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BNPL models are disrupting purchase finance and represent a big opportunity

Buy now, pay later (BNPL) has emerged as a popular mode for purchase financing among millennials, with significant expansion occurring during the COVID-19 crisis. Customers are leaning toward the BNPL model, given its advantages of financial prudence and other value-added services. The BNPL model offers deeper customer engagement as their journeys cover the end-to-end lifecycle - BNPL firms are attractively positioned to capitalize on this opportunity.

There exist several options for banks to foray into the BNPL space:

  • Funding BNPL players: Provide a warehouse line of credit, for BNPL player to fund loans.
  • Co-lending partnerships: Partner with BNPL firms to finance a fixed percentage of the transaction value.
  • Presence at point of sale terminals: Leverage the retail ecosystem to enable BNPL offers.
  • Online payment partnerships: Collaborate with ecommerce platforms to offer BNPL services.
  • BNPL acquisitions: Acquire existing BNPL credit portfolios as well as technology capabilities.

Vivek Iyer
Functional Consultant, BFSI, TCS 

Rajesh Ramar
Consulting Partner, BFSI, TCS