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Consumers are increasingly becoming interested in “buy now, pay later” shopping options amid the growing financial challenges of the average American, and a new study by J.D. Power is urging banks to further educate the public on this alternative.
As inflation and interest rates remain high, customers are experiencing financial stress and trying different ways to manage their financial situations. Aside from turning to traditional credit or loans, one thing that seems to be piquing their interest is buy now, pay later (BNPL) options for financing purchases, with 80 percent of the surveyed customers saying they are aware of this and one-third of them saying they have used a BNPL program in the past 90 days before the survey.
The survey data showed that overextended consumers – those with more debt than they can handle – are most likely the ones to use BNPL options, at 55 percent of those consumers, but even 30 percent of consumers in healthy financial situations are using BNPL options.
For those who haven’t used BNPL, J.D Power said overextended and stressed customers are less likely to be familiar with the products, while only 31 percent are completely unfamiliar with BNPL.
While 60 percent of survey respondents think using BNPL is helpful and 54 percent wished that they always had BNPL as an option while buying things, 64 percent said that they don’t believe it improves financial health.
The survey stated that this is where the banks offering BNPL options need to come in and educate the customers on its benefits and how it can help them with their financial situations – or hurt them.
“Banks need to understand that beleaguered feeling and tailor their customer outreach and their product offerings to account for the fact that customers have been barely holding it together for a significant period. BNPL is a reasonable option for some customers and might not be the right fit for others. As their primary financial partners, banks are uniquely positioned to help customers understand who stands to benefit from leveraging BNPL, and for those that don’t, presenting an alternative option that may be a better fit,” J.D. Power said in its report.
The consultancy and consumer data company also recently put out a report suggesting that banks and credit unions are “sitting on a goldmine of customer goodwill” if they can deliver useful and personalized financial advice to their customers.
“If banks can do this successfully, they’ll be able to retain customers, increase the use of their in-house services, and build better relationships,” it added.
