The Best Buy Now Pay Later Customer Is Not Who Banks Think

Financial institutions have traditionally organized customers using familiar metrics: income, assets, credit score and spending patterns. Those variables determined who qualified for a mortgage, which credit card they received and how aggressively they were marketed new financial products.

But findings in “The Pay Later Ecosystem Report: Consumers Will Let AI Recommend Pay Later, But They Want Control,” a PYMNTS Intelligence report created in collaboration with Splitit, reveal that the emerging distinction for lending today is not between affluent and subprime consumers, but between households that are comfortable allowing artificial intelligence to participate in financial decisions and those that still insist on making every judgment themselves.

More importantly, the greatest predictor of adoption is not wealth or financial stress. It is life stage.

The Customer Segment That Matters Is Life Stage

Traditional financial thinking assumes higher-income households embrace sophisticated financial tools first, while financially stressed consumers have the greatest incentive to optimize borrowing decisions.

The report data challenges both of those assumptions. AI-assisted pay-later behavior across income brackets and financial lifestyles reveal that generational differences remained stronger than economic ones. Gen Z consumers were significantly more likely to use AI to compare installment plans, evaluate financing choices and decide whether to spread payments — even more than affluent households earning over $150,000 annually or consumers experiencing financial hardship.

Young adults are not adopting AI simply because they have less money. They are adopting it because they are simultaneously encountering dozens of first-time financial decisions: establishing credit, managing irregular cash flow, financing large purchases and learning how borrowing affects long-term financial health.

AI becomes valuable precisely because complexity is arriving faster than financial experience. The next competitive battleground for banks isn’t recommending credit. It’s orchestrating every borrowing, payment and cash-flow decision across a consumer’s financial life.

Instead of waiting for the consumer to choose among credit cards, card-linked installments and buy now, pay later plans, software can evaluate those options against a wider set of financial conditions. It can consider the purchase price, available cash, monthly obligations, credit utilization, reward structures, repayment schedules and the effect of opening a new account. It can then advise the consumer whether borrowing makes sense at all.

Banks that continue segmenting primarily by income, assets and risk may understand what consumers can buy without understanding how they increasingly want to decide.

Read the report: The Pay Later Ecosystem Report: Consumers Will Let AI Recommend Pay Later, But They Want Control

From Lending Platform to Household Treasury

While the lending and pay later industry’s language has long centered on extending credit, respondents throughout the report consistently prioritized affordability, budgeting, payment timing and credit protection over maximizing rewards or accessing additional borrowing.

Budget management and credit monitoring emerged as the most common AI-assisted financial activities across nearly every demographic, while younger consumers increasingly relied on artificial intelligence to compare installment plans, evaluate affordability and determine whether paying in full made more financial sense than financing.

More than 6 in 10 consumers said they would consider allowing an AI shopping assistant to recommend pay-later options for at least one purchase category. Yet nearly every trust indicator centered on preserving human oversight rather than eliminating it. Respondents wanted AI to identify the most affordable option, protect their credit score, avoid unnecessary credit applications and require explicit approval before completing any financing decision

Viewed together, these behaviors resemble treasury management more than consumer lending. That transforms AI from another feature inside a banking app into something considerably more strategic: an operating layer sitting above deposits, credit cards, installment loans and budgeting tools, coordinating them into a unified system of household financial management.

The institution capable of synthesizing all those signals into consistently better financial decisions gains influence across virtually every future transaction.