Andy Smith, CEO at Snap Finance UK, examines how evolving retail credit technology helps boost conversions for financially underserved customers.
For furniture retail and the high-value customer decisions it entails, the point-of-sale (POS) finance experience can mean the difference between a converted sale, or an abandoned basket.
Today, this is increasingly challenging as traditional lending models often don’t align with changing financial behaviours. Approximately 20 million UK adults are financially underserved due factors such as thin credit files, variable incomes or lower scores. These customers are often excluded from a market dominated by interest-free credit, limiting retailers’ ability to serve a broader, more inclusive customer base, resulting in lost sales.
At Snap Finance (Snap), this has led us to explore innovative ways to support retailers with more inclusive, yet responsible, point‑of‑sale finance that helps unlock demand from financially underserved customers.
Looking beyond the credit score
Supported by innovative technologies including advanced AI and machine learning, Snap’s adaptive finance has enabled us to rethink finance responsibly in a way that delivers a seamless experience for both retailers and their customers.
Snap’s digital-first application journey leverages proprietary technology, combining advanced credit decisioning with enhanced affordability assessment. Snap’s affordability technology is the first in the UK to integrate Universal Credit and HMRC data into a fully digital income verification journey. Our award-winning Income Portal (Credit Strategy’s Best Use of Technology 2024) combines multi-bureau data with Open Banking to assess affordability in real time, enabling customers to easily share more data with us for a more accurate assessment.
The result is a solution that gives previously declined consumers access to both 0% and interest‑bearing credit, with multiple term lengths in one seamless journey. Crucially, affordability is assessed beyond traditional credit‑score‑based decisioning, using a broader view of a customer’s current financial circumstances.
To further enhance financial inclusivity, Snap introduced a risk-based approach to deliver pioneering dynamic pricing that adjusts APRs and loan approvals instantly. This uses innovative machine learning to respond swiftly to evolving market conditions – ensuring customers benefit from accessible and sustainable finance options.
Keeping ahead in a dynamic world
With AI and machine learning forming an important part of our solution, decision‑making models must remain timely. Many traditional credit models are updated annually, which may have been appropriate when financial behaviours were more predictable.
However, today, many consumers experience income volatility, shifting spending patterns and ongoing cost‑of‑living pressures. Models trained on data from 12 months ago may not accurately reflect a customer’s current affordability which is particularly challenging for financially underserved customers.
Recognising the need for more responsive assessment, Snap retrains and redeploys its lending models every few weeks rather than annually, supporting more accurate and responsible credit decisioning.
Unlocking advantages for furniture retailers
In today’s furniture retail sector, acknowledging the need for faster, smarter, and more adaptive finance is a key driver of growth. Where financial exclusion still impacts millions of consumers, there is a clear opportunity to create a more inclusive lending environment.
By helping furniture retailers say ‘yes’ with a finance solution more aligned with a buyer’s individual circumstances, retailers can empower financially underserved consumers blocked by traditional lending models.
Snap’s use of technology has enabled us to be at the forefront of inclusive lending, delivering a seamless experience for both retailers and their customers, whether through direct integration at checkout or via a smooth second‑tier journey for customers declined by traditional lenders.
Capturing this opportunity means retailers can support more customers at the point of intent, reducing drop-off at checkout and converting demand that might otherwise be lost.
