Jayafar Moidu

Is BNPL the Silver Bullet to energize the Consumer Finance Landscape BNPL is a form of Financing at the point of sale that is gaining significant currency across markets – both mature and emerging. In terms of market share of lending – they may be small today, however, they are growing at a rapid pace compared to traditional loan and card options. BNPL brings new business avenues for merchants and is a cost-effective alternative for the customer as compared to high-interest credit card charges. BNPL solutions are usually highly integrated into the shopping checkout, with just a few clicks, unlike consumer-lending solutions that require paperwork to be applied for. Additionally, BNPL solutions often provide the consumer options that can be opted into or changed with very low friction during the repayment period. The convenience it offers being embedded in the purchase journey rather than just at the Point of Sales, make BNPL an interesting option for consumers. Source: ARKWRIGHT_BNPL_2022 Leading brands like Klarna or Afterpay have blended personalized recommendations for products often mapped to Consumer interest, and preferred channels with product access across mobile, web, app, and PoS systems. The ability to help customers via continuous engagement till the last mile in the purchase journey gives BNPL players the edge vis-à-vis other models now. Across markets from the United States, UK, and Australia to more conservative markets like Indonesia or the Middle East, there has been an upsurge in the number of companies offering BNPL solutions. In UAE and GCC region, there are close to 10 players including Tabby, Tamara, Postpay, Spotii and Shahry. Despite strong growth and bright prospects, there are enough headwinds faced by the industry. There is a growing perception that BNPL drives impulse consumption, which may result in purchase amounts higher than the user's ability to repay. The recent Australia experience was one of the rapid expansions in the last three years with Regulators in 2022 worried that BNPL players have escaped regulation and consumers have got into excess debt without enough repaying capacity. BNPL providers use different and non-standardized assessment methods which still must prove themselves in stress tests and adverse economic environments and are not linked with credit bureaus enabling checking of the level of indebtedness or affordability. In addition, BNPL providers are benefiting from loopholes, avoiding the requirements that banks must meet (KYC, credit check, lending reporting, standardized legal information, etc.). These exemptions in terms of credit duration and/or volume, interest-free credits, and a limited number of instalments were intended to facilitate serving the low-end segment of the market efficiently. Legislators in the US, Australia, Europe, Singapore, the UK and other countries, as well as consumer associations, are starting to pay attention and close regulatory market gaps. Source: Buy Now Pay Later | Strategy Consulting | Quinlan & Associates BNPL business model [...]

Smart Social Banking – An Opportunity for Banks to Augment their Digital Footprint In an evolving business landscape of the Banking & Financial Services sector, digitalization, mobility, cloud, and big data analytics have emerged as top IT trends in recent times. As part of the digital revolution, Social Media has already occupied a place of importance for the banks and financial institutions to reach out to their customers and enhance their banking experience. Over the last decade, Social Media platforms have evolved quickly to become a part of our daily lives and they continue to grow significantly, aided by the accelerated internet penetration. Presently 4.57 billion people around the world use the internet, of which 346 million new users have come online within the last 12 months. Internet penetration is inevitably followed by an increase in Social Media users which currently stands at a staggering 3.96 billion, which is about 51% of the global population. 99% of social media users access their accounts through a mobile device (Sources: Statista, Kepios Analysis, Mediascope, Cafebazaar, and CNNIC– July 2020). Social Media has gained immense popularity, particularly among the younger generations, as it not only makes available a choice of content but also a means to create content and share with the world instantly. Although the Banking industry was relatively slower to realize the potential of Social Media, today, many leading financial institutions around the world have smoothly embraced it to facilitate instantaneous and transparent communication with their customers. Banking activities on social media are currently limited to marketing products, acquiring new customers, providing customer support, and engaging the customers. Social Media has enabled banks to reach out to far more customers than traditional channels, leading to significant efficiencies in customer acquisition costs. Through transparent customer feedback and convenient customer support through the Social Media platforms, banks have scored significant advantages with respect to customer experience. However, the data-points on the growing internet penetration combined with the business uncertainties stemming from the COVID-19 pandemic, compel for a far more advanced role of Social Media platforms in the Digital Banking experience for the customers. The practice of social distancing is likely to continue even after the pandemic subsides, making the branch visits for day-today banking transactions unpopular. This only reinforces the need for aggressive transformation of Digital Banking services, including Smart Social Banking solutions to enable financial institutions to offer transactional banking services on the Social Media platforms. But few banks are open to this idea yet, owing to concerns about data privacy & security risks. But the security risks and data privacy issues are not unsolvable. Advancements in Cloud Services, Data Management, and Disaster Recovery, etc., have made it possible for banks to offer safe access to bank accounts and enable secure transactions online, anytime, anywhere. These security best-practices can be adopted to extend transactional banking services even through Social Media [...]