Latitude CEO Fahour bets work from home here to stay

Latitude Financial CEO Ahmed Fahour is restructuring the lender to adjust to homes becoming the principal place of work.

Ahmed Fahour, CEO of Latitude Financial Services Group. Picture: Stuart McEvoy

Latitude Financial chief executive Ahmed Fahour is betting on the coronavirus pandemic lasting another two years and is restructuring the non-bank lender to adjust to homes becoming the principal place of work.

Mr Fahour has announced a new slimmed down operating structure for Latitude, which involves investing $30m in bolstering its booming interest free or buy now, pay later business and combining the two onto one digital platform. Meanwhile, Latitude’s lower growth credit card offerings will be slashed from nine to three.

Under the new structure, Mr Fahour has combined L-Money (Latitude’s personal loans, motor loans and credit cards business) and L-Pay (the company’s interest free offering) into one business unit headed by company veteran Paul Varro, who will become chief commercial officer.

Mr Varro will work alongside chief operating officer Andrew Walduck. Both men will report to Mr Fahour.

The realignment comes amid what Mr Fahour says is a significant shift in the world economy as the office workers leave CBDs to work from home, which he will become the new normal.

“We still don’t have a vaccine for SARS and that was 17 years ago. So we are going to have to learn to live with this for a long time to come,” Mr Fahour told The Australian.

“The way we work will include the home. It’s a serious structural shift in the world economy.

“Even ourselves here at Latitude, I’m at the Docklands office and we are using 3 per cent of our space here. We have got 97 per cent all working from home. And we don’t expect that to come back at all over winter.”

As part of the restructure and in response to the coronavirus-fuelled changes, Mr Fahour will not renew leases for Latitude’s offices in Parramatta, which accommodates less than 100 people, and Springfield in Brisbane, which houses another 300 employees. Mr Fahour said most of those workers will work from home permanently, leaving Latitude with only its Docklands and Auckland offices.

He said there will also be some redundancies across the entire business. “Every leader will need to start thinking about not just work from home as a temporary thing. Work from home is a permanent fixture now of how to think about leadership.

“Office buildings will become more like a hub where you need to come in for some training or some office meetings where you can only have a small group of people. So it’s more like a landing hub rather than coming into work like you always did taking public transport etc.”

But the shift in thousands of office workers also presents an opportunity. Mr Fahour said Latitude’s interest free loans business has been booming during the pandemic as people realise the need to invest in home office furniture or upgrade other goods such as couches, fridges and televisions.

“E-commerce is a big feature and working from home is now a big feature, so how do we set up our business to work with customers over the next 12-24 months as time goes by.

“When you’re at home, you notice things like ‘geeze that couch is really uncomfortable, I’ve got to replace that desk now, I can look outside and see I need to fix things’.

“If you go through our business you’ll find 90 per cent of the money we make comes from this interest free by now, pay later category and it comes from the home economy. It’s a fridge, it’s a TV, it’s a couch, a computer, an iPhone.”

Since launching LatitudePay last September, which is the company’s small ticket buy now, pay later product, Mr Fahour said it has gone from signing up 5000 new customers a month, to 50,000 a month.

“We told the market would get 70,000 customers — that’s what we thought we would get out of it. We are now sitting at 300,000 customers, just in that small ticket category and overall we are over 2 million customers in interest free.

“We make as much profit in a month as Afterpay makes in revenue a month.”

Mr Fahour said the company had $2bn excess funding available to fuel its growth or cope with another economic shock from a potentially economically disastrous second wave of COVID-19 infections.

Latitude currently has receivables totally about $7bn and around $9bn in funding available. It is now the second biggest lender, by value, of personal loans behind Commonwealth Bank in Australia and ANZ in New Zealand — a feat Mr Fahour, who ran NAB’s Australian operations during the 2000s, is proud of. He said as part of Latitude’s credit card consolation it will reduce the number of offerings from nine to three, focusing on Latitude Go, Latitude Gem and Latitude 28 Degree cards.

“Those three are 95 per cent of our total credit cards. I want to be efficient and get out of things that are small and sub scale.

“And I want to invest in things that are big opportunities for us.”

To that end, he likens the restructure to the challenge he faced in his former job heading Australia Post. “I don’t want to go into Australia Post in any way. But I feel like we at Latitude have got our Australia Post moment like when I started there back in 2010. What I said back then was e-commerce and parcel delivery was the greatest opportunity in front of us and therefore let’s stop putting money on this side and invest in the future. And I think we did that quite successfully.”

Latitude’s realignment comes as its owners, including Kohlberg Kravis Roberts Varde Partners and Deutsche Bank, have had two unsuccessful tilts at an IPO. Mr Fahour says his new strategy isn’t in preparation for a third-attempt at listing. “What I can say to you, is we beat the prospectus forecast... and with the shareholders we haven’t discussed listing or anything like that since last year.”