Since the cart doesn't lead the horse, payment innovations tend to check the boxes that end users need most. And sometimes the smallest boxes, or micro-moments, can have the biggest impact.
David Feuer, chief product officer at Galileo, told PYMNTS: “Embedded financial solutions need to be integrated into the consumer flow to capture the moments consumers want.”
“Buy now, pay later (BNPL) services are great because customers look at their bill and ask themselves, 'Should I pay this out of my bank account or should I pay this?' “I would like to pay in a different way?” he added.
After all, demand for BNPL services is rapidly increasing around the world, with predictions that the user base will exceed 900 million worldwide by 2027, highlighting changes in consumer behavior and preferences. . Banks and fintechs need to deliver that to remain relevant, especially in an increasingly competitive environment where traditional financial value propositions are becoming more commoditized.
Post-purchase BNPL solutions also aim to bridge the gap between traditional card usage and alternative financing options when compared to traditional BNPL services.
“Typically, we see a lot of BNPL, but we don’t see a lot of post-purchase BNPL. For banks and fintechs looking to differentiate themselves by capturing those micro-moments and delivering them to their customers, This is a really great opportunity,” Feuer said.
He said that in today's changing economic climate, there is also a growing need for financial institutions to capture additional revenue streams, and the introduction of installment fees through BNPL represents an attractive new avenue for revenue generation. It added that it will provide.
read more: Galileo expands BNPL services for banks and fintechs
Transitioning between using a card and financing
Today's payments world is very different than it was five years ago, and so are consumer expectations.
“Customers have new expectations for highly customized services. …Financial services are racing to achieve that level of personalization to meet consumer expectations. ,” Feuer said.
Importantly, he said, changes are occurring around financial behavior, with consumers becoming “aware of their purchases and seeking to find transparent structures around their budgets and purchases.” explained.
As such, providing clear insight into costs, terms, and overall financial impact will foster transparency and help consumers make more informed decisions about their financial health and goals. You will be able to make decisions.
“We're seeing a shift in spending habits, especially in a post-pandemic world. For example, Gen Z doesn't want to own a credit card because they can't predict when they'll be able to pay it off,” Feuer said, adding that BNPL fees He pointed out that the transparency regarding It's similar to the compound interest structure of credit cards.
And it's not just Gen Z who wants more clarity and predictability about their spending.
“Many consumers want to be connected to their money, and many value transparency. We don't want to feel like we're going to be fined,” Feuer added.
Deepen customer relationships
Still, when it comes to embracing innovation, Feuer noted that there are three major hurdles that are worth keeping an eye on, though not impossible to overcome.
First, many banks have significant technological inertia. Adopting innovative products and being able to deploy them as innovations evolve requires strategic investments in modernization and API integration to overcome the limitations of existing legacy systems.
Second, regulatory changes can impact lending practices and require active engagement and compliance measures. Balancing innovation and regulatory requirements is essential for sustainable growth.
Finally, he emphasized that changing economic conditions can themselves affect consumer spending patterns and the availability of loans.
Looking ahead, Feuer envisioned a future where BNPL goes beyond just unsecured term loans and integrates seamlessly into consumers' digital journeys.
“If you look at areas like banking and financial services, buying homes and mortgages, vacations, there are all areas where loans, especially secured loans, are ripe for innovation and disruption. …A lot of embedded finance has focused on CPG (consumer packaged goods), but it will evolve as we become better able to capture the micro-moments when consumers seek liquidity, and where and how it is embedded in the consumer flow. “I think it's about showing up. At that moment,” he said.
