European adoption of Buy Now, Pay Later apps reached a record 10 Million Installs in H1 2022 according to The Financial Brand.
The BNPL industry in Europe is on a meteoric rise, projected to reach a staggering €300 billion by 2025.
78% of consumers surveyed by The Financial Brand say they would use BNPL financing options from banks.
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A study from Citizens Advice shows that 41% of BNPL consumers struggle to meet BNPL repayment and in 57% of the cases, creditworthiness assessments were not performed when applying for European BNPL products. Banks have a competitive advantage here, since they are well versed in assessing risks.
Most non-bank BNPL providers have been providing incomplete, if any, information to nationwide consumer reporting companies. New BNPL providers must report this positive data to support consumer financial health.
Many consumers trust their existing financial institution more than BNPL providers. 78% of consumers surveyed by The Financial Brand say they would use BNPL financing options from banks where they already have account relationships.
Banks have a competitive advantage with BNPL. They are well versed in offering credit with safer terms. This presents a great opportunity to build new, successful BNPL products by leveraging their established reputation, existing users, and built-in functionalities (credit assessment, payment in physical stores, overview of accounts, etc).
We rounded up several expert surveys of 1,000s of credit card and BNPL users.
The demand for something beyond a credit card is apparent.
In a 2022 survey of BNPL users – 58% of US respondents, 57% of Australian respondents and 48% of UK respondents, said they preferred BNPL over credit cards.
In a survey of credit card users, 43% of credit card debtors don’t know the interest rates of all of the cards on which they carry a balance.
62% of consumers surveyed by Experian think there is probably a better credit card for their needs than the one they are currently using.
Embedding BNPL in bank credit cards could increase credit utilization in Europe from 19% to 28%.
67% of people surveyed believe BNPL will replace credit cards.
As of 2022, an estimated 360 million people worldwide use BNPL.
The data shows a need in the market for something beyond credit. BNPL products are a great opportunity for banks to improve their current options for instalment payments with better user experience and new features that are more adapted to people’s lifestyle and needs.
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Who are the potential users of BNPL by banks? To get better insight into the market for this product idea, we prepared an overview of the Mastercard report “A closer look at who is using instalment financing” based on research conducted in 2022.
Analyzing the current user trends in instalment financing, we can begin to get a picture of the potential users of BNPL product built by banks and see that it’s the younger generations driving this growth in instalment financing – making this a great bet for the future.
Innovative banks are already offering BNPL to their customers. Here’s some inspiration from around the world.
