Buy now, pay later (BNPL) services are proliferating across the world of e-commerce — ads for modern buy now, pay later services are now swarming social media sites, streaming services, and online retailers. The plethora of options for this seemingly swanky and genius option are shoved into the face of shoppers whether they’re shopping or not, luring them toward spending more money than they otherwise would — or should. As a financial institution, it’s crucial to stay on top of this evolving market and be a resource for your members whose financial health should always be your #1 goal. 

Another factor to keep in mind here is that BNPL services are extremely popular with younger generations, particularly Generation Z, who are generally distrustful of traditional credit opportunities from large institutions. Gen Z is cautious, deliberate, and living through unprecedented economic times that seem to always stay in flux. They’re looking for sustainable budgeting options, which BNPL dresses up as very well; but the truth is that they can be a wolf in sheep’s clothing. As an accredited, experienced financial institution, by stepping in to offer similar services that younger people are seeking, you make yourself a competitive candidate for their membership and loyalty in a modern and helpful way. 

The BNPL options out there are shiny and attractive because they offer people the opportunity to purchase expensive items without paying for them 100% upfront. It’s not as if this concept hasn’t existed in other areas — auto loans, for instance, are a form of buy now, pay later that greatly benefit millions of people on a daily basis. But when those are given out, there are varying processes that ensure loanees are in a good position to make their monthly payments. Oftentimes, with BNPL, those checks and balances aren’t in place, or are minimal, which means that people in need of financial guidance are actually being somewhat preyed upon. 

The Hidden Downsides of BNPL

Depending on the type of buy now, pay later service, it could have hidden fees that rack up quickly when buyers aren’t keeping track of their purchases. The highly unregulated industry makes for a tedious system that can put people in a financial hole that’s hard to get of — as they likely chose the BNPL service because they don’t have the full amount at the time of the initial purchase, the unexpected accruing costs of late fees and service fees and even interest on some can be extremely detrimental to peoples’ financial wellness. As an FI, you can step in to be a helping hand and even potentially offer your own version of these services, in addition to being an educational resource on budgeting and saving for your members. 

What Your Institution Can Do 

According to a survey done by PYMNTS.com, 60% of millennials, 57% of bridge millennials, and 54% of Generation Z consumers are interested in BNPL services offered by their financial institutions — it’s just that, as mentioned above, many are skeptical of traditional credit offerings that can easily impact their credit and overall financial health. Rethinking the products and services you offer to your members to fit the digitized modern times we’re living in, as well as address the financial uncertainty that many Gen Zers and young Millennials live with, is essential for continuing to best serve your existing and future members. 

How Zogo Can Help 

Zogo’s work is centered around finding modern, accessible ways to teach financial literacy that genuinely benefit anyone seeking a helping hand. Even those with solid financial knowledge can always use a brush up on new and emerging enterprises in the industry, such as these often confusing BNPL services. Our suite of award-winning product offerings are designed to help everyone, whether through a financial institution or of their own volition. Through your institution, our Mobile Banking Integration encourages daily learning and banking activity right there in your existing mobile app. On their own, individuals can use our free app to learn financial literacy and earn rewards along the way. The more empowered with financial literacy people are, the more likely they’ll be to make informed financial decisions rather than reckless ones. 

Zogo is a multifaceted financial literacy tool that can be used in varying ways to both educate your members and keep them engaged with your financial institution. Building trust and loyalty with existing and new/potential members is paramount, and we’re making ourselves available to assist with that endeavor in any way we can. From our mobile app to our mobile banking integration, Zogo’s capabilities are here to help you navigate the changing world of technology in finance, including the BNPL craze.

To learn more about what Zogo can do for your educational offerings, request a demo!