Data released by S&P Global Market Intelligence’s 451 Research in March suggests that merchants favour bank-branded buy-now-pay-later (BNPL) services over those offered by fintechs, while a study published by Juniper Research the following month referred to banks gaining traction as disruption from non-fintech players attracts new users.
This is happening as a growing number of fintechs fall by the wayside. Last month, Laybuy entered receivership, while a similar fate befell BizPay 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 debt – particularly in southern Europe – banks are in a strong position to leverage consumer trust,” says 451 Research analyst Sophia Furber.
However, trust is only one part of the recipe for customer retention. Whether or not high-street banks move into the BNPL space will largely depend on their risk appetite, their legacy IT systems, and how fast they can develop or acquire new technological capabilities that meet higher customer expectations, says Dave Farbrother, chief executive of Zopa's retail finance division DivideBuy.
A February survey of US BNPL users published by JD Power found that consumers were most satisfied with plans offered by their credit-card issuers.
