Banks Should Buy Into Buy Now, Pay Later as BNPL FinTechs Push Into Banking, Card Spaces


With all buy now, pay later (BNPL) options combined clocking in at just 3% of total payments in 2021, there’s nothing but open highway ahead — and BNPL is flooring it for 2022.

Banks are where BNPL is headed.

While banks do participate in installments — Cross River Bank originates loans for Affirm, and First National Bank of Omaha teamed last year with technology firm Skeps and analytics outfit EXL to facilitate BNPL for merchants — the banking sector is now poised for more BNPL action.

Market watchers and consumers alike see banks as BNPL naturals, with the systems and, most importantly, the trust of account holders already locked in.

In the new study “Banking On Buy Now, Pay Later: Installment Payments And FIs’ Untapped Opportunity,” a PYMNTS and Amount collaboration, research showed that 70% of consumers who now use BNPL would prefer such plans from their own bank rather than a third-party FinTech if they were offered.

“Interest in using bank-backed BNPL is high not only among those who already use such plans, but also among those who do not currently use them, with 36% of the latter citing their interest,” the study stated. “Just 7% of consumers who use BNPL say they are less interested in a product from a bank compared to one another FI offers.”

Get the study: Installment Payments And FIs’ Untapped Opportunity

Turnabout is fair play, so as banks start pushing into the BNPL space, FinTechs are pushing back by getting into bank-like products.

A prime example of this trend is Klarna Card. Announcing intentions to scale its card ambitions back in the third quarter of 2021, Klarna broke news Wednesday (Jan. 26) that Klarna Card is now live in the U.K.

“The card is already available in Sweden and Germany, where it is now used by over 800,000 people, according to Klarna,” CNBC reported. “This is the first time it has arrived in a country outside the European Union.”

Klarna Card version 1.0 has only Klarna’s “Pay in 30” ability, with other features coming.

“The Klarna Card is a tangible extension of the Klarna app experience, offering U.S. consumers the same control, convenience and flexibility when making purchases using a physical card as they do using Klarna at a retailers’ checkout or in the Klarna app,” the company previously announced in a press release.

Over at Affirm, Wednesday (Jan. 26) was also a news day, with the BNPL brand unveiling the Affirm SuperApp and Chrome browser extension.

Read more: Affirm Turns Its App Into a Super App

Affirm Founder and CEO Max Levchin said in a press release: “By evolving the Affirm app into a super app, we have launched the ultimate destination for consumers to shop their favorite brands and smartly manage their finances, while also delivering a seamless, rewarding and increasingly personalized experience.”

Levchin said the tipoff was the fact that over $300 million in total deposits and much “meaningful engagement” occurred when Affirm added a savings feature to its core app.

It all adds up to new flows and features in the installment credit space that’s heating up.

As the Banking On Buy Now, Pay Later study found, “Consumers who are earning more than $100,000 annually show the most interest in bank-issued BNPL plans of any income level, at 47%. Interest also is high among consumers at other income levels, which demonstrates the widespread appeal of these products.”

Bank-backed BNPL would fly with 42% of consumers with annual incomes of $50,000 to $100,000 and 39% of those earning under $50,000, per the study.