A Conversation with Bruce Weinstein, President, CEO, and Member of the Board of Directors for Genesis Financial Solutions
We recently interviewed Bruce Weinstein, President, CEO, and Member of the Board of Directors for Genesis Financial Solutions. In this Q&A format we discuss Genesis Credit, second-look products, the consumer experience, and the Fintech revolution.
Bruce is responsible for defining Genesis Financial Solutions’ overall business strategy and the execution of the business plan. Sharing his 20+ years of business operations and financial management experience with the Genesis team and our myriad of clients and customers, Bruce secures financing, allocates human and capital resources, and drives the Genesis team to excellence. Prior to joining Genesis Financial Solutions, Bruce served as CFO for Credigy Solutions of Atlanta and as CFO and a Director of Wilshire Financial Services Group. He has also consulted privately, analyzing investments for industries ranging from investment banking, mortgage REITs, and distressed consumer receivables purchasing to direct response retail. Bruce is a graduate of the University of Puget Sound, in Tacoma, Washington, and is a Certified Public Accountant (inactive).
1. Can you provide a brief overview of Genesis Financial Solutions (GFS) in terms of company background, the products that you provide, and the evolution of the business?
Genesis Financial Solutions (GFS) serves near-prime customers with the nation’s leading and largest second-look and supplemental point of sale financing programs, operating under the Genesis Credit® brand name, in addition to the Milestone Gold MasterCard. We have established the highest benchmarks for product innovation, technology integration and customer satisfaction in the second-look financing industry. We are delivering significant sales and are partnered with some of America’s most recognized and trusted brands, such as Ashley Furniture HomeStores, Mattress Firm, Sleepy’s, Kroger (Fred Meyer Jewelers), Serta, Nautilus, Aspen Dental, and many others.
GFS was begun in 2001 by a group of seasoned financial experts focused on originating, acquiring and servicing consumer loans. Over the years GFS has underwritten or acquired 2 million non-prime consumer accounts.
The company recognized an unmet demand after the financial crisis of 2009: individuals with less than perfect credit or limited credit experience were being turned down by traditional prime-based lenders. To fill this financing gap for credit-challenged individuals and the retailers who were trying to serve them, GFS expanded into private label credit cards to offer underserved consumers a chance to purchase the products and services they need and deserve.
In 2011, GFS developed the Genesis Credit business line and we have become the leader by our dedication to two guiding principles:
- Prime Credit Experience for the Non-Prime Credit Customer: We built our company with a different mindset than traditional non-prime lenders; we built a “prime” credit card company using the best practices of major prime issuers with a focus on the non-prime customer. Our technology, innovation, platforms and processes meet or exceed prime-based credit card issuers. Our management team comes from the prime-based credit card industry leaders. Our core competency includes delivering national retail private label cards, co-brand programs, and credit underwriting to the non-prime credit segment which we have successfully done since 2001.
- Retailer & Healthcare Provider Experience: Our private label credit cards emulate the prime credit card program mirroring prime terms such as APR and 0% promotional financing terms, resulting in applicants accepting our card and immediately making purchases. Our retailer and healthcare partners embrace our program because of the ability to say “you’re approved” more often at the point of purchase, resulting in more customer loyalty and more repeat purchases.
Today, Genesis Credit is the leader in providing access to second-look and supplemental financing programs, centering on private label credit cards, bankcards (both general purpose and co-brand), and installment loans, from account opening through the life of the account. Genesis Credit is partnered with America’s leading retailers and operates in over 9000 retail locations across the United States.
2. For second-look financing, what is your strategic focus both in terms of the target customer segment and market verticals?
Our target customer is the near-prime to non-prime segment. Our customers are drawn to the prime-based issuers’ offers of 0% for 12, 24 months (or more) or 15% off when opening a new account at the point of sale. For those customers that are declined by the prime-based issuer, many are approved by Genesis Credit with a prime-like product that often features 0% for 6 or 12 months promotional financing.
Our market verticals are the same as the traditional prime issuers. Our initial focus has been big ticket retailers, such as home furnishings and jewelry, and healthcare providers, such as dentistry, where promotional financing facilitates the sale and also increases ticket size. We have expanded into home improvement in 2015 and we are moving into co-branded bankcard programs as well.
3. What type of consumer does Genesis typically serve?
We serve the consumer who cannot get approved by the prime-based issuer and are not drawn to a lease to own product with its associated higher costs to the consumer. The U.S. population has approximately 180 million consumers. 90 million are considered “prime” and are well served by prime-based issuers and lenders; these consumers usually have FICO scores generally above 700. 50 million are “near-“ and “non-prime” consumers, and these consumers range from around 700 to a high 500 FICO. Genesis Credit serves this middle segment with prime-line products. 40 million consumers are “sub-prime” and have FICO below the high 500 level. This credit-challenged segment often uses lease to own type products.
4. How should national scale retailers think of the applicability of Genesis’ second-look financing solution? Specifically, what type of credit products are offered and how seamless is the in-store and online experience?
National scale retailers are moving toward, and some have already implemented, a seamless and automated prime and second-look credit financing solution in order to save more sales at the point of sale. We are partnered with national scale retailers and healthcare providers in the furniture and bedding, home improvement, jewelry, fitness equipment and dentistry verticals. Our national programs are available through in-store, telesales and online channels, and the prime lender issues a branded-card product to newly approved applicants. Genesis Credit also issues a complementary branded card product and works with the retailer and prime lender to develop a cohesive marketing strategy to acquire more customers and market to existing cardmembers. This has resulted in more sales and stronger brand loyalty to the retailer since more customers are provided with a private label or co-branded card.
National retailers typically choose either a private label or co-branded second-look card product to match the lead card product issued by the prime lender. These products are custom built to fit into the retailer’s or healthcare provider’s environment, ranging from the POS to the partnership structure, so that the second-look card program maximizes approvals and sales while working within the constraints unique to each national retailer and healthcare provider. Our programs are seamless, so that often just one application is needed, and if the applicant is not approved by the prime lender, Genesis Credit can instantly approve the applicant within a few seconds. The power of our programs is the sales associate does not have to have two conversations about credit, just one, since Genesis Credit prescreens the applicants and only responds with positive approvals, which makes the experience more enjoyable for both the applicant and sales associate.
5. Depth of underwriting is the driver of retailer interest in second-look programs. Can you comment on GFS’ capabilities in this area and how material your advantages in this area are, on average?
Genesis Credit delivers high approval rates seamlessly and immediately after a prime issuer declines, and in some cases retailers and healthcare providers experience over a 50% approval rate with Genesis Credit. The approval rate is only one part of the second-look story, however. We spend a good portion of our time talking to existing and potentially new partners about why acceptance or purchase rate and line assignment are almost equally important to saving the sale or building a larger ticket. Purchase rate is defined when a newly approved Genesis Credit customer makes a transaction after the approval. Because our program is seamless and easy to understand by the customer (essentially it is the same prime-like product they were applying to for the prime issuer), and it is easy for the sales associate or the practice manager to process, our partners often experience purchase rates over 90%. Some traditional second-look lenders are not at the same level because the approvals are not immediate and the process requires more steps, which may lead to the customer losing interest. Credit line assignment is another important ingredient. Our goal, and what we have done for our partners, is to provide ample line to cover the sale. Often our average initial ticket is similar to the prime-based issuer’s average initial ticket with many of our partners.
6. How is the Fintech revolution influencing your business strategy particularly as new entrants point to advanced underwriting tools such as alternative credit models and more seamless integration with retailers using tablets, mobile, etc.?
GFS has been at the forefront of the Fintech Revolution. We have serviced the near- and non-prime credit segment since 2001 and have developed proprietary credit models using both traditional and non-traditional sources of applicant data, which has resulted in GFS building a durable and sustainable business. Like many lenders, our greatest test was the 2009 financial crisis, where we proved that our approach and discipline worked in a full range of economic climates.
Genesis Credit is available through in-store POS, online and telesales environments. We have seamlessly integrated with issuers POS systems, and have a tablet, mobile-enabled turnkey solution for retailers and healthcare providers who want a second-look solution but do not have the IT resources to integrate into their POS or practice management software.
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