As the holiday season continues and the cost-of-living rises, shoppers are searching for meaningful yet budget-friendly gifts for loved ones. Consumers need financial flexibility to make large purchases without using their entire paycheck to do so. Buy now, pay later solutions continue to rise in popularity as consumers search for the best way to budget for high-ticket gifts and festive goods.
Financial institutions can help. Here’s how.
According to Morning Consult’s report, more than 90% of people expressed satisfaction with their primary financial provider. So why do so many consumers rely on third-party providers when seeking flexible payment options? The answer is simple: The solution they need is not provided by their primary financial institution. If it were, there is no question the consumer’s loyalty would remain with their community bank or credit union.
In this instance, with how smoothly BNPL is integrated into the commerce experience and how simple it is to use, consumers look to fintech to provide what they cannot find with their financial institutions.
When a consumer is ready to make a purchase, financial institutions strive to be top-of-mind and top-of-wallet. So it is imperative that community banks and credit unions take steps to meet consumers where they are within their spending journey. Why? Because third-party BNPL providers are already there.
Consumers search for financial options that best fit their needs. Yet, they prefer the apps and payment tools they are familiar with. It is up to financial institutions to provide a combination of both to their cardholders. With BNPL increasing in popularity, banks and credit unions can appeal to their customers by expanding their banking suite to include a BNPL solution that is easy to understand and utilizes the financial workflows already available in the digital-banking app that their cardholders are familiar with.
Arguably, no other institution has better insight into consumer financial health than banks and credit unions do. At the forefront of their data is information on account health and payment activities, giving financial institutions a unique lens into their cardholders’ needs and helping to identify solutions, such as BNPL offers, that support customers’ financial goals.
Banks and credit unions form long-term relationships with their cardholders, and in doing so can often anticipate financial needs. Financial institutions are also able to create digital-banking experiences that are more personal, providing offers that directly relate to a consumer’s individual needs. In this way, consumers benefit from flexible payment options, and financial institutions cultivate stronger relationships with their customers.
With the holiday season under way, and with 2023 just around the corner, consumers everywhere have payment flexibility at the top of their minds, financial institutions should be getting ahead of the solution. This is a key engagement moment to nurture cardholder relationships. It’s also a prime moment for banks and credit unions to help empower their customers’ financial wellness—not just this season, but over the course of their lifetime.
—Bryce Deeney is cofounder and CEO of equipifi.