Beforepay has announced it has been granted an Australian Credit Licence (ACL) by financial services regulator ASIC, giving the go-ahead for the ASX-listed fintech to extend its offering beyond its core ‘pay advance’ product.

The ACL, issued to Beforepay’s wholly owned subsidiary BPG Credit Pty Ltd, will “open the door” for the fintech to expand its range of regulated credit products, said chief executive Jamie Twiss.

“[The] ACL is a really big milestone for us both in terms of demonstrating our commitment to responsible lending and to regulated credit. But it also opens the door for us to launch a new personal loans product,” said Twiss during the firm’s annual results presentation on Tuesday.

The fintech said will now leverage the ACL to launch new loan products “with higher limits and longer durations than the current Beforepay advance product”.

“This strategy takes advantage of the company’s capabilities in data-driven risk modelling and rapid, efficient, automated digital lending, positioning it to compete effectively in the regulated lending market.”

Twiss, however, was cagey on the precise details of the new products’ construct, pricing and release date,  confirming only that particulars will be released “soon”.

“Obtaining an ACL also reinforces the company’s commitment to safe, affordable, and responsible lending,” Beforepay said in a statement. “The company’s experience in processing large datasets to assess individual applications will help it tailor credit offers to reflect customer circumstances.”

A ‘transformative year’

The fintech achieved its first full year of profit (NPBT) since its founding in 2019, hitting $3.9 million. The year’s EBITDA was also in the black for the first time, hitting $8.5 million for FY2024.

“It’s been a transformative year for the group. [We’ve gone] from a promising upstart fintech to a scaled profitable lender,” Twiss said.

Pay advances, the group’s bread and butter offering, were up 13 per cent year on year, reaching $710 million for FY24. Revenue was also up a comparable 15 per cent, factoring in the ‘5 per cent fee’ charged on pay advances, with loan originations totalling 40,000 per week.

Active users on the platform grew three per cent, up from 234,000 to 240,000 year over year, with the userbase largely stabilising over the last three years.

Net loan defaults were also down 70 basis points over the last year, falling to 1.4 per cent – a significant milestone for the group, and bucking the overall rise in default personal loan risk over the past 18 months (with the Reserve Bank nudging interest rates to their highest point in 13 years, increasing financial strain for many households).

Twiss attributed the relatively low loan default rate to the company’s increasingly rigorous customer vetting process, noting consistent and incremental “improvements to our risk models, to our AI capabilities, to the way we do our decisioning, and the way we build out our elasticity curves for limit modelling”, among other factors.

“We’re super proud of the interlocked set of modules we’re calling our Risk Scoring Model. But there’s so much more we can do… to upgrade the model. The generative AI movement is coming along at just the right time, and we’re slotting that in.”

He added: “We’ve built a business that is enormously efficient, highly automated, [and with a] very lean cost base. We originate almost 40,000 loans every week with a team of between 40 to 50 people.”

The group also boasted wins for its recently launched enterprise offering, Carrington Labs, which effectively serves to commercialise the core software systems used by the group’s consumer lending/pay advance arm (among which include Beforepay’s vaunted risk management, data science and artificial intelligence capabilities).

Twiss confirmed the signing of two non-binding letters of intent, and ongoing conversations with “very large global banks” for the provision of Beforepay software.

“Carrington Labs has had great momentum. I’ve been pleasantly surprised by how much demand there is for a better way to think about credit decisioning.

“I think a lot of lenders are still using quite old approaches, very traditional 1980s credit scoring. We have something that is genuinely that much better. And we’re pleasantly surprised with how it compares to what else is in the market, [with] a lot of that interest [coming from] overseas.”

The technology, he notes, appeals particularly to mid-sized lenders (identifying a “sweet spot” in the US), “where they’re not going to build a product like this themselves but they have the size, sophistication and scale to use and integrate it into the product construct.”

He added: “We are really a kind of a data analytics credit software business at heart – that’s what has made Beforepay so successful.”

The fast-diversifying fintech, Twiss concluded, has had “a fantastic year”, turning “a very straightforward and significant profit”.

“I think we’re well set up for financial performance going forward and well set up for growth. We’re in phenomenal shape.”