At the heart of Todd Latham’s business strategy as CEO of checkout finance platform Divido is the believe that there remains a significant gap between what retailers offer and what consumers want.

He describes 2022, with a degree of understatement, as “an interesting year for Divido.” In the space of eight months, he has bolstered the C suite with no fewer than four new hires. Specifically, Latham has appointed a new chief marketing officer, new chief product officer, new chief revenue officer and a new VP of finance.

Divido 2022 highlights

Latham tells RBI: “We go into 2023 with a strong new team – the company is very fit. We have signed a number of partnerships with major European banks that we will be reporting upon in the first half of the year. We are positioned really strongly for what I believe the future of consumer finance looks like.”

Looking back on 2022, Latham reports 50% growth over the last year, and says his aim is to make 2023 the year checkout experience and payments become a long-term driver of growth for retailers and lenders.

“Businesses are under a lot of pressure to reduce costs and reach more customers and help them to buy the necessary items. As consumer behaviour changes, and inflation continues to take its toll, lenders and merchants must meet these evolving customer needs and deliver transparency, value, and flexibility at the point of sale.

“Through strategic partnerships, retailers and lenders can offer consumers responsible checkout finance options. In what will continue to be a difficult time for many, this level of choice can help brands earn trust and loyalty by creating frictionless finance for the consumer moments that matter.”

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Latham stresses that the firm works mainly with large ticket transactions of around £2,000 with a payback period of around one to two years.

It is, he says, a segment that the market has largely neglected over the past 20 to 30 years. Moreover, the wider BNPL sector has not targeted this market to date.

2022 highlights included a new deal with M&S Bank to enable Sparks Pay, a new retail finance programme for Marks & Spencer shoppers.

2023: ‘an even bigger year for the checkout finance platform’

He says that 2023 is set to be an even bigger year for the checkout finance platform as it continues to curate an ecosystem of trusted lenders and merchants that enables finance at any checkout.

In 2023 Divido will implement its checkout finance platform on behalf of multi-million-pound merchant The London Mint Office.

Divido will also be integrated into the CellPoint Digital orchestration platform, allowing CellPoint clients to implement their own retail finance programmes through the CellPoint stack. Further, a partnership with Nuvei will open the door for Divido to scale within the Nuvei client base, while allowing those clients to access Divido as a solution.

Divido last raised capital in June 2021. In a Series B funding round, the firm raised $30m to fund growth while continuing to build out its platform for lenders and merchants.

The round was led by HSBC and ING, with participation from Sony Innovation Fund by IGV, SBI Investment, OCS, Global Brain and DG Daiwa Ventures along with existing investors DN Capital, Dawn Capital, IQ Capital and Amex Ventures.

Says Latham: “2023 will be an exciting, transformative year. The firm is well capitalised with great backers, great customers and a great culture. Divido is a fabulous company and uniquely positioned within retail finance.”

BNPL segment woes

While Latham is unswerving in his assertion that Divido has an exciting future, the wider BNPL segment has endured a torrid 2022. Market valuations have plummeted. The Australian BNPL market in particular, supposedly the strongest market for BNPL with 12 quoted players, is currently a financial disaster. The total market cap of the Australian BNPL market peaked briefly at $58bn. Today, it is worth less than $1bn.

For example, the share price of Zip collapsed by 88% in 2022. Sezzle’s share price dropped by 86%, Payright by 83%, Laybuy by 78%, and Openpay by 76%. Other 2022 share price nosedives included Splitit and Humm, by 43% and 39% respectively. Moreover, 2023 kicked off with news that Laybuy’s low market valuation and liquidity are making it tricky to raise capital or attract institutional support.

Accordingly, Laybuy will ask shareholders at a meeting on 22 February to vote on a proposal to delist its shares from the Australian Securities Exchange.

In the US, the market is also suffering from a collapse in market sentiment with Affirm’s share price collapsing by almost 90% in 2022 and Block down by around 60%.

‘There is cash out there, funding out there’: Latham

And here, the writer and Latham, will just have to agree to disagree. He seems strangely unconcerned by the collapse in market sentiment and valuations. One of us argues that a large number of BNPL stocks will disappear and will lose the battle with rising interest rates and an increase in provisions and write-offs. There also remains the looming threat of much needed regulatory scrutiny. On the other hand, Latham argues that all technology stocks are down.

Latham goes further: “There is cash out there and funding out there. I do not think that we should be paying too much attention to the ups and downs of the market. I do think that these companies are long term sustainable.”

On one point, the writer and Latham do agree wholeheartedly and that relates to the need for BNPL fintechs to transform their business model. The future for BNPL fintechs, says Latham, is to pivot to become super-apps. That argument has merit. Whether or not Divido is indeed the future of what consumer finance looks like is for another day. One thing is for sure. Checkout finance will remain a source for great copy and fascinating to cover.

RBI editor Douglas Blakey speaks with Divido CEO Todd Latham