Todd Schwartz, Founder & CEO of OppFi, on providing credit to subprime borrowers

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There are tens of millions of Americans who have limited access to credit. Those with thin files or FICO scores below 650 often have difficulty accessing credit. Many have to resort to payday loans or pawn shops when they incur an unexpected expense. But there are fintech companies whose sole focus is serving this population with affordable credit access.

Todd-Schwartz, Founder, CEO & Executive Chairman, OppFi
Todd-Schwartz, Founder, CEO & Executive Chairman, OppFi

My next guest on the Fintech One-on-One podcast is Todd Schwartz, the CEO and Founder of OppFi. OppFi has been around since 2011 (they have a fascinating founding story) and is now a public company that has helped more than 1.3 million people with affordable loans. I did have the previous CEO, Jared Kaplan, on the show in 2020, but this is the first time I have had the founder on.

In this podcast you will learn:

  • The founding story of OppFi.
  • Why he started the company with a physical store front.
  • How the pandemic really turbo charged the business.
  • Why they decided to go public.
  • How being public has changed their business.
  • For underwriting, why understanding the primary bank account is critical.
  • Details of their Turn Up program .
  • The impact of the entry of banks into the small dollar loan space.
  • What the consumer advocate don’t understand about small-dollar lending.
  • What happens when states, such as Illinois, ban higher APR small-dollar lending.
  • Why they are focused on the states when it comes to engaging with regulators.
  • How they make sure that OppFi customers end up better off financially.

Read a transcription of our conversation below.


Peter Renton  00:01

Welcome to the Fintech One-on-One podcast. This is Peter Renton, Chairman and co-founder of Fintech Nexus. I’ve been doing this show since 2013, which makes this the longest running one on one interview show in all of fintech. Thank you for joining me on this journey. If you liked this podcast, you should check out our sister shows The Fintech Blueprint with Lex Sokolin and Fintech Coffee Break with Isabelle Castro, or listen to everything we produce by subscribing to the Fintech Nexus podcast channel.

Peter Renton  00:39

Before we get started, I want to remind you that Fintech Nexus is now a digital media company. We have sold our events business and are 100% focused on being the leading digital media company for fintech. What does this mean for you, you can now engage with one of the largest fintech communities, over 200,000 people through a variety of digital products, webinars, in-depth white papers, podcasts, email blasts, advertising, and much more, we can create a custom program designed just for you. If you want to reach a senior fintech audience, then please contact sales at fintech today.

Peter Renton  01:21

Today on the show, I’m delighted to welcome Todd Schwartz, he is the CEO and founder of OppFi and we wanted to get Todd on the show because he’s one of the old guard of the fintech lending space, founding OppFi many, many years ago, now all the way back in 2011. So we get into the founding story, which I think is unique. But we also talk about, a lot about the customer that they deal with and what their options are. We talked about why he decided to come back to the CEO role. We talked about underwriting and how OppFi is able to underwrite these loans, what sort of criteria they use. We talked about a lot of the innovations they’ve done, like the Turn Up program and some of the social impact companies that they work with, we talk about the banks coming to the space of the small dollar loans, or we talk about dealing with the consumer advocate groups and the regulatory environment, and much more. It was a fascinating discussion. Hope you enjoy the show.

Peter Renton  02:25

Welcome to the podcast, Todd.

Todd Schwartz  02:26

Thank you, Peter. I’m glad to be here.

Peter Renton  02:29

Okay, so let’s kick it off by giving the listeners a little bit of background about yourself, why don’t you talk about what you’ve done? Just some of the highlights of your career today?

Todd Schwartz  02:40

Well, I grew up my dad was an entrepreneur. He had bootstrapped a business in the call center space. So I kind of always had the entrepreneurial spirit as a kid, and always had jobs in the summer, was always working, trying to figure things out, kind of. So after school I went and worked for someone in the real estate space, a vertically integrated apartment developer, and then the financial crisis hit. And so I left, came in to start helping my dad with some of the things he was working on. Had this experience where I had a friend who worked at a pawn shop. And this was about 2010/2011. He invited me to lunch afterwards, we went to the pawn shop, and I saw a woman pawn a wedding ring off to meet her financial obligations, she was getting cash for what appeared to be a family heirloom. And so, you know had a really profound effect on me. And, you know, I just thought, like, wow, like, this really strikes a chord with me, it’s something I think I can, you know, I’m pretty passionate about, like, I can change how people borrow. And I started to do some research and realized that there’s a large segment of the population that’s impacted by credit access for unsecured, you know, unsecured credit. Specifically, there’s about 60 million people, it varies depending on cycles and the economy, but it’s a large portion of the population falls below a certain FICO score. And credit, historically at that time, had been inaccessible, or very expensive and onerous. The terms were very onerous.

Todd Schwartz  02:40

So you know, I started to do more research and saw that the banks, you know, there was a $32 billion/year industry in NSF and overdraft fees, right. So title loans, payday loans, and I said, Oh, my gosh, there’s got to be a better way to do this. And it all started kind of with the understanding of like people’s finances in their bank account, understanding their job and the security there. And so I kind of took $50,000 of my own money, and opened an office in the north side of Chicago and started getting referrals from the pawnshop, you know, I was very adamant about was that we were going to help people, you’re going to provide them a better option. And the product had to be fair, and had to be easy to use and easy to understand. And know those are kind of the roots and the beginning story of OppFi, the founding story of how it got going. One thing that was always important to me was, I couldn’t just do something that wasn’t helping people or doing something or changing outcomes, right. And I liked tackling large scale problems. This was a large scale problem that I could never solve myself. You know, we just hit 1.4 million unique customers, or 1.3/1.4 million unique customers. So we have a lot of work to do, right. If there’s 60 million total underbanked, you know we’re making a small dent. So it’s, and this is what I’m a big advocate of credit access, right, and credit choice. Choice and access for borrowers, because no one company is going to solve this issue, right. It’s a large scale problem and a large scale issue. And I think, if there’s, you know, sensible guidelines and sensible regulations, common sense ones that protect consumers, but allow for access. I’m always a big believer in that.

Peter Renton  05:51

Right, right. So then, maybe you could just give us a little bit of a history lesson if you could, just kind of how OppFi has developed. And it was OppLoans originally. I’ve had your Jared Kaplan on the show before, the former CEO and I think you’ve been…have you been chairman the whole time and what maybe you can give us a little bit of the history through to the IPO?

Todd Schwartz  06:13

Yeah, absolutely. For the first four and a half years, I was the founder and CEO. So I ran the company, built it up, really started to get product, the service delivery, some of the technology and start to allow for us to lend in a centralized way, which was different. When I first started, we had branches, and I had two branches, one in the city and one on the north side. And we were doing loans in person. I think that was instrumental in OppFi’s start though, because we really learned about the customer, I did the first 5000 loans myself, and I actually talked to every customer. And I learned why they were using product, why we were so much better. And we’re getting a lot of referrals from friends, colleagues. And, you know, we were able to book a business with a very low cost of acquisition and a very low delinquency rate. And one of the things we were able to lower the interest cost was is we took the time to underwrite the person, right? Instead of just instant approval, where you just approve someone and try to charge as much as you can to cover losses, we say, hey, we can bring the rate down and offer an amortizing product, which is larger, and people can pay it back in less than a year and nine months. And it was very successful and wildly popular. And I knew that.

Todd Schwartz  07:22

So about, I would say a year and a half in people started Todd, I love you, but I’d rather fax in my information or email you my documents. So you can ACH or wire the money into my account, I don’t want to drive 45 minutes to the branch. And they’ve already met you. So I saw the writing on the wall that the world was going to where things were going to be transacted on their phone, right and on computers. And so then I quickly started to develop it and work with some some vendors to develop technology to be able to lend online in a centralized format. And so once that kind of a jumping off point happened, and we closed the branch and I moved to the downtown office, we started to form the semblance of an operations call center and to be able to service people in a centralized format, which was much different. But a lot of the learnings from the in store experience and servicing our customers from day one really, really helped me in designing our service delivery model and our best in class, you know, customer service, and some of the social impact things that we do, you know, still live on today with the business like reporting credit, some of the credit education stuff, it was all stuff that was foundational in the beginning of OppFi.

Peter Renton  08:32

That’s interesting. I had no idea that you started actually with a physical office and talking to customers face to face.

Todd Schwartz  08:38

Yeah, well, you know why I did that, I thought it was gonna fail. I didn’t put it on LinkedIn, I didn’t. I thought this was just gonna be like a charitable venture that I you know, help people for a little bit. And then I wrapped it up and got back to doing, you know, a real estate or something else. But it ended up really, you know, kind of taking off and was really popular with customers. I knew there was a great product market fit. That was one thing I was sure. So you know, what happened was I was intertwined in kind of all aspects of the business, it was very centered around me, I realized to scale this right to be national. And to develop, we needed a management team, we really needed, I needed someone, and I also have other business interests with Schwartz Capital Group and Strand Equity Partners. Where I’m a partner there. And so at the time, I was kind of straddling the fence starting to work on both and because the economy unthawed and there started to be other things going on. And Jared, who came in at a really great time, you know, and really helped scale the business. That’s when we were, we had launched our first bank partnership, and really started to scale nationally. And you know, as you can imagine, scaling lending was a lot of work. So you know, he did, he did a really good job working with me, I was an executive chairman. So I’ve always been close to the business and stayed close to the business, working, working with me and the board and management team. So scaling it up and building a really good team that really continued you know, growth and we even launched other additional bank partners. We’re the vertically integrated service provider with the bank, and, you know, got us into 35 states at that point.

Todd Schwartz  10:13

So, you know, I think COVID happened. COVID was way better than expected then almost everyone thought. I think when we first, through COVID first happened, and the economy was closed, I think we all thought the worst, right, but then when the government stepped in, and stimulus, and the PPP started happening, I think things recovered really quickly. And credit losses, actually, probably our best year on record was 2020, which is surprising, after the start, when everyone thought it was gonna be the worst. But that really positioned us well. Right. And one thing that’s funny of it, never contemplated going public, never contemplated a public offering, didn’t think that was really the reason. And, you know, it was a long and thought out decision, you know, my dad who’s always been a big supporter, and also, you know, was there at the beginning of the founding, we had a long conversation about it, and, you know, kind of weighing, it was like the old Venn diagram, right, like public (garbled) the positive and negatives. And ultimately, like, you know, I think that the structure of the SPAC merger accelerated the timeline to go public, it’s not a traditional IPO, probably takes a lot longer. And also, we thought that the timing was right. And we wanted to reward management and reward people that had worked really hard to get OppFi to where it was today, so we decided to go public in July of 2021, it was a monumental day.

Todd Schwartz  11:34

It was pretty, pretty incredible, from a one room office on the north side of Chicago to looking up at the NYSC on the banner, like it was a, it was a pretty breathtaking moment, I had my family there, and it was just something I’ll never forget. But you know, on the other side of being public, you know, you have to be public. And so it was a great conversation, I did interviews, you know, we decided that I’m just going to kind of come back in into the CEO, or the more day to day the business has changed. I mean, when you’re public, it’s just a different, it’s a different mindset, different business, you’re not necessarily… We were a high tech, fast growing company, right. And in the public markets, there’s a lot you have to do a lot more, right, you got to to be successful. And I think it took a year, you know, we I came back in, and we had a little bit of a tough year last year. But you know, really, really have found our footing, we have really, really stable and solid team now. Some of the operating metrics of the business are back to 2019 levels, performing very nicely. And I feel like we’re in a really good, you know, good spot. I feel like our growth rate, we’re still growing nicely. But we’re also able to focus on the operating metrics, product improvements, and do other things well. When you’re growing so quickly and so fast, it’s hard to focus on everything, right, and think like, now we’re at a really good pace and the businesses is really performing well. And listen, you know, I enjoy what I do, I enjoy the great people at OppFi.

Todd Schwartz  12:59

Our mission has not changed since day one. And we’ve had the same mission to expand credit access and improve people’s financial health. Right. I think one of the things, you know, kind of we’re going to is to kind of finish off the timeline is, you know, we think that OppFi which is the parent company of OppLoans, OppLoans still exisits today, that is our core offering, which is a consumer focused product that provides credit access in the sub 650 FICO space, it’s a better alternative to other options that have been prevalent over the last 15 to 20 years. And so you know, that product remains today. We’re still the leader in the space, you know, it’s not only the way we deliver the product, it’s our product features, it’s you know, no prepayment penalties, no origination fees, fully amortizing, we report all payments to the bureau, we have for free, we have Experian Boost, we have SpringFour, we have all these different social impact partners that our customers get to use in conjunction with the product, no cost to them. And you know, we’re really passionate about giving people access, we believe they should have that access, but also trying to improve their financial health along the way. Right. And so that is still going strong. We still have a lot of growth there.

Todd Schwartz  14:16

I think, you know, one of the challenges a little bit today is just credit in general. It’s a little bit of an ominous outlook in the economy. No one knows. Right. I’ve heard I’ve heard soft landing. I’ve heard recession, I’ve heard things are going great. So, you know, I don’t think there’s a real consensus and when you’re running a public company, you just we’re being a little cautious, right now on credit and just making sure, obviously last year was a little bit of a tough year. So we want to make sure that we don’t make the same mistake twice. And so we’re being cautious on growth. But I do think, you know, we’ve really done a great job at, you know, trying to help everyone we possibly can in this environment to expand access. I think like if you look at OppFi though now, one of the things we’re focused on is we’re really good at delivering digital financial, alternative financial service products, right, our company has gotten really good. We have the scale, the size, from a compliance and regulatory standpoint, from a marketing funnel standpoint, from a service delivery standpoint, we’ve gotten really good. And we built that throughout the flows over the last 10/11 years. I think like there’s other products in the alternative finance space that bode well for OppFi as a parent company, where we can, we think we can do better than what’s out there now, or, and also service it better. And so the ability to take market share, you know, specifically we’re looking at stuff in debt settlement credit repair, which was very complimentary to OppLoans and our offering, but also, looking at small business lending. We think there’s, there’s a huge addressable market there that has a pretty significant supply demand imbalance, very similar to when I started OppFi in the consumer space. So we see a lot of similarities there. And we’ve been, you know, from that front, working on, looking at options, understanding the market and where we think, if we did enter this space we can play.

Peter Renton  16:05

Right, right. Okay. So let’s dig into underwriting for a little bit. Because, you know, these are, these are small dollar loans. You know, there’s not a whole lot of margin there, you can’t have someone spending a week digging into financial statements, and all that sort of thing to underwrite these people. How are you underwriting and I appreciate sort of the, the way you described how it started, you know, the face to face interactions. So maybe you can take, like, what you’ve learned and how you’ve created an underwriting model, I presume, a good chunk of this is automated, but maybe you just take us through how you do that.

Todd Schwartz  16:42

Yeah no, we’ve worked to automate, you know, almost 75% of applicants. By the way, there’s some applicants that could go through in an automated fashion that want to call and talk with somebody which is perfectly acceptable, we’re there to take the calls. You know, one of the one of the things we did early was we were focused on the, on the bank right, on their on their primary banking account, and seeing how the customer was using it, but also verifying the income through it, their identity, stuff like that, those were all things that other lenders were not taking steps to do. So we said, hey, like, we think we can lower the APR if we, you know, really understand the bank, understand their job, the security there, and then also look at, you know, other attributes through, you know, some some of some Bureau information. And so, what we did, we had a manual scorecard originally, right, it was a manual scorecard that we used to score. For the first year there it was really, hey, nice to meet you. You know, it looks like you know, you’re employed, this and that. But over time, we started to learn and develop actions and other things. I think, you know, what’s  important is, you know, we’re looking at it from a lens of, hey, we can’t approve everybody, right. But we can always, you know, treat people with dignity and respect, right there. Maybe give them a reason as to why it’s important. We think that if someone’s but ultimately, like, I’d love to hear all this AI talk, and all these, like, you know, different New Age underwriting.

Todd Schwartz  18:04

At the end of the day, I mean, let’s be honest, if someone doesn’t have the income to pay you to service the debt, you’re not going to get a payment from that person, delinquencies will rise. And so I think it’s really, really important that you make sure in the underwriting process, ability to pay, that’s something that OppFi has done since day one, it’s something that is paramount in underwriting. Ultimately, that is, I mean, you can look at all these attributes, you can look at their their past behaviors, but ultimately, like someone needs an income to support the payments for the product, right. And that’s something that we’ve always done. And something that we continue to advocate for is you can, you know, spin the data any way you want it, but ultimately it does, it does boil out the debt to income ratio, right? And that is something why mortgages have used that historically, why other lenders have used it, it’s very important in the underwriting process, you know, and it’s also something from an ethical and transparency standpoint, like if someone can’t afford it, or someone’s bank account is not in good standing. It’s not the right thing to do. And so we’re, you know, we’re, we still, you know, self govern ourselves, we’ve been complying with the small dollar lending rule with the CFPB, since it’s since it was written and continue to, you know, think things like that, like ability to pay, making sure income verification, bank account verification, those are all common sense, you know, guardrails for consumers that we support.

Peter Renton  19:25

Right, right. Okay, so I want to talk about this program you have, I think, is somewhat unique that your TurnUp program, it’s not a turn down program. Explain a bit, a little bit about that. What was the thinking there? How many customers are you referring out?

Todd Schwartz  19:40

It’s something that you know, came about, probably five years ago or so we kind of were sitting around a table and how it came about was, hey, like, one promise, promise to our customers or new customers is, hey, when you come to us, if we can find you a lower rate product that you may qualify for, and you’re just not aware of, we should extend that to you, or, or have that technology in place to offer that to you to see if you can get a lower cost product other than ours. And so what happens when customers come to us directly, we will screen them against a consortium of lower cost lenders, and they can potentially match. Obviously, once they match, then they have to go through the underwriting process of that lender. However, we have, usually about 10 to 11% of of applicants match. And I think probably a third of those get approved. So it’s still pretty low, like when it when it comes to like how many people do qualify, and that shows that there definitely, if 97% of the customers don’t get approved, that means that we need to be there on the back end, if it doesn’t work out. But it’s just something that we think is the right thing to do. And a lot of times people don’t realize they qualify maybe for a lower rate product. And so if we can extend that to someone and help them facilitate that, we think it’s good business, right. And we think that people will appreciate it in the long run. And so regardless, we don’t get the customer, but it’s okay. We’re okay with that. Because that is, you know, our mission and what we what we set out to do is help people get financial access and better financial access.

Peter Renton  21:13

You started this obviously, over a decade ago now, I think. And in that when you started, there was no banks offering these products, it was pretty much no large banks, shall we say, you know, now you’ve got US Bank’s had a product for many years. You’ve got now, you got Wells Fargo, BofA, you’ve got Truist. So you’ve seen more and more banks entering into this small dollar space. And obviously, you’ve had a little bit more clarity from the CFPB on that, which has helped. But why do you think we’re seeing more banks entering the space, and what impact’s that having, is that a positive or a negative impact on your business?

Todd Schwartz  21:49

All in all, like, I think the banks have pretty stringent, you know, application requirements to get those products. Like you have six months with the bank, you have to have stable income all this, you know, all this kind of same underwriting to even achieve, and some of them are a higher rate, right, but we’re supportive of it. I mean ultimately, like if someone can get a better product that fits their needs and prevents them from kind of a financial spiral that can happen from an unexpected emergency expense, or a shorter cash flow, I think it’s a good thing. You know, one of the things about some of these products, though, you know, we’ve always stated our APR straight out, like we don’t charge an origination fee, we don’t charge prepayment fee, no late fees. So instead of doing that, which which you could also always stay at a lower rate and then charge fees, right, like the Spirit Airlines model. We don’t do that. And so people can just understand what the true cost of those products is, right? The APR may be stated in a way. But if there’s fees, and things, you know, what is the APR, actually, for what you’re getting? I do encourage consumers to understand that. But yeah, I mean, ultimately, the banks, you know, participating in the space will help number one lower overdraft and NSF fees, but also provide more access, right? And I think there’s there’s plenty of room for banks to play in that and still coexist. I’m not, you know, from a demand perspective, I think it’s, I’m supportive of it.

Peter Renton  23:15

Right, right. So you mentioned the demand perspective. So I want to I want to touch on the consumer advocates who dislike small dollar loans, many of them want to just completely ban it, but the reality is the demand is not going to go away if you ban these types of products. What are these consumer advocates who dislike your product? What do they not understand about your customers?

Todd Schwartz  23:41

Yeah, I mean, number one is, you know, our customers are gainfully employed, right? Their knowledge of consumer finance, what they can afford is payments, how much it’s gonna cost. I mean, number one, knowedge is our contract, and we state all that. They know, you know, they understand. I think…I challenge if people are like, oh, people are being taken advantage of, this and that, they’re not. These people understand what they’re doing. The problem is they don’t have options. They don’t have options, right. So if a mom of three kids brakes blow out on a Thursday, right, and the car has to go into the repair shop and it’s $800 out of warranty brakes, there’s just not, she doesn’t have that cash flow to support that. You know, there needs to be options out there for people to fix that so that she can fix her car on Friday and then Saturday/Sunday drive her kids to activities, and then Monday go to work again, right? You know, you can really start a very severe spiral of someone’s financial situation if those options are not out there. When you look at our products, one of the things everyone’s focused on APR. APR is like the…what everyone talks about. But you really need to look at the totality, or you know the whole product in general. If there’s no prepayment penalties, no origination fees, like ability to pay, right? All the product benefits, like reporting to all three payment bureaus. Like, they’re not, they just focus on one variable of five in a product set. Right. And APR is always the one that that is talked about, almost exclusively. But you know, it’s like, yeah, I can lower my APR to, you know, and they’ll say, that’s what you should be doing. But then I can charge fees on top. And so it’s, you know, it’s one of those things, it’s like, I’d rather just state the APR the way it is. And the truth is, is small dollar lending less than a year, which is what we do, right.

Todd Schwartz  25:33

You know, we have the blueprint for what a small dollar lending rule should look like, you know, it should have everything that we’re doing, ability to pay, they should report to the payment bureaus. no prepayment penalties, right. Simple daily interest, fully amortizing. So what happens is, there’s bad actors, right that in this space, probably take advantage. And we all get grouped together, which is not fair, I think you do need to look at the provider, right? And you need to look at what they’re actually offering and how they’ve helped customers, not just regulate, you know, one size fits all, right. And so we are a big advocate of consumer protections. We think that, there’s common sense and that there needs to be guardrails for this, but we do think in small dollar lending ability to flex on APR to cover cost and expenses and have on demand service for people like we do, you need to be able to do it profitably. And every time that there’s a some type of rate cap or a ban on banks working with fintech partners, like ourselves, and a state, we see the data afterwards. And the unintended consequences are dire for people that have below a 650 FICO score, banks do not come in and magically lend. Other lenders don’t come in and start managing lending unprofitably, no, you know, nobody, nobody’s gonna do that. It’s not profitable, and they’re a for profit company, right? It’s not, they’re not going to be able to fill the void.

Todd Schwartz  26:54

So what we’ve seen, you know, most recently, like in Illinois is, we’ve seen that customers are impacted very negative, right, they get behind on bills, they’re not able to keep up, they’re going across state lines for payday loans, they’re actually paid, they’re going, they’re getting tribal loans online at three quarter, three quarter percent APR is, you know, and most customers that we talked to were like, Hey, we wish you were still here, they took away this option from us, because they did a one size fits all regulation that knocked everybody out. And so when I, you know, listen, we’re not going to be able to prevent all that from happening every time from happening. But one thing we do is, we like to have sit down and have conversations with with regulators in states and lawmakers in states and just tell them about what the situation is. Why are my customers like OppLoans, you know, how they’re using the product, how we’re responsible in how we administer and deliver the product, and try to hope they understand from our point of view, a lot of times we have a lot of success when we actually sit down and talk about it, and help them understand why Hey, we’re not charging fees upfront. So there does need to be, someone could pay off in two days. So we would actually lose money on that. That’s why we just say the higher APR to be able to cover costs, it’s literally that. It’s not that we’re you know, we’re not a 40% margin business, you know, net income margin business. We’re below 10%. So you need ability to flex on rate to be able to make this happen and provide access for people kind of on demand in real time.

Peter Renton  28:24

Right. Right. So then you haven’t chosen an easy business when it comes to dealing with regulators. You just said that you know when when you’re able to sit down face to face, the regulators oftentimes they they can really understand where you’re coming from. But I’m thinking about nationally, is there any kind of, are you focusing nationally to see if there’s some sort of federal regulation that that can really come through to help your types of customers and your products be viable nationwide? Or are you really focusing on the states?

Todd Schwartz  28:56

Yeah, I mean, right now, because the Senate and the house are pretty deadlocked, right. There’s narrow, narrow margin for the Democrats in the Senate, and the Republicans have the house. So there’s not much talk about, you know, a bipartisan effort for a small dollar lending bill right now. So the most of the interactions come at the state level right now. You know, that’s, that’s kind of today’s environment, but every time there’s an election, right, a presidential election which is coming next year, things change, right. And so we kind of respond to what we see and, and kind of our strategy there to, you know, inform people about our business and you know, how we try to help people. Right now, it’s mostly at the state levels where we’ve been really working with states. This past midterm, a lot of new Congress people in the state legislature came in, a lot of new state senators came in so you know, the new class we try to explain to them, Hey, this is how many constituents in your state need or use this product. This is how OppFi services that we think this is best in class for these reasons. And you we’d appreciate, you know, knowing that one size doesn’t fit all, right. And APR is not the best metric necessarily, to regulate this product, right? It just cuts off access in the end.

Todd Schwartz  30:11

I think like, one of the things I do, that’s probably more talked about in today is is affordable housing, right? You almost hear about affordable housing on a weekly basis. And very similarly, you know, if it’s an issue of there’s not enough supply, right, like, we all know that the only way to lower housing costs is to have more supply, right? And that’s kind of basic economics. Rent control doesn’t work. Like, ever. I haven’t seen it work. You know, if someone could point a case to me where it works, I just haven’t seen it. It’s similar to rate cap. A rate cap doesn’t work, right. It doesn’t feel, you said this earlier with the demand, the demand stays the same. People still need the product, just like people still need affordable housing, right? So there’s other there’s other methods, right, that work that put protections, guardrails, protecting the vulnerable, but also provide access to the people that need it, whether it’s housing, whether it’s credit, but I do believe choice and access is what brings down prices, ultimately, right competition. Not banning some things, that never really seems to work.

Peter Renton  31:14

Right, right. Gotcha. You mentioned social impact is a really important part of what you guys do. And like, can you just maybe take us through like, because one of the things that I’ve always been a supporter of, of products like this, even though many people say 36% rate cap, we gotta you know, that’s, that’s sort of the gold standard, they’re missing out on a huge segment of the population that simply can’t be underwritten for that kind of price. So what people I think are concerned about in general is a debt spiral and people just taking out a loan and then just never be able to pay it back and ending up just spiraling down into bankruptcy. How are you making sure that doesn’t happen for customers of OppFi?

Todd Schwartz  32:00

Yeah, I mean, you know, there’s a couple of things we offer to our customer at no cost, you know, social impact partners SpringFour there’s Experian Boost™. SpringFour connects people with local communities and helps them with resources and provides them that option. Experian Boost helps boost people’s credit score, a lot of times people have reporting on their credit that may be impacting it, and it tells you kind of easy steps to remove those trade lines to provide for potentially a score increase, which can help you get lower cost to capital, we report all three to all three bureaus every payment, so people can get a positive trade line and show that they’re responsible. So you know, the TurnUp program, right, is a big one, we’re trying to get people lower cost to capital, right, that’s a commitment to our customers. So I mean, those are those are things that you know, we do that’s different than kind of most, we also have OppU, which is a personal finance, credit education site that we maintain and write articles for. And so yeah, I mean, we’ve done some of that.

Todd Schwartz  33:04

We just launched the credit education tool where people can win gift cards for doing, playing games about credit education. And so, you know, we’re, we’re kind of in the forefront of finding ways for people to learn while they’re using our product, and to help, you know, make their lives better in that respect. I think one of the things ultimately that I always talk about is, you know, personal finance is not taught in schools, like I don’t, it’s starting to, like, you’re starting to see state legislators pass laws that it’s required, like health education and personal finance education are required, I think I’m always a big believer in it, I think it’s not talked about enough. And what happens is people kind of come out of college. And you know, they don’t really understand how to use a credit card responsibly, they don’t understand, you know, interest rate, amortization, the different financial products, it’s confusing, especially if it wasn’t taught to you at a young age, or your parents really didn’t kind of bring it into the household. So I think that’s something that is really important for kids to learn this at a young age about managing money, about the different financial products, you know, what’s beneficial, what’s not, and how to, you know, use it responsibly, I think is really important.

Peter Renton  34:19

Okay, so last question. You’ve been a public company now for more than two years, and just love to get a sense of how that’s changed you know, how you do business how it has changed, sort of the employee kind of feelings inside the inside the company, what’s different now that you’re a public company?

Todd Schwartz  34:40

One of the things is it’s made us better, right? Like now have, you know, oversight by the SEC, you know, when you’re in the spotlight, like OppFi, as you know, we made sure we operate that, you know, at the highest level of standard to make sure that the company’s fulfilling its mission but also, you know, doing it from a compliant standpoint and uh, you know, I think we’ve we’ve gotten good, you know, do you have stocks? Do you have? SEC you’ve got a lot of requirements now that, you know, ultimately, yes, some of them are tough at being a smaller sized company that’s less than a billion dollar market cap, you know, kind of have the same requirements as a larger company, so that we don’t have the size necessarily, or the balance sheet to spread the cost, but it does make you better, right, it prepares you and makes you better. So that, you know, we’re continuing to do things at the highest standards and levels. I think, you know, one of the things I’ve learned about you know, that the reporting every quarter is tough, right? So, you know, in the private markets, you don’t even have thoughts when you’re operating, you’re like, Hey, let’s go, let’s go invest these dollars, you know, now, and, and test this and make this happen. But when you have this, you know, when you have investors, I mean, you have the Street and you have financial expectations, right, you’d have to learn how to do it in those confines, right? You can’t, you can’t kind of move as quickly necessarily as you want. But we’re still able, you know, we haven’t lost our competitive and entrepreneurial spirit at OppFi I mean, you know, people, we still like to keep things nimble, always be testing things and make sure that we’re, you know, staying in the forefront, right of our service delivery, and also our productization. And so, you know, we’ve, it took us, you know, it probably took a year, right to learn how to be public and just learn what that means to be public.

Todd Schwartz  36:25

But I think we had a, we’re in a really good working rhythm, and I think the company’s responded really well, we had a kind of muted profitability last year, but you know, kind of came out in the second quarter, and a lot of the things we did from, you know, improving the payment portal experience, to the underwriting model to our marketing funnel, you know, we improved major metrics of the business significantly, year over a year, and a lot of that was the hard work of the team at OppFi,  and us just kind of getting back to the basics, right, and really just saying, Hey, we’re public, but that doesn’t matter. What got us here, we need to keep doing right, just because the lights are brighter just because, you know, we are charged stock trades publicly every day, every market day, it doesn’t mean that the economics or what we’ve been doing in the business has changed. All that remains the same, right? We still got to be driving value to our customers and still fulfilling our mission. That’s how we got here. That’s what we have to do to continue to go on. So I think it’s more normal now. You know, it was very fast paced, exciting. It was all a lot of new stuff for our team, you know, in the first year, but I think, you know, we’re starting to, it’s starting to become more normal and the pace of change and learnings is slowing down, which is good, so we can get back to doing what we do well, which is provide credit access.

Peter Renton  37:44

Okay, let’s leave it there. Todd. Great to have you on the show. Thanks for coming on. And best of luck to you.

Todd Schwartz  37:50

Peter, thank you. I enjoyed meeting with you. And thank you very much for having me on.

Peter Renton  37:56

Well, I hope you enjoyed the show. Thank you so much for listening. Please go ahead and give the show a review on the podcast platform of your choice and go tell your friends and colleagues about it. Anyway, on that note, I will sign off I very much appreciate you listening, and I’ll catch you next time. Bye.