Exploring the Buy Now Pay Later Boom

Written by

 

We often talk about the differences between older and younger generations, and we can add another trend to the list of factors that divide them: the surge in buy now, pay later program participation among younger Millennials, and Gen Z.

Let’s explore the BNPL boom and its role in the future of banking.

Why is BNPL Gaining Popularity?

As online shopping continues to grow in popularity, more and more we are seeing checkout prices being listed as “$349.99 now, or $29.17 per month for 12 months” or “4 payments of” a much more manageable amount. And younger shoppers are loving it. Buy now pay later is gaining popularity.

The younger members of the Millennial and Gen Z populations are not fans of credit cards, and their buying habits back this up. For example, in 2021, 12% of the 18- to 34-year-olds surveyed said they used BNPL for holiday purchases, compared to 0% of the 65 and older demographic, says CNBC. Overall use of the buy now pay later method was up nearly 30% year over year.

But why is BNPL so attractive to younger shoppers? Because it costs less than using a credit card, they say.

The attractiveness of BNPL comes from the idea that shoppers can create a bit more flexibility in their medium-sized purchases. Purchases that fall in the $100-700 range can be split into a handful of smaller payments that are spread out over the next few months, or even over a year. It eases the burden these occasional purchases bring, without incurring the high interest fees one would be stuck with if they used a traditional credit card.

It can be useful for more than just low-income shoppers, though. BNPL often is being used by those who are financially stable, but who want the predictability of the plan without having to incur costly fees or go through a long or drawn-out loan application process.

And, says CU 2.0, younger generations crave financial stability in a world that has been exceedingly unstable for them, they want solutions that leave no surprises. While a loan amount or balance is always available, banking members don’t know what the actual cost of their purchase will be until they pay off the full amount – and this depends on the frequency of payments (and whether the member pays in variable amounts), initial loan amounts, interest rates, the member’s credit score, and more. And if a member puts that purchase on a credit card but doesn’t pay off the full amount during the next billing cycle, the end expense is, once again, a variable and often a much higher price tag at the end. But with BNPL, the total cost is given upfront, and the timing or amount of the payments made will not change that.

How CUs Can Use BNPL Plans to Their Advantage

Credit unions looking to capture and engage more younger members can implement programs and offerings that follow this ultra-convenient and straightforward buy now pay later idea by using account data history for current members, and by advertising these services in a friendly, quick, digital offering.

More and more businesses have these BNPL plans built into their websites either on product pages on somewhere in the shopping cart or checkout process.

Focusing on smaller, more upfront methods of creating recurring payment plans for your members can help differentiate you as a credit union that is both up-to-date on the current trends and also committed to helping and educating members so they can become more financially sound.

Digital Solutions for Rapidly Evolving Banking Trends

IMS Integration wants your credit union at the forefront of digital transformation. From online account opening to web loan applications and Skip a Pay, our solutions are tailor-made for credit unions, because we know that your CU has unique needs and goals for the new year.

Check out our website for more information, or contact us today if you have questions.

Post-COVID Member Habits

Written by

 

It feels like no matter what, COVID-19 isn’t done with us. Schools, small businesses, healthcare providers, credit unions – we are all scrambling to find the best ways to keep our livelihoods intact and our families safe. And as such, this has affected how we do things, from day-to-day activities all the way up to prominent life events and important company decisions. And member habits are not immune to the pandemic, just like credit unions and leadership and innovation practices weren’t.

We’ve recently seen statistics and reports laying out post-COVID member habits look like. And most of these reports say the shift in habits is here to stay. Let’s talk about it.

Digital Trends Are Dominating

The gigantic shift from in-person to digital member services was due, in part, to the pandemic. While it’s true that each generation is more and more tech-savvy, older credit union member habits were rooted in just that – habits. While check fraud has been on the rise for decades, older members seemed to still place more inherent trust in their paper checks than in an online account. When many of the face-to-face member options were suspended, older members had to adjust their approach to include more digital options.

In 2020, international credit union membership grew by more than 14 million members. Digital banking solutions will continue to be the most important trend that affects your credit union’s future and should be the basis for continuity and growth planning.

According to Aux, 60% of 2021 survey respondents said they believe member usage of branches will never return to pre-COVID levels.

Women and Young Members Are Biggest Growth Opportunities

The World Council of Credit Unions released a 2020 Statistical Report that showed North America as having the oldest average age for members, at 53 years of age. Worldwide, credit union members are over the age of 45. There is a lot to be said about creating more Gen Z-centered marketing programs and modernizing your credit union’s digital presence.

This report also underscored the importance of creating more opportunities and campaigns to increase the number of women as members and in leadership roles. In Africa, Latin America, and North America, men hold more than 60% of leadership positions. This could hurt future expansion if your credit union hopes to attract more women to become members.

Financial Habits Are Shifting Towards Savings

A recent survey from Aux done from May to June of 2021 highlights areas of change and focus as it pertains to post-COVID member habits and feelings.

When participants were asked what areas they felt consumers will spend more on, the most popular answers were home improvement and travel. And many credit unions have noticed that lending is much less popular than saving right now, which means future loan campaigns and marketing efforts will be successful when they focus on these popular spending categories.

Elevate Your Credit Union to Match Member Habits Post-COVID

When Aux respondents were asked, “how they felt their members’ needs and values have changed…common themes were faster access to money and more digital tools.”

Digital transformation isn’t an abstract idea, it’s a global movement, and your members are depending on you and your credit union to offer the best online solutions to help them navigate this new normal with less friction and wasted time. Online account opening, Skip a Pay, and web loan applications are some of IMS Integration’s greatest assets that help credit unions meet and exceed their members’ expectations.

Check out our website for more information, or contact us today.