Tag Archive for: fintech

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Buy Now, Pay Later Usage Increases as Provider Options Expand

(New York, NY) Buy Now, Pay Later plans have reinvigorated the centuries old installment payment concept, now allowing shoppers to split payments for small and large purchases alike, particularly online. Auriemma Group has been researching this space in their Payments Report study since 2018, as new providers entered the space, rolling out their own unique spin on the offering.

Buy Now, Pay Later has gained wide visibility in recent years thanks to celebrity and influencer led marketing campaigns. Providers such as American Express and Klarna enlisted everyone from Tina Fey and Snoop Dogg to more niche personalities like Celeste Barber and Trixie Mattel in expansive ad campaigns. Since this advertising push, other bank-branded solutions (like Citi Flex Plan and My Chase Plan), and offerings from FinTechs such as Affirm, PayPal, QuadPay, Afterpay, and Sezzle have entered and redefined the space.

The widening provider field has created increased awareness, opportunity, and exposure for these products. Between Q1-2019 and Q1-2021, Auriemma’s research shows a 10+ percentage point increase in debit cardholders offered a Buy Now, Pay Later plan in-store or online. And most of these consumers find the plans attractive.

“It has become common for shoppers to see a Buy Now, Pay Later option at checkout,” says Jaclyn Holmes, Director of Research at Auriemma Group. “Online, these buttons become subtle reminders for consumers, and reinforce them as a viable payment option, especially when offered at checkout for a brand they trust.”

Take rates on Buy Now, Pay Later also increased significantly over the last couple years. More than half of those offered Buy Now, Pay Later in a physical store (56%) or online (51%) say they enrolled in the option, again representing 10+ percentage point increases since Q1-2019. These increases parallel the expanding field of options available to shoppers at the point of sale.

While merchants have traditionally been the most common provider of installment plans at the point-of-sale, more recent data from Auriemma Group shows that the FinTech Buy Now, Pay Later providers offering these short-term solutions are closing the gap. However, merchants will continue to play an integral role in the adoption of these providers – over half of debit cardholders agree that being partnered with well-known or trusted retailers is paramount when it comes to feeling comfortable and secure in using the product.

“While merchant trust is playing an influential role in Buy Now, Pay Later adoption, these offerings are also impacting the merchant’s ticket size and shoppers’ likelihood to purchase with a merchant again,” says Holmes. “This shows that a positive Buy Now, Pay Later experience can create a halo effect for the brands offering them. And with Buy Now, Pay Later becoming increasingly common and recognizable, consumers may come to expect it as a payment option rather than a sweetener.”

Survey Methodology

The Payments Report

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in March 2021 among 800 adult debit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying. The average interview length was 19 minutes.

About Auriemma Group

For more than 35 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory 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 New York City and London. For more information, call Jaclyn Holmes at (+1) 646-454-4200.

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Why Challenger Bank Customers Haven’t Left High Street

(London, UK): In a short time, challenger banks have won cardholders over with their unique mobile-only banking model, differentiated from High Street offerings by touting foreign exchange features, budgeting tools, spend analytics and easy cheque splitting. But consumers aren’t breaking up with High Street just yet. According to new research published by Auriemma Group, challenger banks are being used as a complement to, not a replacement for, traditional banking products.

Currently, 13% of credit cardholders have a mobile-only current account with Monzo, Revolut and/or Starling. And 44% of credit cardholders without a mobile-only current account could be persuaded to switch to one. This small, but notable figure shows curiosity in the mobile-only banking model.

“Challenger banks market themselves as innovators in the payments space,” says Jaclyn Holmes, Director of Research at Auriemma Group. “From graphic cues like bright-coloured and vertical cards to their digitally focused approach, these banks are trying to visually and experientially differentiate themselves from their High Street counterparts.”

These benefits and differentiators alone, however, are not enough to instill full confidence in challenger banks. Nearly all (96%) of those who had a current account with a traditional bank prior to opening one with a mobile-only provider say that they have kept their traditional account open.

There are several factors likely at play in this decision. Many who are uninterested in challenger banks express satisfaction in their current offerings (58%), prefer banks with physical locations (42%) or don’t know enough about them (28%).

In effect, challenger banks are charged with informing the consumer about who they are and what makes them better. While some focus on the strength of their digital offerings to make this point, others have taken innovative steps to address the perceived need for in-person service.

Starling Bank, for example, partnered with the postal service to offer cash deposits in a physical location for its account holders. This partnership offers a consistent physical footprint (i.e., the post office) for the bank as traditional bank branches continue to close across the UK.

While offering a physical location for some banking activities is one solution, other mobile-only providers focus squarely on self-service options. These are especially important for younger cardholders, who, according to Auriemma’s research, are less likely to see branches as a critical component of the banking relationship.

“Although the absence of a branch footprint is currently an obstacle for challenger banks, its importance may wane as the industry becomes more digital,” says Holmes. “As the industry shifts, we can expect consumers to become more comfortable with mobile-centric banking solutions.”

Challenger banks cultivated enthusiasm around innovative tools and features, many of which currently exist in the High Street digital experience. It appears even basic tools could be enough to keep these cardholders from looking elsewhere. Many of those who find tools important most often cite bread-and-butter functionalities that are already a part of online banking—spend alerts, reports, and automatic transfers.

“Challenger banks are bringing digital tools to the forefront of the customer experience, but consumers will continue looking to legacy providers for everyday banking needs,” says Holmes. “High Street Banks have given little reason to look elsewhere, and although challengers have their merits, it’s unlikely that cardholders will transition their entire banking relationship to them in the near term.”

Survey Methodology

This Auriemma Group study was conducted online within the UK by an independent field service provider on behalf of Auriemma in November 2019, among 855 adult credit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognised experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximise 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 Jaclyn Holmes at +44 (0) 207 629 0075.

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