- Younited Credit, a French fintech backed by Goldman Sachs, is set to expand into the UK.
- The startup has raised $368 million to date by offering rapid loans worth up to $58,000.
- CEO Charles Egly says there is a danger around how buy now, pay later offerings have been marketed.
Younited Credit, a fintech lender backed by Goldman Sachs, is expanding into the UK as it looks to take advantage of the groundswell of interest in buy now, pay later (BNPL).
The French startup, which was founded in 2012, offers quick loans to consumers in Europe worth up to €50,000 ($56,873) over periods ranging from one month to seven years by automating the approvals process.
The company draws on customers’ banking data, something that has become more workable with the advent of Open Banking regulation in Europe. The regulation has enabled customers to share their banking data with other companies more readily. Younited’s algorithm then uses a customer’s data to evaluate their credit risk rapidly.
BNPL has emerged as one of the hottest trends in the credit industry with companies like Klarna soaring to a $45.6 billion valuation last year. The service, which is typically offered at checkouts, enables shoppers to spread the cost of an item over several weeks or months.
Younited also offers its own form of consumer credit at online checkouts. Younited Pay, an embedded product that appears as a payment option on the websites of popular merchants, offers longer-dated credit which customers can use for more expensive items.
Charles Egly, the Younited chief executive, told Insider that BNPL companies were not competitors to his company but that in many ways, the French fintech was aiming to be a competitor to them.
“We don’t think it’s worth taking out credit for smaller amounts and if you’re going to offer credit as a payment facility then it should be called that,” Egly told Insider.
“That’s the danger around buy now, pay later because they don’t name it. Behaviors have changed for e-commerce consumers and through
open banking
, you are able to better score consumers and avoid over-indebtedness.”
Generally, BNPL players do a soft credit check on users before determining a user’s credit worthiness and concerns have been raised on both sides of the Atlantic about the potential for unregulated players in the space to cause consumers to go into debt.
“BNPL companies are riding the same wave as we are in terms of the growth of e-commerce, cashless payment, and improved user experience on user experience around payment and credit,” Egly added.
“Those companies are surfing the same mega trends but we are a very different business model.”
The UK’s financial watchdog has indicated it will regulate the sector and Younited Credit plans to add FCA regulation to its license from the European Central Bank to operate.
“The UK is a big market and is a big focus for us although has Brexit made it a bit more complex,” Egly said. In the UK, credit scoring is usually the preserve of credit bureaus which Younited wants to disrupt.
“We think our risk pricing with PSD2 (open banking) is better, faster and allows you to avoid indebtedness,” Egly added.
The Younited CEO has also not ruled out pushing into the US market eventually but insists the European market is “so huge” that there is still plenty of expansion to be carried out.
Younited reported revenues of more than $170 million in 2021 and has around 500 staff with more set to join in the UK.
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