A Conversation with Peter Kalen, Founder and CEO of Flexiti Financial
We recently had the opportunity to speak with Peter Kalen founder and Chief Executive Officer of Flexiti Financial. In this Q&A we discuss the evolution of Flexiti Financial, trends in the Canadian retail sales finance market, the company’s value proposition, and growth opportunities in the market.
Peter Kalen is a seasoned retail credit executive. His banking experience includes Canada Trust and Citibank Canada (Citi Cards Canada) where he was Senior Vice-President and Chief Marketing Officer. At Citibank, Peter worked closely with Petro-Canada to launch the Citibank Petro-Points Mastercard, the first major launch of a contactless credit card in Canada. Peter also managed the marketing for credit card programs with retail partners such as Staples, Ikea, Costco, and The Home Depot. He also worked for President’s Choice Financial and Sears Canada where he was Executive Vice-President of Financial and Home Services. In addition to Financial Services, Peter managed Sears Travel, Warranties, Sears Connect Telecom Services, Specialty Services (such as Sears Portrait Studios and Sears Optical), and Sears Home Services.
Peter obtained his Honours Business Administration (H.B.A.) and Master in Business Administration (M.B.A.) from Ivey Business School at Western University.
Flexiti Financial is a Canada-based sales financing company founded in 2013. The company’s mission is to become the leading provider of point-of-sale financing and payment solutions for businesses across Canada. Flexiti’s vision is to help its partners in the retail, health, and home improvement sectors offer flexible sales financing solutions to sell more while helping consumers enjoy the things they need and want sooner.
1. What led you and your team to launch Flexiti Financial? Can you describe the evolution of the company – the management team, investors, etc.?
In the lead-up to the global credit crisis of 2008, there were a number of large players in consumer lending. In the midst of the crisis, between 2009 and 2012, all of these players either exited the market or dramatically curtailed their activity in Canada. Their departure created a large void, estimated at approximately $7 billion in receivables, and caused a significant shortage of sales financing supply for small and medium-sized retailers.
Flexiti Financial was founded and our unique mobile delivery platform was developed to take advantage of this market opening. Our first seed investor was Anthony Lacavera, Chairman of Globalive Capital and founder of Wind Mobile in Canada. Globalive has continued to invest in every funding round alongside several distinguished Canadian private investors. Our primary source of lending capital is currently a Canadian private debt fund and we are in discussions with several institutional investors to supplement that facility, given our rapid pace of growth.
For me, the opportunity to launch a business in a space I knew so well was something I couldn’t pass up. I have been in retail and credit my whole career, and possess a strong entrepreneurial drive. Flexiti was the right opportunity at the right time in terms of starting a company to address a growing market need.
2. What needs or trends did you see in the Canadian market that you felt were not being addressed by other retail credit options?
In my view, large financial institutions offering point-of-sale (POS) financing were slow to adapt to consumer needs and wants, and/or adopt the technological advancements available to them. Critically, the retailer or their customers were not being put at the center of the POS financing experience. Applications were, and in some cases still are, paper-based, which requires manual entry by a customer and then re-entry into a system by a salesperson. Application approval times at best were 15-45 minutes, but could take hours or even days, leaving both a customer and a salesperson in the dark on whether financing would be available to facilitate the sale. Financing terms and conditions were often tied to rigid policies and procedures, rather than built to support the pace and needs of retail. In short, the legacy process was slow, cumbersome, intrusive, and, given the low risk tolerance of providers, did not always result in sale. As a result, POS financing as a sales tool was seen as a last resort and a missed opportunity. To bring POS financing to the forefront of the sales process, where it should be, Flexiti believed that the model needed to be flipped on its head.
3. At the most fundamental level, what is Flexiti Financial’s core product/service and the underlying value proposition to merchants and consumers?
First and foremost, we want to be seen as an extension of the retailer’s business and service model to help them increase sales. Building a strong partnership with our retail partners through exceptional customer service and an inherent understanding of their day-to-day business realities is key for us.
Our platform allows retailers to offer instant financing through any device, anywhere, and obtain an instant credit approval in three minutes. This is done using a mobile application process and ID scanning technology. Flexiti Financial’s advanced algorithms and customer service are able to confidently approve more people and thus generate more sales at a time when both the customer and the retailer need a solution.
With Flexiti, retailers can also offer customized payment options at interest rates significantly below current credit options on the market.
We offer the following features:
- Speed and Ease of Application: Customers can apply in-store or at home and get instantly approved
- High Approval Rate: More closed sales and higher customer satisfaction
- Scalable Infrastructure: Our platform can adapt to any type of retailer across multiple locations
- Strong Customer Service: Customized and aligned with retailer on driving a differentiated sales and service experience
Customers can choose flexible payment plans with varying interest rates. We also offer a virtual QR code that can be transferred via cell phone, allowing customers to have their Flexiti Financial line of credit always accessible.
The combination of these features builds the confidence of the sales representatives, meaning they are using financing as a tool to grow basket size and close more sales, rather than only for those that proactively ask “if financing is available.”
Overall, we are seeing great traction and have received some notable recognition. Our platform and services were recently named Best Emerging Consumer Lending Platform by LendIt, which recognizes Flexiti Financial’s platform as having great potential to impact the future of consumer lending. Already, approximately 10,000 customers use our financing services in over 1,500 retail locations, so our unique offering is clearly resonating with customers, retailers, and the payments industry.
4. What type of merchant (e.g., size, average ticket, retail segment, type of financing opportunity, store or digital player) would find the most value in the Flexiti Solution?
Our merchants are typically those with a physical retail space that sell large-ticket items like furniture, appliances, jewelry, outdoor equipment, etc. Average ticket size is around $3,000. In many cases, the purchase decision is made quite quickly and so retailers need a solution to instantly capture a customer’s intent to buy.
5. Where is Flexiti in terms of platform technology roadmap, scalability of the platform, its funding capacity, and ability to take on larger merchants?
To expand on various product features in our offering and allow the company to serve a broader customer base, we led a significant systems migration in November 2016 to a proprietary private label credit card platform. It is a modern and flexible system that allows us to react at the pace of our retail partners. Our mobile application communicates with our adjudication and back-end system through API’s, making it very flexible. We are fully scalable and currently count large merchants with multiple locations as our customers.
6. How should merchants think about the implementation of the Flexiti solution across channels? Can you give us an indication of time, effort, and the level of resources required for a Flexiti partner?
We want to be seen as a real partner to retailers and an extension of their business. We needed to build a solution that could be up and running with minimal investment from a merchant. To achieve this, we built our platform to limit any technical integration with the retailer’s POS or back-end systems, which makes it very easy to plug Flexiti in and start using our financing services with little to no technical customization. Our training and support staff will work with the retailer’s sales team to get them up to speed on how to use our platform not only from a technical perspective, but also as a sales tool. Based on the number of locations or size of a sales team, retailers can be up and running within a couple of weeks.
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