tonight $400 million has been paid to credit card companies in fees and interest. So we started there, and we said alright, what do we do about that? What's going on?
And actually, what's happening is that you have revolvers paying for transactors. And what I mean by that, is credit card companies are taxing people who are paying slower or who don't have the means to pay back on time; and they're using that to subsidise the rewards and awesome features and perks of their more wealthy clients who are paying on time every time. That brings me to the larger issue, and that is this reverse or inverse pyramid problem that we talk about a lot at Zilch.
And the problem is simple: credit has to be priced appropriately for risk. And what that means is people who have got thin files or no files of credit, or are perceived to be more risky (in other words, who perhaps have less income or assets) are typically priced much higher than customers who have got a lot of assets or a lot of income or a great credit history - what that creates is an inverse pyramid problem, the wealthy have the most access to credit, and they pay the least for it, and they need the money the least/ people who are not as well off have limited choices where they can get credit, they pay the most for the credit, and they actually need the credit the most.
How do you fix that problem? Right? How is it that we can make credit more equitable and affordable to people who actually need it? That's the challenge. The question hasn't changed, it's the answer that needs to change.
The answer for most companies goes back to the same old answer. And that is, 'well, let's just charge the customer'. We said look, how do we do something different? How do we find a way to reduce the cost to a customer without underpricing the risk?
So you had a lot of companies in the market, companies that call themselves BNPL companies, but what they were doing is they were raising a huge amount of cash from venture capital, they were underpricing risk, and they were plugging the losses with venture capital company's money. That's what they were doing.
That's not a business model. And these companies have all discovered that right?
So when the funding dries out, unfortunately, you making a net negative margin, it doesn't work. What we wanted to do is we wanted to price risk fully, and then see if we couldn't subsidise that to a large degree, and the vision one days is to zero. So what we did is we set out to just ask ourselves some fundamental questions.
Number one, why are people taking loans? They wanted to buy something. And what that meant is there was another party involved. There was somebody selling them something. All right. It's almost like a bit of a crime story. Ah, there was another person at the scene of the crime.
It seems obvious, but a lot of people don't seem to have asked themselves this question. A lot of people think of lending as a borrower lender agreement, do you apply for some cash and I give it to you. We said, no, there is another party involved. And it's the person selling. So what we then did is, we said, right, let's go and think about what that seller has as a list of issues themselves.
What was interesting to learn is, the average seller is willing to spend between 3% and 10% of the sale on marketing.
They are sick and tired of paying Google and Facebook or Meta, you know, for clicks and impressions that don't convert. They're tired of it, they want to pay for sales. And this is where we thought 'there's an opportunity here'. If there is another party that is willing to pay for the person who's borrowing the money to buy, you can look at subsidising the cost to the borrower.
Brendan Le Grange 11:03
I'm putting some words in other people's mouths here, but my first job was working on an American Express credit card portfolio, and they were so close to getting that - you know, if Visa's charging you 1% we'll charge you 3% but our customers are wealthy and they'll spend more with you. But the problem was, they didn't really bring the customer. I brought the American Express to the place.
And sure there was a some reward points or something, maybe that would encourage me to use it, but there's never been a single time that someone said 'we don't take American Express' that I've left the store. I said fine, here's my Visa.
And by understanding I guess, the modern ecommerce world, it's not 'us or Visa' it's 'us or Google'. So like, the merchants are getting far more out of this than just a slightly cheaper payment tool.
Philip Belamant 11:47
I'm glad you actually raised the Amex story, because we've had a few investors along the way, ask us about Amex. And by the way, a lot of what they've done, we really respect and has formed some of the building blocks for what we've built ourselves.
I would say the difference you've actually just pointed out brands are paying billions in marketing budgets, so that you can see the advert you then clicking the advert getting to their site or going to their store pulling your credit card out and paying billions in interest and fees to credit card companies to buy the products.
What we've done is we've sort of said, why don't we circumvent the middleman? Why don't we let brands rather pay our customers? In other words, use the brand's marketing budget to subsidise the cost of credit to our customer, and convince our customer to buy from that brand.
The whole equation makes more sense. The customer has more sustainable buying power, because the brand is subsidising the cost of credit to the customer. So the brand can make a sale.
And retail media I think is showing us that this trend is growing larger and larger and larger all the time.
Brands really want to get in front of customers through platforms with first party data that can target customers, not just by inference. In other words, we've had a customer that appears to look like you and that customer bought socks. So we think you might buy socks. Now you can actually get in front of customers, and you know what they've bought in the past, you know what their affordability is no point showing me a brand that I can't afford, you might as well show me one that I can. And you also know that they're spending in a sustainable way and you as a brand are contributing to that sustainable commerce. And that's really where we think the sweet spot exists.
And just because you brought Amex up... Amex was doing, and is still today, something I think is more interesting than Visa and MasterCard. Visa and MasterCard is an open network four-party model, they don't actually issue the cards, Amex has requested a premium from brands and they're using that to give you more value than a Visa or MasterCard could for that reason, right?
That's great. But what Amex has not done, is they've not made that fee that the brand's pay dynamic.
And that's what we've created with our network: we've come up with "an ad subsidised payments network".
We, of course, plug our customers into this network. And now we opening this up for third parties to plug into. And the idea is, is that brands can actually now dynamically dial up or down the amount of commission they willing to pay for a purchase, not just for their store, but if they share basket data with us, they can do this by product SKU.
Imagine you came to me with one of these Ingenico terminals, and I was running Phil's Socks, and I was sitting in a brick and mortar store. And there was a metaphoric dial on the side of this terminal. And you said to me, if I'm having a slow Tuesday afternoon, I can start dialling up the amount of commission, I'm willing to pay for my red socks. And he will literally start to watch people walk into the store and buy red socks, right. That is what we're trying to achieve here.
And certainly, we think that this model protects us from the downward pressure and the erosion of revenue you've seen in interchange, and even in closed loop MDR is like what Amex has negotiated, as you say, over the many, many years. And this means that brands can choose to pay more or less when it suits them, and we pass that value to the customers
Brendan Le Grange 15:06
On their side, what do you think is the draw that's moving consumers across from the 'apply for a credit card, use a credit card' model to a more transaction based way of borrowing for their their spend?
Philip Belamant 15:18
I think it's two major things: the first speaks to instalment payments generally, and then the second speaks more to Zilch.
The first is just ease of understanding, right? A lot of people say it's easy. What's simple. The problem with that is it doesn't explain what simple: it's easy to understand what it costs. And when you're going to be billed.
We've met with lots of card issuers. And I'll ask you the same question. If I've got £150 outstanding for 40 days past the free period, what will be the fees and interest you're going to charge me?
And the reality is nobody knows.
So the thing is, how does the customer ever get to understand what they're going to pay, when they're going to pay... it's just too difficult. So what instalment payments does, particularly zero interest instalment payments, and by the way, that doesn't mean that has to be completely free, you can have a representative APR with a fee, but if a customer knows, as an example, they're buying something for £100 pounds, it's going to cost them £2 upfront, and they're going to pay it back in equal payments of 25% - one on the day of checkout and one every two weeks.
I get it, I know what it's going to cost me: it's going to cost me £102, I know I'm going to pay every two weeks, and I'm paying the two pound fee up front today. And that's really why people are loving this way of paying.
It's just simple. It's easy to understand, and I can I feel more in control.
And I think that's the thing is people today have information at their fingertips, they want to feel in control. We all want to know more about our lives today than we ever have before. No one was wearing an Apple Watch 15/ 20 years ago, and worrying about their calorie deficit and the variable heart rate and the what, you know, people just didn't care as much. They didn't have the information. But now all of us want to know that I sleep okay, you know, should I be tired right now, have I caught COVID, all of us want to know because the information is available to us.
And it's the same with our finance. And it's the same with credit.
We want to understand what is going on and how it works. And we don't want to be told a long story. Oh, it's 23.4%. But that's it for this and that and one day maybe. What I want to know is it's £2, I 25% every two weeks. And that's why customers are coming to this way of shopping. Of course, it's also user experiences slick, and it's easy. And it's good to understand and all those things. But that's sort of table stakes, right?
So that's the first thing. But I think there's also a very strong argument - and this is where Zilch is headed, this is our aspiration - is we really want to become that financial heartbeat monitor for you. We want to be all things credit to you.
I think a lot of people talk about super apps, we don't believe you need a super app, I don't need to chat to my friend while you TikToking something and buying something else. I don't think we need that.
What we believe you do need is, you do need a super app for your credit. Think how confusing the world of credit is and how many different ways a customer can get themselves into a position of debt. I could be earning a salary, I could have a wage company, let me draw my salary down early. I then go and I've got that money, I then go and use my credit card to buy something or I get a loan online, I might then use instalment payments to pay for something even if it's for free over the next two years because I bought a couch. I've then got my home loan I'm busy paying off. I have my auto insurance. Oh, and I'm using Zilch.
It's no wonder that customers struggle to consolidate their position across all of these things. And you can tell that we need a super app for this just by virtue of the existence of credit bureaus.
Credit bureaus are there to try and consolidate the view for you. They're like, hey, whoa, Brendan, you can't afford this man, because we pulling in all the different things you've done, and we try to tell you what you can afford. So why don't we just cut out the credit bureaus and do this properly ourselves? Let's have a super app for credit, which is 'hey, customer, any form of debt that you want to take on, you should do that in one consolidated place'.
This way, everyone knows your standing, you can move things around, you can refinance from one to the other. And that's the aspiration and journey we are on at Zilch.
So we started with pay in 4, we've launched pay in 1, we're just about to launch pay in 3 months, and so on and so forth. And the idea would be you should do more and more and more of your credit spending with us. It's the best way to do it and one consolidated view.
Brendan Le Grange 19:33
We're going to shift soon to talk more about responsible lending and all that more lending-focused stuff, but before we do, I do just want to pick up on that pay in 1, because talking about the merchants and you making it available for them to kind of adjust how much commission they want to pay. There's a similar sort of thinking to the end consumer where a consumer can choose they want for free instalments or would they prefer to get the more traditional rewards that would come with a credit card.
Philip Belamant 20:01
So this is why we called our engine and ad subsidised payments network, not credit network. Interchange, particularly in Europe and the UK, has long since been regulated away, it's not a business model anymore. And that's why you find all of these Cash Back Cards and rewards cards that used to exist 10 years ago have all disappeared, no one has the margin anymore. Well, what our ad subsidised payments network is doing is it means that payments are back!
We found a way to generate ad revenue with each and every card swipe.
And that means that we can pass it to the issuer of that card, who can then bundle that up and give that value to the customer in any way that they see fit. So the customer could choose for instance, I don't want to take on debt right now rather pay in one, and I can get 5%, 6%, 7% as instant cashback. That's really quite exciting.
And the only reason I'm able to do that is because it's coming from the ad and sales budgets of the brands, this is not coming from interchange.
So the customer could now rather get deals and discounts. Or they could choose to defer the cost of something if that cashflow from a cash flow point of view that makes sense to them. So we could look and say we know what open banking data looks like, we know your payment cadence. We know that means that typically people's accounts spike and then drop off as they spend the salary down and spike again, whether that's a wage or salary that looks weekly or monthly. We now know if you're checking out today and you're going to owe us an instalment in two weeks time, we know if that might be tough for you to manage. So we would recommend you actually pay in one use the liquidity you have currently paying one, get five or 10% deep discount so that you scoring on that front, and then rather roll forward this way.
So it's more responsible way of spending and managing your cash flow. And finally, I will say that if a customer falls into arrears, we stop them taking out new loans, so the pay in four product isn't available anymore, but they can continue using the pay in one product. And we will take that affiliate commission and push it towards your debt that you owe, you know, so it allows customers to keep buying food and they're paying for their lives, but actually paying off their debt making use of the sales and ad budgets of brands.
I don't think I've ever seen that done before.
Brendan Le Grange 22:03
You're using the ads so that you can properly price risk.
If you go to the Zilch website, you see Responsible with a capital R, you were FCA regulated since the start, you're sharing your data with the credit bureaus. What is the philosophy? It's all about responsible lending? And how do you build that?
Philip Belamant 22:20
What we've tried to do is anything that we've really done at the business to date, and we've we've always done that in our previous businesses, we've taken the same approach, anything we do, we just tried to break it down and keep it very simple.
You've got to start at the beginning and say, well, we given customers loans, it's credit, right? The customer is creating a liability, they must repay over time. It's credit, why would you not be regulated?
It's just a simple question.
So when we began, a lot of people said, well, we should just operate in the same exemption as other BNPL companies. And our view was, but we confused, we don't understand, how would that even be possible? This customer is taking out a loan they have to repaired surely we must give them the protections they would expect?
So it's just it's actually quite simple. Yes, you should do that. Obviously, we should do it. Okay, let's go get regulated, cool, good start. Then you look at things like repayment, a lot of other BNPL, and frankly, lenders are allowing you to use a credit card to pay back their instalments. Now, if I came to Brendan and said, look, look, man, I've got a great idea. I owe a loan to some company, I'm going to take out a credit card and use that to pay off the loan. What would you advise be to me in that case? Why would we do that? This is what creates problem debt.
So when we looked at it, we said, should we allow our customers to use a credit card to repay Zilch? Well, unless we don't believe in our underwriting, then you should probably pay them off the risk to some other company, which is what other BNPL companies seem to be doing. They do put underwriting and originations and then pass them off to credit card companies.
But we think that this is creating loan stacking, and we don't think it should be done. So again, the answer was simple. No only allow customers to pay us on debit. And so really, we've applied a very logical way of thinking about things.
And I think that's what's developed so much trust between us and our customer base, where they going, Okay, this is transparent and easy to understand. If you're going to charge me saying, you know, what, you just tell me, and then at least I can decide if I see value in that. And if I do, I use it, and I pay for it. And if I don't, I don't. And when I'm having to repay you, you're not rolling me into an interest product, you're not over lending to me so that I don't repay on time, which is the credit card business model, you're not doing that either.
Your interests are completely aligned.
So that's how we think about this is that if customers are defaulting, it is our fault. It's our responsibility to get it right. And that's why we also want you then, as a customer, to give us more of the picture so we can take more of the responsibility. If you give us your open banking and we can see everything going on in your life. We should get it right and you should not default.
That's sort of how we've gone about this, which is why, as you mentioned, we got regulated from the start, we think reciprocal reporting is fundamental. Right.
So how are people meant to underwrite appropriately, if they don't know what loans that you owe to other parties, you must do the reporting, which is why we've of course done that we're the first in the market to do that in the UK, to all the agencies.
And then furthermore, you need to let people cure themselves. So let's also be honest with ourselves, if you're operating in the subprime ish market, and I say ish, because it's a big broad range all the way from just under Prime through to deep subprime. If you're operating in that space, life happens. I mean, we attended the birthday with Stepchange, the largest debt charity in the country, a few months back, and someone stood up, and they were talking about Stepchange. And he said something really interesting.
Money is important. But not having money is also really, really, really important.
And you know, spoke about how it feels you can imagine this feeling 50% of people in the UK, if you can believe it, today, get to the end of the month with nothing left in the bank account. Nothing. That suffocating feeling, what do you do? Who do you turn to, and then the next day you being charged interest that's pushing you into overdraft on which you will pay a fee, and you get into the spiral.
So for us, you also need to be working with the likes of debt charities, you need to let people cure themselves if they're lazy or slow payers, give them a route to come back. That's how we thinking about the customer.
Brendan Le Grange 26:30
Yeah, and I think it's really important to have their business model that makes profit, right, that is made to make profitable lending, where the Buy Now Pay Later model the fundamentals were really sound - any way you measure it, a safer way, a more controllable way to do a transaction. It's more direct, it's more understandable, it's more transparent. But some people some investors had dumped a lot of money into businesses that was simply chasing growth, and think about how to make it profitable in the future. And that is where things go wrong. People just will take any customer on board, because the customer is not generating the profit. It's VC money. It's sitting down and thinking, can I really make a sustainable business that is sustainable to the consumer and to the business?
You having a vision to profitability right from the start, there is what forces you to think more carefully through that lending. There may be some of the others who were more about, let's just add new flags on the map.
Philip Belamant 27:21
Yeah, absolutely agree with that.
I mean, sometimes we joke a little bit about that model. I think it's called VC to see right venture capital to consumer. Sometimes we wonder why they bother building an app, you may as well just start transferring the money to people's bank accounts. It would be easier, right?
Yeah, those models have not worked so well.
Of course, there's also a broad spectrum of companies doing different things. Everyone was chasing down growth, some of them certainly knew how they could start to turn a profit or they could build a positive margin. Others, of course, had no clue. But I agree with that completely.
I think what's really fascinating is that, when you look at this way of paying, particularly how we think of constructing it and putting it together.
It's probably one of the biggest changes in the way consumers pay that we've seen in a quarter of a century.
I don't say that lightly. There's not much that changes in payments, what has really changed in payments, if you think about it in the last 25 years, not much. I mean, PayPal came along, we were all like, oh, okay, this looks quite interesting. Maybe if I can remember my password and actually log into my account, I'll use it. But since then, it's just you know, it's cards, it's ACH or wires. That's what it is.
This is really changing things. And we think it's for the best.
Brendan Le Grange 28:34
And it's obviously bringing in some big names as well. So we've seen Apple coming into the space, sort of a long spoken about, long rumoured entry does the entry of someone like that tech first consumer centric change the way you're thinking about the future and the way you approach your business?
Philip Belamant 28:51
I suppose it's always easy to say things like, while it's a great endorsement of, of BNPL. And you know, everyone welcomes the competition. But look, a provider like that, I think is certainly going to make it harder for certain businesses to compete and survive.
One just needs to say that, I mean, it must be the case.
But with that said, financial services is not easy. Now, let's take a look at Apple. All right, Apple, probably one of the best consumer businesses in the world. I think I've bought every single phone they've ever made, okay. And I mean, literally every single one of them, so I love the brand. Apple go and rollout the Apple Card about three, four years ago now in the States.
We've seen through filings that Goldman has had to write off a billion of bad debt on that card. So you know, when we talk about fully pricing risk and underwriting appropriately, not such a great job going on there. Okay. And this is strange for a company who has got hundreds of millions of customers using their products and you would think have great affordability.
Then on top of that, the rollout I mean part is, it looks really cool. I'm still waiting for my one here in the UK haven't got it yet, the rollout has not gone so great. I mean, in four years, they don't even own over 2%, I think it's just over 2% of card holders in America so I don't think Chase is packing up and going home.
And this is the fascinating thing. I mean, we experienced this in our last business in South Africa, we had 20 million customers. Whenever we rolled something out, people all went, oh, my God, you're gonna you're gonna take the whole market? It just doesn't work like that. This is complex, it's difficult, you have to get it right. It is not the core proposition or what they do.
Could anyone do it? Well, I think Apple could do it. If they if they put a real amount of effort into it, they could do it. Well, if they put the same effort they put into the card, maybe not so well. Perhaps that's why they're having to fund this off balance sheet, not with Goldman, I don't know. But the point is, is that when I look at how they've begun on this journey, it worries me. And in fact, I was quite shocked. Why would they go and use MasterCard's instalment technology, this is the best technology business in the world and they've got an outsource the technology of their pay later product MasterCard. How bizarre is that?
So I think the whole thing is off to a bit of a weird start, will they pick up momentum and get customers? I mean, I would be shocked if they don't. But long story short is we have 150 billion of savings for customers to go and generate across the US in the UK.
So you know what, it's heads down. Let's go and create those savings and the value for customers.
You know, we've spent almost four years every day and every night quite literally on this thing. And we've still got a big amount of ground to cover. But look, if Zilch gets it right, if Apple get it right, and probably a number of others, we may see the complete elimination of the cost of consumer credit in the next 25 years... and that would be phenomenal!
Brendan Le Grange 31:53
As we wrap up here, about that ground to cover for Zilch, what are you focusing on? Obviously last year entry into the US, which is a huge thing to achieve, where is Zilch putting its energies as we wrap up 2023.
Philip Belamant 32:07
So a major focus for us right now is capturing more wallet spend of customers.
So there's use cases that we can see customers don't use Zilch for, we want to understand why. And then we want to go and work really hard to find great value to give customers to convince them to use us for those use cases.
In doing that, we want to create significant value for brands for sellers.
All of this is made possible because sellers are subsidising the cost of customers. So we want to really work hard this year at creating amazing value for brands that is not trying to build tick tock about, we don't see any value in doing that. Tiktok has done a great job. And there's other platforms that do good jobs of that.
We really want to give brands access to first party data get hyper targeted, we're talking about the Google'ization of payments.
How do we let brands get in front of first party data customers with the highest intent the world has ever seen? I mean, our click to sales ratio is 55%.
How do we get brands in front of those customers, and make sure that they understand what the customer can afford what the customer has bought before, and convert that customer to a sale in a meaningful way in a sustainable way. That's going to be a big focus, a really big focus on bringing value to retailers and sellers.
And then moving forward obviously into next year. It's about just just basically growing that.
So market wise, we really want to start to own and control a much larger share of the UK market, we think we're in a phenomenal position to do that. We think we have the right to win here. The US is still nascent for us. And we really want to start to move into a position where that business is at least the size of our UK business by the end of next year.
But with that said, we have something quite interesting, something new and interesting that we're going to be announcing over the next few months that will allow us to really democratise access to our ad subsidised payments network without us going and getting the customers directly. And that's something we're excited about. We're going to be focusing heavily on in the next few months.
Brendan Le Grange 34:08
Where can they go to get the Zilch app? Where can they go to learn more about the Zilch product?
Philip Belamant 34:13
Yeah, so the app you can get obviously on any any of the usual app stores, iOS Android Play Store. Otherwise, you can go to www.zilch.com.
We run our blog off there, we've got a couple of white papers. So we tend to post something once a quarter, for instance, our Google'ization of payments white paper, and so everything you can find on zilch.com.
And of course, if you want to reach out to us specifically, you can see you can find most of us on LinkedIn.
Brendan Le Grange 34:35
Great. Well, Philip, thank you so much for your time. Best of luck with these bold plans. I think you've already shown you can achieve quite remarkable things in short time. So yes, I'll be one of the ones following and seeing what that uses as it comes out.
Philip Belamant 34:48
No look. Thanks very much for having me.
Brendan Le Grange 34:50
And thank you all for listening.
Please do look for and follow the show on your favourite podcast platform and share the updates widely on LinkedIn where lending nerds are found in our largest concentration. Plus, send me a connection request while you're there.
This show is written and recorded by myself Brendan le Grange in Brighton, England and edited by Fina Charleson of FC Productions.
Show music is by Iam_wake, and you can find show notes and written transcripts at www.HowtoLendMoneytoStrangers.show and I'll see you again next Thursday.