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Banks can benefit from the BNPL turbulence

Banks can benefit from the BNPL turbulence
Banks can benefit from the BNPL turbulence

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Data from S&P Global Market Intelligence’s 451 Research published in March suggested that merchants prefer buy-now-pay-later (BNPL) services from banks to those from fintechs. A study published the following month by Juniper Research touted a rebound for banks as disruption from non-fintech players attracts new customers.

This comes as more and more fintechs fall by the wayside. Last month, Laybuy filed for bankruptcy, while BizPay suffered a similar fate last November, just weeks before ZestMoney shut down.

“In markets where BNPL is less widely used or where customers have a more conservative attitude towards consumer credit – particularly in Southern Europe – banks are in a strong position to gain consumer trust,” says Sophia Furber, analyst at 451 Research.

But trust is only part of the recipe for customer loyalty. Whether or not branch banks enter the BNPL space will largely depend on their risk appetite, their existing IT systems and how quickly they can develop or acquire new technological capabilities to meet increased customer expectations, says Dave Farbrother, CEO of Zopa’s retail finance division DivideBuy.

A survey of U.S. BNPL users released by JD Power in February found that consumers were most satisfied with the rates offered by their credit card issuers.

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