Payix co-founders Chris Chestnut and Preston Cecil sat in Chestnut’s home a little more than a year ago. The pair had worked together at Innovate Auto Finance, a North Texas company that specializes in purchasing auto portfolios of all sizes in the less-than-prime credit tiers.
With the success at Innovate Auto Finance fresh in their minds and Chestnut having been part of the information technology brain trust at AmeriCredit, they sought to create a solution that could benefit a finance company that might not have the resources to create a tool from scratch to reach their customers and collect payments through a way that’s one of the best to reach subprime consumers.
As a result, Payix was born; a company providing collections tools, payment processing resources and business intelligence solutions to U.S. finance companies and dealers. Offering white-label services and real-time loan management system (LMS) integration, the fintech firm is out to help its clients connect with their borrowers and improve their ability to collect payments — especially with Payix’s intuitive, engaging and affordable mobile collections application.
“One of the main drives for our solution is to truly give smaller lenders and dealers access and benefits of a very large-scale mobile technology solution,” Chestnut said during a phone conversation with SubPrime Auto Finance News ahead of Tuesday’s official launch.
“This ability for them to get brand recognition and basically leverage that trust they’ve already got with their borrowers through our technology, I feel gives them a huge leg up on the mobile use by their borrowers. We’ve coined this term called smartphone dependent borrowers,” he continued. “Folks who are truly probably deep subprime and subprime borrowers, they use their smartphone almost exclusively out of necessity because of their circumstances, they don’t have other access. They truly use their smartphone for everything.
“We felt this is who our solution is geared toward, lenders who are catering to those types of borrowers. Being able to present to those borrowers a solution that is in that lender’s name and brand only helps the situation in collecting payments,” Chestnut went on to say. “We felt from the very beginning being able to offer this as a white-label solution was extremely critical.”
Part of the research Payix’s founders included material from a 2015 Pew Research Center study. Payix cited it in a white paper posted on its website. A portion of the white paper stated there three additional reasons for smartphone dependence that standout for lower-income borrowers, including
—It’s the best choice. People living month-to-month on a low income finally have an affordable and convenient way to access the “internet of things.” According to Pew research done in 2014, more than 75 percent of monthly data plans now cost less than $100 per month. Additionally, market competition has driven average smartphone prices down in recent years, which provides access for this demographic group that was considered out-of-reach not too long ago. Now, that access is an essential part of day-to-day life.
—It’s the new home phone. Cell tower coverage and carrier reliability has reached a point where, according to the National Center for Health Statistics (NCHS), almost half of American households have abandoned what was once considered a must — a home phone. Many argue a home phone today is a superfluous item for the wealthy or those on the technology fringes.
—They have limited options. Although higher-income consumers often have access to PCs at work, school, or home, lower-income individuals are more likely to have jobs that either don’t require direct access to a computer or limit their discretionary online access. That leaves a smartphone device as the best or even only option to get online.
The Payix mobile app and other collections tools — including web, interactive voice response (IVR), and collector portal applications, as well as a client administration portal (CAP) — is designed to provide finance companies and dealers with control of their payment channels.
In addition, Payix says it has built a one-of-a-kind, powerful borrower communication channel that can provides finance a new way to talk with their borrowers in real time. These solutions are designed to help any size client, can easily be added to complement and work alongside other collections tools already in place, and can work with the finance company’s loan management system.
To get to Tuesday’s product launch took some heavy technological and capital-raising lifting by the Payix team. The company leveraged its collective experience in subprime auto financing as well as a relationship with a Silicon Valley firm that built the platform in less than four months.
“To build a native mobile application I’m sure as you can imagine is not cheap,” Chestnut said. “The bigger finance companies, they have the money and time to go invest to build that type of solution. Although we’ve been able to execute our build in a short amount of time, we’re able to do that because of the level of expertise that we have as a software company.”
In addition to offering collections tools, Payix also is rolling out payment processing solutions. The company is a registered independent sales organization (ISO) of Deutsche Bank AG and is powered by First Data. It transacts e-commerce payments through its own proprietary payment gateway.
Payix also can offer its clients business intelligence solutions to help them better understand their customers’ payment patterns and communication preferences.
“We’ve got very powerful programs at our disposal to offer to these lenders that hopefully will save them a lot of money,” Chestnut said.
While Chestnut didn’t offer any specifics regarding how many clients Payix hopes to land — or what kind of profitability is needed to satisfy investors — the co-founder is confident about what the company can do.
“As you can imagine would be like anyone starting a new company, we want to get as many clients as possible in a safe way. We’re ramping up diligently and prudently. We’ve got internal goals we’re striving for. But honestly, we’re going to make right decisions. We’re not going to put somebody on the platform in a way that jeopardizes them or us,” Chestnut said.
“In a nutshell, the philosophy we’re going with at this point is we feel like we have a product that’s a solid valuable product to our lenders and clients,” he continued. “We feel that will be evident as they get informed and exposed about what we’re doing. Through that process, they’ll see value. We feel they’ll also see the value that it adds to their borrowers. It allows them to interact with them in a much more efficient and effective way so the borrower receives value.
“Frankly our goal is to position the company and products in a way that we’re all winning together,” Chestnut went on to say. “That may sound a little clichéd and hammy, but the point is that’s truly what we’re doing. We feel like we’ve created a situation where by our lenders winning and their borrowers winning that we as a company also can win so we’ll have the success and eventual profitability we’re all hoping for.”