A Conversation with Jeff Howard, CEO of Fortiva Financial and President of Atlanticus Holdings
We recently spoke with Jeff Howard, CEO of Fortiva Financial, as well as President of Fortiva’s parent company, Atlanticus Holdings. In this Q&A format we discussed the evolution of Fortiva, its product offerings, and advancements in underwriting.
Jeff Howard is CEO of Fortiva Financial, as well as President of Fortiva’s parent company, Atlanticus Holdings. He is responsible for the creation and execution of all aspects of the company’s strategy and operations. During his 15 years with the company, Jeff has led overall strategy development and mergers and acquisitions activities. In the course of Jeff’s tenure, the company acquired over $6 billion in assets and numerous business lines resulting in platform expansion both domestically and internationally. Prior to joining Atlanticus in 2001, he was a director at SunTrust Equitable Securities, a division of SunTrust Bank, where he spent time in mergers and acquisitions advisory as well as the Corporate and Investment Banking unit. Jeff has a Master of Business Administration from the Goizueta School of Business at Emory University and a Bachelor of Science from the Georgia Institute of Technology.
1. Can you provide a brief overview of Fortiva in terms of company background, recent events, and the evolution of the company’s business/product line?
Fortiva is a technology-enabled, consumer finance business, which markets three programs: Fortiva Retail Credit, Fortiva Credit Card and Fortiva Personal Loans. These programs focus on consumers with less-than-perfect credit who are overlooked by the traditional bank lenders. With 20 years of underwriting experience and having funded over $25 billion in loans to overlooked consumers, Fortiva leverages instant decisioning capabilities, deep underwriting and a completely paperless process to support a best-in-class program for our clients and our customers.
After the 2008 global financial crisis, consumers with less-than-prime credit scores were left with little to no options for financing necessary purchases. The crisis hit retailers, as these consumers no longer had access to general-purpose credit. With over a decade of experience under our belt, and having already successfully navigated several macroeconomic shocks, we were perfectly poised to fill this void.
Shortly after the 2008 crisis, Fortiva Retail Credit was launched and we set out to offer the best point of sale experience in the marketplace to retail partners whose customers need financing. Our clients benefit from:
- Flexible Technology – Whether it is through direct or third party integrations, our web portal, mobile applications, or our call center, we integrate with our partners based on their infrastructure requirements.
- Proprietary Analytics – By utilizing hundreds of data points, from multiple sources developed over decades of underwriting, we approve more customers.
- Instant Decisioning – The fully online, paperless process allows retailers to obtain a financing decision for their customer in less than 10 seconds.
We have since added Fortiva Personal Loans and Fortiva Credit Card, which are marketed directly to consumers, to expand further our breadth of offerings. Through our omnichannel origination platform, we leverage technology-enabled analytics to offer the right product (line of credit, personal loan, or credit card), wherever (point of sale, in-home, online) and however (through POS, web, mobile, call-in) is best for our client.
2. For the retail sector, what is your focus both in terms of the target customer segment, the product set and coverage of market verticals? How do different products align with retailer or customer needs?
Retailers spend a great deal of money to attract customers. Yet, in this post-financial crisis world, several sources have reported over half the population has a subprime credit score. The last thing retailers want is to say “no” to a consumer who has chosen to purchase their product, or to offer a financing program that does not appeal to their customer. While prime providers typically approve 60%-80% of applicants, Fortiva Retail Credit focuses on applicants who are declined by prime providers. We have a broad array of offers and serve national retail relationships primarily in the furniture, electronics, home improvement, educational services, elective medical and dentistry verticals.
Even though we say our sweet spot is in the mid-500 to high-600 FICO range, Fortiva does not rely on FICO scores. Instead, we look at several hundred attributes in order to optimize approvals. Depending on the product, the vertical, and the dealer/retailer costs, APRs can range from 9.9% to 35.9%, with credit lines from $1,500 to $20,000.
We learned early on that each retailer is unique and demands different solutions to align with their business processes. Whether it is integration requirements, application process changes, or a variety of consumer offers, our configurable platform has been built to allow retailers the ability to create the program that is right for them. Some retailers prefer the lowest consumer rates and are willing to subsidize us for this. Others prefer higher credit lines and longer terms, and still other retailers are focused on the lowest possible cost to them. To support these varying priorities, Fortiva offers the most flexible solutions in the marketplace.
3. How should national scale retailers think of the applicability of Fortiva’s solutions? Specifically, what type of credit products are offered and how seamless is the in-store and on-line experience?
National retailers understand, in order to increase sales and customer loyalty, they need to offer payment programs for their full range of customers, not just a select few. The Fortiva Retail Credit program is consistent across the retailers’ national footprint and their customers’ purchase lifecycle, from online to in-store to repeat purchase. With Fortiva Retail Credit our retail partners gain:
- Lower customer costs, higher acceptance rates, higher credit lines and higher repurchase rates compared to other alternatives
- Revolving, single purpose lines of credit, meaning it can only be used in the retail partner’s locations
- Coverage across all U.S. markets, including Puerto Rico and the U.S./ Virgin Islands
If a retailer is looking to offer financing beyond revolving credit, Fortiva also provides credit card and installment loan options. Fortiva works hard to meet the business requirements of our client partners and have multiple, flexible configuration options available.
4. Depth of underwriting is the driver of retailer interest in retail credit and specifically, second look programs. Can you comment on Fortiva’s capabilities in this area and how material are your advantages in this area, on average?
Our experience in funding over $25 billion in customer loans across numerous asset classes means we have a unique and advantageous perspective on underwriting. This experience, combined with our broad range of offers, gives us the deepest underwriting capabilities in the market. Retailers benefit by:
- Recapturing a higher percentage of consumers, declined by traditional prime lenders – exceeding 50% in some cases
- Supporting FICO scores well into the 500s – up to 30-40 points lower on average than a prime originator’s buy-deeper approach
- Increasing customer acceptance, average tickets and repurchase rates – versus cash payers or tertiary providers
Fortiva knows successful retail programs cannot be measured through one metric alone. Instead, success is gained by optimizing every element of the customer lifecycle, from application to acceptance to repeat purchase. While our underwriting expertise allows us to approve more consumers, our retail partners also benefit as we optimize each of these variables.
5. How is the Fintech revolution influencing your 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.?
First, the #fintech revolution has forever changed the consumer experience, taking consumers away from traditional banks and using technology to replace branches. It has certainly accelerated the adoption of, and driven enhancement to, the online experience for those used to a bank experience. Nonprime consumers, however, have rarely made great use of banks. Even prior to the #fintech revolution, it has been important to us to have multiple channels through which to interface with our customers, whether it is through retail, online, mobile, direct mail, or phone.
Second, the advancements in underwriting tools and data sources have been taking place for decades and the #fintech revolution has certainly increased awareness of these alternatives. Our company was founded based on leveraging technology to aggregate data and make instant credit decisions. Today there are thousands of attributes which can be analyzed in nanoseconds to make better underwriting decisions. We are continually testing different sources and attributes to confirm:
- Is the use of the data compliant?
- Does the use of the data make outcomes more predictive?
- Is it scalable?
- Is it cost effective?
We have been at the forefront of advanced analytics and will continue to do so in our ongoing effort to bring the lowest cost options possible to our customers.
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