By Liza Tetley on Monday 21 February 2022
Geoffroy Guigou, co-founder and COO of the French fintech unicorn, tells AltFi why he chose to enter the credit space during the global financial crisis, and shares the secrets to the company’s success ahead of its UK expansion.
Founded back in 2009, Younited may be one of the more mature fintech unicorns in France, but co-founder and COO Geoffroy Guigou has the energy and optimism of a man fresh onto the scene.
Looking at the staggering growth the company has seen over the past few years, this may come as little surprise. With revenue growth of between 140-150 per cent year-on-year, there is certainly reason to be cheerful.
But his enthusiasm no doubt also stems from the knowledge that a new era for financial services has really taken hold in Europe. A wholesale shift towards open banking on the continent is succeeding in breaking down barriers to technological innovation and disruption by democratising market access for new players.
In France, the benefits are self-evident, with droves of new “unicorns” now grabbing headlines on a semi-regular basis. As vice chairman of France FinTech – a non-profit association promoting fintech growth in France – this is a topic particularly close to Guigou’s heart.
“Of the French unicorns that emerged in 2021, 30-40 per cent came from the fintech space,” he says. “Growth in the country has become almost self-sustaining, given how often fintechs work with one another – the more fintechs there are, the more players emerge.”
Guigou got the entrepreneurial bug quite early on in his career. Starting out at McKinsey, he soon moved on to a start-up in the gas and electricity industry – a company that was later bought by energy behemoth, Total Direct Energie.
“It was around the time that the market had just opened-up to competition, and new players were flooding in to challenge the incumbents,” he says. “I joined the company when there were just 50 employees, and within three years, we had grown to over 700. Though I didn’t start the company myself, I saw it scale. It was my first “unicorn experience”, so to speak.”
Following Younited’s $170m funding round last July, backed by Goldman Sachs and Bridgepoint, Guigou had his second unicorn experience – this time of his own making – giving Younited the fuel for further expansion across Europe.
The company occupies a space in the market that Guigou himself admits is complex: credit. Along with co-founder Charles Egly, Guigou also chose a particularly unorthodox time to enter the financial markets.
“It was 2009, in the middle of the global financial crisis,” he says. “But Charles and I had a very strong vision on how the retail financial services industry would evolve. We thought that given how much the big players would need to do over the next ten years – in updating their compliance controls and changing how they work – they wouldn’t have much time to think about changing their products or the way they sell them.”
The pair saw an opportunity to create order out of the chaos that had engulfed the financial markets and chose to innovate in the credit space.
“We wanted to bring a touch of simplicity to the banking industry. That’s why we chose credit as our playing field – it is by far the trickiest, most complex area for customers, but also the one that gives them the most satisfaction.”
Fast-forward to today, and the challenger credit space is a crowded one. Younited provides a similar cash management offering to some “buy-now-pay-later” firms – allowing customers to pay for purchases across a series of instalments. But the crucial differentiator is the firm’s banking licence, which opens the door to a more attractive array of terms and conditions.
“We are certainly riding the same megatrend that explains BNPL growth – the rise in e-commerce, e-finance and e-credit,” says Guigou. “But we are different to BNPL providers in that we are not just traffic generators for merchants, but rather a regulated, e-credit provider that provides flexible financing solutions for customers.”
The firm’s banking licence allows it to offer higher loans and longer maturities, naturally positioning it in the luxury or higher value item space.
“The average spend in a customer’s basket with a BNPL provider is around €40-€50,” says Guigou.
“For our customers, the average spend per basket with online merchants ranges between €500 and €2,000. And rather than repayments occurring over a 30-day period, our average loan maturities are 12 months.”
Unlike traditional BNPL providers too, Younited’s credit products are not just available through online merchants at point of checkout. Customers can directly access loans (which average between €6,000 and €10,000) for larger ticket items – such as weddings, second-hand cars, furniture, or home renovations – via Younited’s website.
Younited’s high-profile partnerships with key providers such as Microsoft, Apple and telecoms provider, Orange, speak volumes about its growing profile in Europe. Guigou claims that Younited appeals to these tech giants on account of its pan-European coverage, giving companies access to 60 per cent of the entire European market via a single technological solution.
Growing its presence to cover 80 per cent of the market, and increasing its roster of countries by another four, are key objectives for Younited over the next three years. As is leveraging its coverage to engage in new partnerships with eminent product providers.
Though Macron has done much to improve the fintech landscape in France in recent years, Guigou attributes the growing success of fintechs to the shift in mindset within the European financial community and the introduction of PSD2 – a pan-European payments directive that allows banking data to be shared within the financial ecosystem.
“In the days when all companies relied on credit bureaus for data, the efficiency of the entire system was stifled, with acceptance rates and transaction flows being substantially slower,” he says.
“There has been a wholesale psychological shift within the industry thanks to PSD2. More data is available between institutions which can then be used to create better credit tools. For us, it has enabled us to lend for longer periods, using data analytics based on facts, not estimates.”
Guigou claims it’s not just fintechs and banks benefiting from this evolution in the financial system, but also customers themselves.
“It's presented a huge opportunity in terms of improving customer protections and democratising finance, by making the whole system more transparent and inclusive,” he adds.
Now, according to Guigou, Younited stands as the leading instant credit provider in Europe, with its products now widely used by neobanks and other fintechs – including fast-growing French superapp, Lydia.
Its growth across Europe has snowballed over a relatively short period. Up until 2016, the company was trading solely in France, but it has since rolled out its products across Germany, Italy, Spain and Portugal, and Younited’s ambitions don’t stop there.
“Last year our revenues stood at €150m. Our aim is to reach €1bn within the next few years and expand the business to cover 80 per cent of Europe by 2025,” says Guigou. “Thanks to our credit institution licence, we can deploy our technology in 30 countries across the European continent, so we now have our sights set on the Netherlands, Austria, Poland and the UK.”
Amid a tightening regulatory environment for BNPL providers – with FCA regulation incoming in the UK in response to concerns around consumer protections – it may seem an odd time to commit to such expansion. Yet Guigou claims Younited is “immune” to such pressures and sees new growth opportunities as regulation rids the landscape of less sustainable players.
“For our part, we aim to offer simple conditions and a duration of credit that is pre-confirmed upon purchase to avoid customers getting into circular habits,” he says. “We have also developed an AI-based personal finance management tool – called Younited Coach – which provides free budget diagnoses for our customers.”
It seems Younited too subscribes to the growing emphasis among financial institutions, not only on using data to improve their services, but on re-equipping their clients with their own data in a usable manner to help promote better habits.
For Guigou, it’s all part of promoting more sustainable credit usage that, in turn, should help support Younited’s growth within regulatory parameters.
“We ensure that customers are given back their credit information to help inform their future behaviours,” he says.