Andy Smith, CEO of Snap Finance UK, talks about inclusive retail credit and what it means for furniture brands.
With millions of adults cut off from traditional lending, Andy answers key questions on how furniture brands can say “yes” to more customers.
Why are more customers struggling to access traditional point-of-sale (POS) finance?
Between 2022-23, nine million UK adults reported credit declines. This is because many mainstream lenders lean heavily on credit scores as a primary application filter. It’s understandable why; they are fast, scalable, and, historically, have been suitable risk predictors.
However, this often excludes customers with thin credit files, changing circumstances, limited histories, fluctuating incomes or atypical employment.
What happens when customers cannot access POS credit?
Customers with strong intent increasingly utilise retail credit for higher-value, needs-based purchases like furniture. Consequently, credit declines from primary lenders can mean frustration, abandoned baskets and lost sales.
Retail credit contributes significantly to consumer confidence, highlighting the need for inclusive lending to close the gap between intent and purchasing power.
How does Snap work with traditional lenders to help retailers approve more applications?
Snap complements, rather than competes with, mainstream retail credit providers in a multi-lender approach by offering customers a second chance through second-line lending. When a primary lender declines, we step in to support eligible customers.
Instead of relying heavily on a single credit score, we combine traditional and additional data sources to assess affordability more holistically.
Our award-winning Income Portal combines multi-bureau data with Open Banking and is the first in the UK to integrate Universal Credit and HMRC data into a fully digital income verification journey. This helps keep customers in the buying journey whilst enabling accurate, real-time affordability assessments, providing a seamless path to purchase.
How do you ensure responsible lending?
At Snap, responsible lending and affordability is central to our inclusive finance offering. Our approach ensures these customers aren’t simply turned away – they’re assessed on their real financial circumstances.
Alongside richer affordability checks, our risk-based pricing with dynamic, rather than static, APRs is tailored to individual risk profiles. Compared to a one-size-fits-all approach, this improves credit accuracy and fairness to widen access responsibly.
What results do furniture retailers see from this approach?
Our proprietary, advanced decisioning enables us to approve up to 35% of applications declined by first-line lenders.
Retailers experience higher approval rates, converting demand that might otherwise be lost, alongside increased average order values. This is from customers making considered, and often higher quality, purchases alongside obtaining the additional, complementary products that they need.
Are there any examples of Snap’s solution in action?
Simba Sleep partnered with Snap last year, leveraging our innovative inclusive finance to complement its existing retail finance offerings.
For Simba specifically, so far, we’ve managed to approve 17% of primary declines and expanded credit acceptance rates tenfold compared to its previous second-line lender.
In tandem, Simba’s seen a 50% higher average order value than the site norm across all transactions. By having Snap integrated directly at checkout using our Shopify plugin, customers are empowered to choose the right credit solution for them, including our more inclusive option if it’s better suited to their needs.
Does second-line finance add friction to the buying experience?
We work with retailers to ensure the right solution for them, and where we see the most success if having a fully integrated, digital journey.
By introducing Snap as a second-chance option at the point of decline, embedded in the checkout journey, customers can conclude their purchase with no added friction.
Does AI have a role in inclusive POS finance?
AI and machine learning capabilities are increasingly important for inclusive finance. Traditional credit models rely on limited data, which can lead to unnecessary declines. AI enables more dynamic customer journeys and real-time assessment of broader data such as spending patterns, income stability and affordability.
This unlocks quicker, fairer and more responsible approvals for customers struggling to access mainstream credit.
Is it a complex process for furniture brands to integrate second-line lending?
Snap’s solutions integrate seamlessly to sit alongside existing lenders in a waterfall journey, offering customers declined by primary lenders a second chance.
For e-commerce platforms, such as Shopify, Magento or WooCommerce, we’ve developed plugins which make it incredibly easy for retailers to launch with Snap in less than one month.
Innovative solutions like the Snap virtual card and Snap Wallet mobile app allow retailers to embed inclusive finance across in-store and telephony channels.
Why should furniture retailers be thinking about second-line finance now?
The UK retail sector has been dominated by interest-free POS credit. Today, however, 1 in 3 UK adults may have difficulty accessing credit from mainstream lenders, a 50% increase since 2016.
For higher value, needs-based customer decisions such as furniture, credit can be the deciding factor between browsing and buying. For millions of customers facing rejections, Snap fills a gap with second-line lending and a second chance for customers and retailers alike.
