This past October, PerformLine hosted a panel discussion at the Money20/20 USA conference with experts from Sezzle, Alliance Data, and Snap Finance titled "Innovations and Challenges Ahead for Lenders in the BNPL Era."
For part 5 of this BNPL blog series, here are the biggest opportunities that leaders in the BNPL space see in the future for the industry in the short term and in the long term.
Building Out A Full Product Suite—A “Spectrum of Credit”
One of the biggest opportunities for BNPL products is that they’re an excellent addition to a line-up of financial products, which allows for a “full spectrum of credit,” explains Rick Cunningham, Senior Vice President of Strategy and Business Development at Alliance Data:
I think with BNPL, the product itself has dramatically increased the total addressable marketing for retail credit products, which is near and dear to me. It’s helped merchants find new customers, it’s driven new sales for those merchants, and so I think that it’s all definitely on the positive.
For Bread, which is the company we acquired a year ago, BNPL gave us that missing ingredient to have the full product spectrum when we now approach a retail prospect. We come in and we can offer pay-in-four (BNPL), we can offer installment loans, we can offer private label credit cards. We can offer the merchant a full product suite, and we can then migrate customers between those products as their needs evolve.
For example, I can bring a customer in as a BNPL customer. Then, as their needs evolve, I can pre-screen them for a credit card. Then, on the flip side, someone can get declined for a credit card from us…but we can then seamlessly migrate them into a BNPL product.
Having that full product suite that includes BNPL options is a great near-term and long-term opportunity for us, and we just have to tell our story out there to the marketplace. The other piece of our story is that we go to market in our partner’s brand. So we white label everything, whether it’s BNPL, private label, or co-branded. Everything we do is behind our partner’s brand, reinforcing our partner’s brand, driving revenue to our partner, and that is a unique approach as we try to cut through the clutter of the fintechs. Time will tell if that strategy will be unique enough for us to continue our growth, but I think we very much like our growth prospects for both Alliance and Bread.
Financial Health of the Consumer
Beyond just payments, BNPL products provide financial access and financial health to so many consumers. Mylee Vigness, Head of Innovation and Growth at Snap Finance says:
The opportunity is that we are just scratching the surface. With already billions of transactions in the industry, it’s still not even 2% of all the payment transactions that are happening, so to me, there is so much exciting opportunity.At Snap, we have the benefit of knowing and having a lot of expertise in credit and lending. We also have an infrastructure that is very much focused on, as Sezzle is, helping our consumers elevate, giving them that stability and breaking that cycle, and helping elevate their credit profile.So for us and the way the industry is going—I know for Snap specifically—this goes beyond payments. This goes to financial access, financial health, thinking about as an industry, how do we serve consumers? The most exciting thing is that we have that ability with our expertise as fintechs to provide amazing experiences to consumers and can do this very easily. We are focused on having it be simple and clear and that’s really exciting. We have a huge opportunity in front of us.
Financial Wellness for the Younger Consumer
For younger consumers, financial wellness is important to them and their happiness, and BNPL helps create that wellness for them. Chris Bixby, Vice President of Growth at Sezzle, says:
Rick really talked about the spectrum of credit and kind of graduating and working with what exists out there today. And Mylee talked about that consumer-driven piece, consumer adoption, etc.
We (Sezzle) are a certified B-corp and what we always looked at is payments as a relationship builder with a customer. How are payments, brands, and fintechs thinking about the overarching strategy in terms of consumer connection points? When we look at this, a lot of the conversation we get into is about dollars and cents, compliance, how does the product really work, and so on.
What we’re really seeing is a new generation of consumers that thinks about financial issues more than they think about other big issues out there, like climate change for example. So for a younger generation, they care and they think about financial wellness as a really really big part of their overall thinking of who they are, what they are all about, and their overall happiness.
We talk about this idea that purpose-driven payments and that relationship with the customer can be built through payments, by providing products at the right time and right place. It actually creates this closer relationship with the consumer, and then we also talk about it in terms of life-cycle marketing and other ways to both bring in that user and treat them right.
We think that that is a reflection of a brand and we really think it's a big part, and payments are a big part of this ecosystem, in terms of why customers make decisions and we are going to see that continue to evolve.
An Opportunity to Help and Protect Consumers
There are so many opportunities for the BNPL industry to grow and flourish in the coming years, and there are tons of opportunities to protect consumers, too. Learn how PerformLine is helping leading BNPL lenders across the world be proactive in their consumer protection and marketing compliance efforts to protect their brand, protect their consumers, and mitigate risk.