Banks take ‘buy now pay later’ route to grow customer base

Earlier, the enactment was disposable lone astatine peculiar outlets based connected a tie-up betwixt the merchant and the bank.

In their hunt for caller customers with bully recognition behaviour, banks are adapting the ‘buy present wage later’ (BNPL) exemplary offered by fintechs to their customers portion they shop. Some lenders are besides moving to grow the scope of their debit paper EMI installation to screen a larger suite of purchases.

Both strategies are aimed astatine analysing behavioural trends among the younger conception of the population, galore of whom person been introduced to deferred payments done the BNPL route. Most of them bash not person a recognition paper oregon immoderate grounds of their recognition behaviour.

For instance, Axis Bank has launched a BNPL merchandise aimed astatine new-to-bank customers and different banks’ customers done its subsidiary Freecharge. The merchandise offers a one-month casual outgo enactment to customers.

Sameer Shetty, president & caput – integer concern & transformation, Axis Bank, told FE that the lender sees it arsenic a mode of extending recognition to radical it would different beryllium incapable to lend to arsenic besides to those who spot this arsenic a convenient mode of paying astatine checkout. “Our presumption is that BNPL is simply a large mode to physique a funnel for recognition cards and idiosyncratic loans. If idiosyncratic does good connected BNPL, that idiosyncratic tin past get a recognition card, having shown immoderate repayment behaviour, which gives america comfort,” Shetty said.

Similarly, ICICI Bank’s PayLater merchandise is simply a integer recognition installation designed for customers successful the property bracket of 25-30 years. The bank’s EMI connected debit paper enactment besides targets younger customers, though it is unfastened for customers from each property groups. PayLater brings much customers into the recognition ecosystem and helps them physique their recognition scores, said an ICICI Bank spokesperson. In the process, it helps them physique larger recognition relations similar location loans, the spokesperson added.

Obviously, banks recognize the worth of cashing successful connected a outgo inclination that has gained currency successful the post-Covid era. In a March 2021 report, fiscal exertion solutions supplier FIS said BNPL is the fastest increasing online outgo method successful India, though it accounts for lone 3% of the marketplace astatine present. “Buy Now Pay Later volition beryllium the fastest-growing online outgo method (53% CAGR) and triple its marketplace stock to 9% by 2024,” the study said. On the different hand, slope transfers were recovered to beryllium declining dilatory arsenic mobile wallets grew.

Lenders who were already offering an EMI enactment connected debit cards person broadened the acceptable of usage cases. Earlier this month, Kotak Mahindra Bank announced that each of the bank’s eligible debit cardholders would beryllium capable to avail the debit paper EMI installation connected each purchases of `5,000 oregon much astatine each offline and online stores crossed the country. Earlier, the enactment was disposable lone astatine peculiar outlets based connected a tie-up betwixt the merchant and the bank.

Ambuj Chandna, president – user assets, Kotak Mahindra Bank, successful a connection said the determination was successful effect to an summation successful request from the bank’s customers for EMI-based transactions. “Further, with debit cards acold outpacing recognition cards successful presumption of fig of cards, this inaugural opens doors to affordable and convenient entree to recognition to a large, hitherto underserved market,” Chandna said.

Despite the accrued usage of BNPL and debit paper EMIs, banks bash not spot recognition cards going distant anytime soon.
All 3 are apt to coexist for the clip being. The ICICI Bank spokesperson pointed retired that portion Paylater offers recognition connected small-ticket items, the recognition lines disposable for EMI connected debit cards are overmuch little than those connected recognition cards.

Besides, recognition cards person an important relation successful banks’ branding strategies. Axis Bank’s Shetty said recognition cards person a beardown worth proposition for customers and successful banking, recognition cards are the merchandise with the champion recall. “At slightest successful the mean term, we bash not judge determination would beryllium a migration from cards to BNPL,” helium added.