Like so many shifts in consumer financing options, buy now, pay later (BNPL) will become democratized, creating a unique opportunity for financial institutions to win.
With the introduction of BNPL solutions in the payment industry over the last few years, it is apparent the consumer market has spoken: They like it. A lot.
After all, who doesn't want the ability to afford large purchases now, but not have to see a sudden depletion of cash from your account? To have the option to spread your installment payments over time with a simple structure, no hidden fees, and no credit card required, BNPL has become a very attractive and popular payment method for millions of shoppers.
BNPL has become an attractive and popular payment method for millions of shoppers.
Although this consumer need has primarily been fulfilled by fintech companies, the popularity of BNPL has created a unique opportunity for the incumbent financial institutions to offer a fully integrated offering that is much more attractive than what exists today.
Consider this: Consumers who prefer BNPL are using multiple providers depending on where they are shopping, yet all of these installment payments are made from their primary checking account provider. Unavoidably, the process is complicated, creating friction in ways that are difficult for these providers to solve.
Why wouldn’t this shopper use their checking account provider to initiate these installments?
Simply put, it hasn’t existed before.
(At least, not before equipifi.)
And this isn't the first time the financial industry has responded to these consumer driven disruptions. Many other payment product and loans have been disrupted and streamlined over the past several years, including auto loans, mortgages, digital issued cards, A2A, P2P, and more.
BNPL is the newest consumer product taking the industry by storm. The difference between BNPL and all of these other payment products is simple: banks and credit unions currently don’t offer BNPL; only fintech does.
If a primary checking account holder is more likely to use fully integrated P2P, A2A, Bill Pay, and get other loans from their bank, they would also prefer to use installments fully integrated with their checking account and online banking mobile app.
The benefits of using a financial institution's BNPL program over third-party BNPL is clear.
As BNPL continues to gain popularity and adoption, we will see the incumbents roll out products that will remove any doubt: BNPL is here to stay, and banks and credit unions will once again be top of wallet.
Ready to see it in action? Schedule a demo today!