As younger Americans make the move to more flexible financing options and consumers start to take a greater interest in their financial wellness, banks and credit unions are taking center stage as a trusted resource. Their encore – adopting BNPL.
Younger Americans are increasingly leaving credit cards behind in favor of BNPL
Credit cards once was a consumer favorite when it came to paying for purchases. In recent years, third-party BNPL solutions have taken their place. While adoption is happening across generations, younger consumers are the primary drivers of the growth of BNPL. Morning Consult’s report “The State of Consumer Banking & Payments,” found that Gen Z adult credit card usage is down 17 percent, while their BNPL usage increased 9 percent. Meanwhile, Raddon research found that 61 percent of Millennials have used BNPL to make a purchase.
It’s not a surprise to see credit cards and BNPL usage trending in opposite directions, particularly among Gen Z adults and Millennials. The user experience of BNPL both in how embedded it is in the shopping journey and it's positioning away from stressful topics like credit scores, make it an easy fan favorite. But with nearly all BNPL solutions today provided by third-party, a growing number of consumers may disengage with their primary financial institutions, unless financial institutions begin providing the BNPL solution consumers are looking for.
Consumers’ trust in banks and credit unions is strong
Banks and credit unions would be excited to know that the key reason third-party BNPL solutions are popular today is not because consumers are no longer interested in traditional banking, but because BNPL today is simply not available from their primary financial institutions.
More than 90 percent of the respondents in Morning Consult’s report expressed satisfaction with their primary financial provider. Of the BNPL users Raddon surveyed, 72 percent would be extremely or very likely to use BNPL from their primary bank or credit union if offered. When asked whether they would prefer to use BNPL through their primary bank or credit union or a third party like Klarna, Affirm or Afterpay, 61 percent of users said they would prefer their bank or credit union. Only 7 percent would prefer a third party. Members and consumers are interested in inviting their financial institutions on their shopping journey, all they have to do now is say yes.
The opportunity for banks and credit unions
Banks and credit unions can meet their customers where they are with BNPL options, providing in-demand services and leveraging the trust they’ve already earned. The growing popularity of BNPL has created a unique opportunity for incumbent financial institutions to provide a fully integrated BNPL program that is more attractive than what exists today. By offering the products their customers are already using, banks and credit unions can capture the BNPL market while increasing their consumer lending portfolio.
Ready to see equipifi’s BNPL solution in action? Schedule a demo today.