How we built a fast growing Fintech startup – Cofidis Pay – inside a traditional financial corporation in less than 2 years

Innovation is the lifeblood of any successful company. It allows businesses to stay ahead of the curve and create new opportunities in a constantly evolving market. However, innovation can be challenging for traditional corporations, which may be constrained by rigid structures and legacy processes and technologies that hinder creativity and progress.

In the opposite side, Fintech startups have entered the market and disrupted the traditional banking sector, creating innovative and more efficient solutions for consumers.

Cofidis, a traditional financial corporation in Europe, aware of the challenges and trends decided to launch “an experiment” in Portugal, Cofidis Pay, that evolve to a fast-growing fintech startup that has innovated the payment industry in Portugal in less than 2 years.

Who is Cofidis?

Cofidis was founded in France in 1982, is part of the French Crédit Mutuel Group and has since become one of the leading consumer credit companies in Europe. In 1996, Cofidis Portugal started as a Credit by telephone company, which was a disruptive innovation in the local market. Before this, people had to go to a physical bank premises, apply for the credit, and wait weeks for approval. Today, Cofidis has 5061 employees in Europe and revenues of €13.5 billion.

How did Cofidis Pay start? Cofidis Pay was born out of a partner need, a business need, and a market trend that was gaining traction.

Partners, which were retailers who had physical stores, needed an immediate, simple credit solution that did not require a license to intermediate credit due to regulatory ruleswith a minimum friction to the end user. .

Cofidis needed to address a new market, adding a new revenue stream and business diversification.

The market trend was Buy Now Pay Later (BNPL), which was getting huge traction globally. Cofidis Portugal saw an opportunity to explore a new business opportunity while creating a new product for its clients.

So Cofidis Pay was born in late 2019 out a small team of dreamers with a big vision to create a holistic and omni-channel payment solution that could provide an amazing experience for customers and partners. However, they knew that they needed to validate their assumptions and take risks to make their vision a reality.

Business Risk Validation – is it viable?

Before launching Cofidis Pay, the team had to assess the business risk of building a new product based on the BNPL concept. This was done by building a business case to answer whether the product was viable. The business case answered questions such as whether the product would generate a new and sustainable revenue stream, whether the company could fund it, whether it had enough resources to build it, and whether there were any regulatory and/or legal blockers.

The team also defined the Why – “Optimise revenue per transactions (small tickets credit) , in the Short Term” , the What – “Develop a Payment Solution that provides a fast and full digital financing experience in physical and online stores”, the How – “How quickly and agile can we create a payment solution?”, and clearly framed the Problem: “How quickly and agilely can we solve the short-term need of a payment solution, creating the path to a more disruptive and sustainable innovation in the long term, based on an initial MPV and incremental small releases until achieving Product Market Fit?”

User Risk validation – is this valuable and usable?

To validate the assumptions, Cofidis Pay started the Customer Discovery phase based on the Design Thinking and Design Sprint methodologies. We wanted to validate the user risks – is this valuable and is this usable? After 8 weeks of intense Discovery work, a Value Proposition Canvas was built for final customers and partners and high fidelity prototypes were made to validate with real users and partners. The team got a “green light” from both, meaning the riskiest hypotheses and assumptions were validated with both customers and partners.

During the customer discovery phase, we conducted interviews with both end-users and merchant partners. End-users expressed their desire for a super immediate credit, simple, with no taxes, and no phone calls. Merchant partners shared that there were clients who felt uncomfortable sharing their financial situation in a traditional process. They also observed that while clients wait for the credit approval, they felt that the product or the service already belonged to them.

 Tech Risk validation – is this Feasible?

The initial answer to the question of whether Cofidis Pay’s vision was feasible was “yes.” However, the team discovered that it would take much more time and resources than they had estimated, meaning not enough funding available to this project. The team decided to use a Low Code platform, not only to accelerate the customer experience development (front end) but also the back-office and the integrations with Cofidis internal APIs.

Setting a clear Vision for Cofidis Pay ecosystem solution

With a clear vision and validated assumptions, Cofidis Pay moved on to build their product right. The team aimed to create a holistic and omni-channel payment solution with an amazing experience for customers and partners. Their vision included three main digital products: an app business for merchants, an app for clients and an e-commerce solution.

The app business offers a simple and frictionless payment solution for physical stores, including BNPL, that contributes to retail partners do more transactions at the point of sale.

The e-commerce solution is a simple and frictionless payment solution for eCommerce sites, including BNPL. This way Cofidis can also diversify and grow the type of merchants and customers that they acquire.

The client app is where customers can manage their payments, apply for new instalments, discover partner discounts, new recommendations and access to other Cofidis credit and insurance products. This app aims to create continuous engagement and retention with Cofidis Pay customers.

Building the product right

As Walt Disney once said, “The best way to get started with something is to quit talking and start doing.”

So, after the Discovery phase was complete and the Cofidis board approved the next step, it was time to move on to Delivery. A small team of 3 developers was hired and Cofidis Pay started by building and launching an MVP, based in the biggest pains and needs capture from user and partners.

The team selected to build first the app business product to offer a simple and frictionless payment solution for physical stores with BNPL.

In the development phase, the first wave of Covid 19 happened, but that didn´t stop the team from working remote, applying Agile methodologies to build the MPV for this first product.

The MPV was followed by several increments, validating user and partner traction (product usage) and business metrics. The team kept doing continuous Discovery and Delivery to learn, improve, develop and release new increments until reaching Product Market Fit. From the MVP to Product Market Fit the team took 8 months what is remarkable under the conditions.

Lessons Learned

The first lesson learned was to seed the culture of innovation and product mindset. In a traditional company, with traditional structures and frameworks, Cofidis Pay wanted to experiment with other ways to create, develop, and deliver products. Cofidis Pay fostered a product management mindset, utilized agile methodologies, hired new skills fast, leveraged new technologies like low code, and communicated effectively with other teams.

The second lesson learned was the importance of the team. The team at Cofidis Pay worked collaboratively and supported each other throughout the product development journey. From product managers to engineers, designers, UX writers, and QAs, everyone worked together to achieve their goals.

The third lesson was to focus on achieving product-market fit before moving onto the next phase, that was building the next digital product. Cofidis Pay followed the steps:

  • define the ecosystem vision
  • define each product’s vision and strategy,
  • identify and prioritize the MVP features and the success metrics for each product,
  • build the first MVP,
  • achieve traction on the key product features,
  • build the next MVP for the next product,
  • hire people to support growth – product, engineering, sales, support and operations

The next challenge

Cofidis Portugal has learned valuable lessons that can be applied to their future endeavors, while Cofidis Pay is ready to take on the next challenge – to move from a startup to a scaleupc and continue to innovate and create valuable products while scaling the business to reach new heights.

The future is looking bright for Cofidis Pay, and we are  ready to take on whatever challenges come their way.


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