28/11/2006 - 21:00

Niche product opens global markets for ThinkSmart

28/11/2006 - 21:00


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The growth of niche marketing opportunities in the financial services market has been a vital part of ThinkSmart’s growth in Australia and Europe, and targeting of other overseas markets.

Niche product opens global markets for ThinkSmart

The growth of niche marketing opportunities in the financial services market has been a vital part of ThinkSmart’s growth in Australia and Europe, and targeting of other overseas markets.

Established in Perth in 1996, the company recognised a gap in the market for helping small businesses obtain finance for their IT equipment needs.

For ThinkSmart founder and chief executive Ned Montarello, the evolution of the company’s rental finance product, RentSmart, stemmed from three key facts.

“One was the inability of banks to provide business customers funding that was under $20,000, as inefficient processes made it a time consuming, non-profitable experience for them,” he told WA Business News.

“Secondly, there was a very healthy small business community, not just in Australia but globally, which seems to be the backbone of most of the economies throughout the world…a $6 billion market.

“Thirdly was our appetite for technology.

“So it was a combination of 40 per cent of the workforce being small business and the offering of technology that can produce a product that is quick and easy at the point of sale that benefits small businesses.”

From the outset, ThinkSmart rationalised the requirements for providing credit to simple rules and utilising pooled data intelligence that gave it the confidence to assess a business’s ability to repay small monthly amounts.

Typically, this is $100 per month in the IT retail environment, where the average transaction value was between $3,000 and $5,000.

The delivery of information at point of sale made it an easier transaction than was previously the case when financials or asset and liability statements were required.

The development of ‘SmartCheck’ technology offered retailers point-of-sale finance approvals through computer software that checks credit worthiness, allowing RentSmart finance to be competitive with cash and credit cards.

RentSmart is currently used in hundreds of retail outlets across Australia, including chains within the Coles Myer Group, David Jones and the Woolworth’s Dick Smith Group.

Mr Montarello recognised the same appetite for the product in the UK with the company in 2003 establishing a European operation centre in Manchester.

From there, the RentSmart product was re-branded and launched as SmartPlan through Dixons’ PC World super stores in a joint venture with the Halifax Bank of Scotland (HBOS).

“Within 10 months of launching in the UK we were writing more business there than we were in the Australian market,” Mr Montarello said.

The product is now offered through more than 135 PC World stores throughout UK, Wales, Scotland and Ireland.

Realising the enormous potential for further growth in Europe, which has a total market of 400 million people and 20 million small businesses, the company expanded SmartPlan into France and Spain through PC World’s European sister chain, PC City, and established a wholesale funding arrangement with Spanish bank Banco Santander.

“Spain has been one of our most successful markets,” Mr Montarello said. “It does half the volume of what we do in Australia.

“You go into a market like Spain with 48 million people, small businesses are the norm and so you have the same opportunity as in the UK or Australia.

“We are currently looking towards Italy and Sweden in 2007 and then we will be looking at one to two territories a year,” he said.

“We believe the same circumstances exist in South-East Asia as it does in Europe and we also look at every opportunity to expand our business into North America.”

Mr Montarello said the group’s offshore sales account for about 65 per cent of revenue, which was expected to jump from $22.3 million in 2004-05 to almost $29 million in 2005-06 and up to $41 million in 2006-07.

“We will be moving towards 90 per cent [in offshore sales] in two years,” he said.

In the past, Mr Montarello has hinted that the company may look towards an overseas listing in the future as its European operations continue to grow.

The company’s staff numbers have increased from 109 in 2003 – 2004 to forecast staff numbers of 127 for 2005-2006 year end and 137 for 2006 – 2007.


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