$1 Club, page-24697

Good points mate. I believe that IOU has always intended on becoming a leading "digital transaction processors" in SEA (the quoted section is directly from their website). I don't think that's ever changed. However, I am also starting to see how strategic they are in making this goal a reality.

Management committed to the change of direction to focus on BNPL about 12 months ago. The existing operations already had the capacity and capability to process digital transactions and had been doing so for several other organisations. I don't have the exact numbers in front of me however I believe these existing operations were totalling around $6m AUD per annum. Not exactly pocket change however it had its limitations.

BNPL transactions are growing rapidly and have accelerated due the COVID-19. This is an should be the focus of IOU for it to achieve the goal of becoming a leading digital transaction processor. The issue I see in SEA is that when something gets traction, every company jumps on board. We've seen this in the US, UK and in Australia. There's more BNPL providers than you could poke a stick at. It happens a lot faster in Asian countries simply because they aren't afraid to adopt new technology. To win in this space a business has to have a unique position that gives it an edge.

The IDSB investment/acquisition imo provides that edge. There's a unique opportunity to cross-sell BNPL to civil servants. I don't know how the company will make this offer attractive but I'm sure they have a plan. According to the research I cited yesterday, on average these particular individuals display a socio-economic disposition to use credit. Given they work in civil service, they are offered attractive rates as seen by the IDSB offering. Perhaps in the cross-sell some additional perk will be afforded to these individuals which makes using IOU, too good to pass up. The numbers I posted yesterday were rough and don't take all factors into account however there's some merit in the fact that IDSB has a loan book of $850m. Servicing these individuals will yield positive results and provides IOU a unique position in the BNPL landscape.

Expansion into new territories has been put on hold because of the pandemic. The focus on growing the presence in Malaysia means that spending a large amount of money on this opportunity is not quite as bad a move as I first thought. The reason no one predicted anything like this is because we've all been so focused on how every other BNPL business is choosing to grow their operation. If every business is run the same way the opportunity decreases. Maintaining the same direction with a unique position and increased focus makes this opportunity very attractive in my opinion.


I went from thinking, "what the hell are they doing?". To, "Wow, this is actually quite smart". I like being impressed and this is certainly impressive to me.