It’s time to revisit the credit union case for BNPL. Recently, Affirm released its own debit card that has more features than credit union debit cards, and is seeing over 70K new accounts activated every month. Jack Henry also released a survey showing 13 percent of credit unions have already added BNPL to their roadmap.
We sat down with Jessica Hernandez from Generations FCU and Eilene Markus from ACU of Texas to chat about how they launched BNPL for their members, their credit unions’ strategies, and their advice for credit unions exploring BNPL for 2024.
This is what they had to share.
Your members are already using Buy Now, Pay Later
ACU of Texas and Generations FCU first heard of BNPL from third-party offers to their members, but quickly realized the importance of providing it from their home banking apps.
“[ACU of Texas] wanted to meet our members where they are and to be able to help them,” Eilene explained. “We knew it would be a sticky product that our members would use and appreciate safely in our own home banking, versus one of the third-party options.”
Generations FCU also saw the third-party BNPL transactions take place in member accounts. “We were already talking about BNPL a few years back,” Jessica said. “But we hadn’t seen any [BNPL] with financial institutions except for credit cards [and] we all use our debit cards nonstop here.” However, Jessica’s team didn’t know the volume of BNPL use until they sent their transaction history to equipifi to do an assessment. “It took us aback because we didn’t think it was that much,” she recalled. “Once we got that information, meeting as senior leaders, it was a no brainer for us. Members are going to [use BNPL] regardless.”
BNPL cultivates deeper relationships with members
Both ACU of Texas and Generations FCU understood that BNPL would allow members to further consolidate their digital experience around their debit cards and online banking app.
“We try to make sure our products are centered around our members,” Jessica said. “BNPL is about meeting members where they need you to be. So we knew that [BNPL] needed to be part of our strategic plan.” For her, that meant making Generation FCU into a one-stop shop for all of their members’ banking needs. Their branded BNPL solution, GEN Pay, will be released along with a relaunch of their debit card. “We have been trying to make sure that the community knows who Generations is, what we bring to the table, for our members and future members. [We’ll be] shouting about GEN Pay from the rooftop.”
Eilene also sees BNPL as an integrated tool to deepen member relationships with ACU of Texas. “We want members to do what they need to do, wherever they are. And if that means logging onto home banking and getting a plan to help out their budget, then that’s the best thing that we can offer them right now.”
Split payments from credit unions is more powerful
“It seems like everyone has been super responsive to it,” Eilene said. “We’re seeing that members are [using BNPL] to budget for unexpected expenses or pay for a vacation they weren’t sure they could take. We had some champions out in the branches excited to share it with members. They thought it was a great product for members to use on a regular basis. We also liked the idea of it possibly bringing in extra interchange on our side.”
Both speakers mentioned the importance of launching a credit union BNPL that was easier to use than third-party apps. “BNPL is one of our digital-first initiatives,” Eilene explained. “The main thing we wanted [BNPL] to be was easy for our members to use. Very intuitive, no application required. So integration into Lumin and to Symitar were important. I think the numbers are speaking for themselves.”
BNPL from credit unions outperforms expectations
Because credit union BNPL is designed around the member relationship, there is faster uptake and wider engagement compared to third-party apps. “We’ve seen more buy-in,” said Eilene, “especially at the beginning, than we originally expected. 11 percent of members who view their offers actually go through with the plan, and of those members, most of them are doing multiple plans.”
“Our initial thought was that it was going to be mostly for younger members,” Eilene recounted. “But there have been interesting use cases across age demographics. You have regular use cases like paying for tires. We also see some of the baby boomer generation shopping at locations more geared toward the younger crowd. So we’re thinking maybe grandparents are taking their grandchildren shopping. We’re glad to see that everyone’s taking advantage of the options that they have.”
And the final note to credit unions for 2024?
Both Eilene and Jessica advised credit unions to view BNPL as more than a loan product. “It’s going to help your retention and make [members’] lives easier,” Eilene explained. “If it’s at a fair rate, a fair easy payment to make over time - Then that’s what we look at as the credit union way.”
“Get an assessment of your transaction data,” Jessica encouraged. “Let the data tell you how your members are currently using BNPL and how your own solution could look like.”
To see the full interviews with Eilene and Jessica, watch the Insights and Innovation 2023 series here: