How big banks can benefit from inbound regulation Buy now, pay later

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LONDON, May 2, 2022 /PRNewswire/ — Future FCA regulations may add restrictions on how consumers can use Buy Now, Pay Later (BNPL) services, but these changes may be welcome. According to the latest issue of the Auriemma group Cardbeat United Kingdomthere was an 80% increase in negative experiences with BNPL diets between September 2020 and July 2021.

The increase is consistent across all customer segments, including different age groups, household incomes, and levels of familiarity with BNPL, signaling concerns about the product itself, rather than new or new user experiences. unknown.

“Our research shows that the few people who have negative experiences with BNPL most often attribute it to unexpected charges or problems it created for their other finances,” says Will Moody, Manager at Auriemma. “With a growing segment of consumers turning to BNPL borrowing options, regulation may play a role in maintaining positive customer sentiment for the product.”

Auriemma’s latest findings show an increase in negative experiences using BNPL or installment plans – by 5% in September 2020 to 9% in July 2021. If 9% remains a minority, this represents a large community if we consider that 17 million UK consumers have used BNPL services since November 2021.

“This sentiment is mirrored in other markets as well,” Moody says. “In the United States, a market where more than half of adults have used a Buy Now, Pay Later service, about a third have had a negative experience. This rapid growth has caught the attention of CFPBand surprisingly enough, half of BNPL users in the US agree that these plans should be more regulated.”

Klarna is the UK’s leading BNPL and payout provider with 13 million customers using its products and services, but the Swedish FinTech announced a series of substantial losses in H2 2021 to add to the pressure of incoming regulation.

Many UK banks and lenders already have products on the market, such as NewDay with its NewPay product. Additionally, regulated FinTechs such as Monzo and Curve also joined the BNPL space in 2021, and Revolut will soon follow.

“Auriemma expects BNPL regulation to put a significant strain on compliance resources for unregulated players such as Klarna,” says Louis Stevens, director of the round tables. “This, in turn, could impact innovation, development and growth, opening the door to the intervention of regulated lenders such as High Street Banks and credit card issuers.”

Could the future of BNPL in the UK rely on traditional players integrating remittances into their existing product sets? And will this be the solution to reverse the increase in poor customer experience? Auriemma Group will continue to monitor and discuss BNPL in future Cardbeat studies, and as part of its Customer Service Roundtable groups at their next meeting June 16-17 at the Sheraton Grand in Edinburgh, Scotland. Email research@auriemma.group to learn more about our consumer research and roundtables@auriemma.group to inquire about our forums.

Survey methodology

these Research Auriemme studies have been conducted online in the UK by an independent field service provider on behalf of Auriemma since September 2020 and July 2021, among 80o+ adult credit cardholders. The number of interviews conducted on a monthly basis is sufficient to allow testing of statistical significance between subgroups at the 95% ± 5% confidence level, unless otherwise specified. The purpose of the research was not disclosed and the respondents were unaware of the qualification criteria.

About Auriemma Group

For more than 35 years, Auriemma’s mission has been to provide its clients with authoritative data and actionable insights. Our team is made up of recognized experts in four main areas: operational efficiency, consumer research, co-brand partnerships and corporate finance. Our business intelligence and consulting services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in London and New York City. For more information, visit us at www.auriemma.group or call Will Moody at +44 (0) 207 629 0075.

SOURCE Auriemma Group

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