Deloitte and cloud banking platform Mambu released a new report exploring what the Buy Now Pay Later (BNPL) market means for banks and retailers and successfully identified the steps to build such offerings.
The ‘Deloitte and Mambu Guide to BNPL’ identifies five core building blocks for businesses looking to develop a BNPL solution in an increasingly competitive environment:
- Value proposition – defining and understanding what merchants and customers need and developing a model to solve their key pain points
- Technology and data – developing a tech stack with best-of-breed partners to enable real-time decisioning and the creation of next-generation solutions that deliver distinctive customer experiences.
- Risk and compliance – designing a risk framework that provides a competitive edge, from in-built fraud detection and management to defining the risk appetite, model, and strategy
- Skills and capabilities – investing in specialized talent in critical areas to compliment businesses’ existing teams as well as build their brand and differentiate their product in the market
- Go-to-market – bundling the offering within a business’ portfolio and bringing the minimum viable product to life.
This new report was released following the rise in demand for BNPL services. The global market of BNPL is expected to be worth USD3.98 trillion by 2030 – growing at a CAGR of 45.7%. Relatively, massive growth of BNPL is foreseen in the Philippines this year, with its payments expected to increase by 109.7% to reach USD803.5 million in 2022. This adoption is expected to continue growing consistently, at a CAGR of 50.9% from 2022 to 2028.
This growing demand by consumers is due to its convenience and affordability, among others, as per the report. 56% of consumers cite the ability to test a product before making a payment as a key driver for using BNPL.
Other growth factors include widespread merchant adoption, as vendors look to reap BNPL benefits, such as increased sales conversions and average order sizes and accelerated market traction during the pandemic.
“Filipino consumers have heartily embraced BNPL, which has gone hand-in-hand with a boom in online shopping, particularly during and post-pandemic,” said William Dale, Commercial Director at Mambu APAC.
“BNPL is now a key sales and conversion driver for retailers and ecommerce providers. Merchants, if they have not done so already, are looking around for an embedded finance solution that can help them design BNPL experiences at speed and at low-cost. The bottom line is that it’s a new revenue driver and having the ability to quickly add seamless instalment-based payments at the point of decision can change a business,” added João Caldeira, Partner at Deloitte.
Download the full report by Mambu and Deloitte here.