D-Rating : more than one in four European banks have already integrated BNPL into their offerings

Apple Pay Later will be « launching soon » according to Apple CEO Tim Cook, who told CNBC that Apple employees are beta testing the buy now, pay later (BNPL) feature. While some of the fintechs, that specialize in marketing this new offering, have faced serious headwinds since the spring of 2022 (such as Sweden’s Klarna, whose value has been divided by eight), usage is growing, and the launch of Apple Pay Later – originally scheduled for the fall of 2022 – confirms the group’s bet that their rise will continue.

According to data collected by Adobe, BNPL usage accounted for 12% of the $8 billion in online purchases made by Brits in January, up 10.7% from January 2022.

In the United States, Insider Intelligence estimates the market at $75.6 billion in 2022 (+77.3%) and forecasts 25.5% growth in 2023 ($94.87 billion). More than a third of Americans would use it this year for their online purchases (35%), 6 points more than in 2022 (29%)

In 2023, the market is expected to grow by 20.1% in France, 19.4% in Germany, 19.8% in Sweden… And in Spain, studies predict an average growth rate close to 20% for the period 2022/2028.

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BNPL already presented by 70% of Spanish banks but 0% of Belgian banks

As part of its annual European retail banking rating campaign, D-Rating has included BNPL among more than 300 indicators to evaluate the digital offerings of over 80 European banks.

At the end of 2022 (the indicators were qualified between October and December), 28% of European banks had integrated BNPL into their offerings (28% on their app and 27% via their website).

But these market observations cover very strong disparities with, at the top, Spain where the service is offered – on their website as well as via their app – by 70% of the 11 banks studied.

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On the other hand, it is not observed in any of the Belgian groups in the D-Rating scope.

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The BNPL is nearly equally deployed by both digital banks and banks with networks of branches. It seems that this innovation has transcended the banking typology and seems to interest in a similar way, both established institutions and new comers.To get more in details and give you an idea of how closely the numbers get when we look at the rate of deployment of BNPL, here are some key numbers:

30% of the European digital banks surveyed display their BNPL offer at least once either app or/and web, versus 36% of network banks. Focusing on the application only, 21% of digital banks and 22% of network banks present their BNPL offer to their logged in customers. Whereas on the web personal space, 21% of digital banks and 26% of network banks offer BNPL information through the web. BNPL being heavily connected to e-commerce and online shopping, we would assume the majority of banks offering this service would be digital players, however we observe through these data a slight increase in network banks. It is safe to say then that the disparities regarding the existence of BNPL information are less connected to the bank type and strategy, and are more a question of geographic context and local customer behavior. BNPL may also be linked to the purchase power and the number of younger populations. This offer helps increase purchase power and sales in e-commerce, a filed in which millennials and younger groups are interested in, specifically as they may not have or want access to more typical loans and credit cards.

All of these are demographical, social and economical factors that contribute even more to the future growth and market potential of this offer in the upcoming years.

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