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Wish I Knew with Nick Molnar
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Millennials trustworthy but debt adverse says entrepreneur
12 June 2019
CEO of one of Australia's largest fintechs joins Business School podcast
At just 25, University of Sydney alumnus Nick Molnar (BCom ’12) thought that "trust" was a good foundation on which to build a business. Furthermore, Molnar decided to entrust his business to millennials or the so-called "me generation."
Today at 29, he is CEO to one of Australia's most successful fintech companies, Afterpay, which in just four years has recruited more than 3.3 million customers.
Often said to have been pampered by parents, millennials are defined as confident, ambitious, and achievement-oriented. They also have high expectations of their employers, tend to seek new challenges at work, and aren't afraid to question authority.
In an in-depth interview with the Business School’s Monica Vanderkley for the Wish I Knew podcast, Molnar adds that "millennials also spend money differently than members of any other generation."
"Growing up through the Global Financial Crisis, millennials learnt not to spend money that they don’t have," he says. "As a result, there are now twice as many debit card transactions as there are credit transactions."
Capitalising on this aversion to debt, the digital payment platform, Afterpay, allows customers to take possession of a purchase now but to pay off in four interest-free fortnightly instalments. It’s a modern twist on the old lay-by scheme and it’s funded via a fee charged to the retailer.
"We flipped the finance industry on its head by saying we are not going to charge the customer, we are going to charge the retailer and we are going to make it a true win-win for both parties," Molnar tells his podcast audience.
As Afterpay funds the initial purchase, it is the company that takes all the risk but, Molnar says, "our customers have the highest savings levels and the lowest levels of debt and they are incredibly responsible."
We say to our customers 'we trust you' and if you go late on a payment, we are going to stop your account until you catch-up. We wanted to create a great outcome for our customers with the right protections in place.
Nick Molnar, Co-founder and CEO, Afterpay
"Millennials are very educated, they are very real-time, they are peer-to-peer, they are reading reviews and they quickly realise that the traditional credit system was designed to make money from the customer."
Afterpay listed on the Australian Stock Exchange in 2016 and last year Molnar and his business partner Anthony Eisen launched the company in the United States. It now has a million customers in the US using its highly disruptive platform.
"When we launched in Australia nobody understood this debt card trend, when we launched in the US everyone understood it," Molnar says. "The key millennial brands in the US had seen it through their own data and they had been trying to solve it."
"We now process one in four fashion transactions. When you tell that to one of the world's largest fashion retailers that gets their attention."
When asked about the future, Molnar talked of the issues that arise from rapid growth and then turned to what it is that he intends to avoid.
"We will never be a finance product," he says. "We do one thing and it is uniquely simple and we have built a great relationship with what is arguably the most valuable demographic in the world. It’s the biggest population set in the world. In five years in Australia millennials will earn half of all disposable income."