A force for financial inclusion and advancement, fintech leaders are always pushing the envelope to reach customers across all categories. The Buy Now, Pay Later (BNPL) model is the perfect example of innovation in action, and customers received it across India with open arms. Adopted by top fintech leaders such as Vijay Shekhar Sharma, Harshil Mathur and Bala Parthasarathy, it is revolutionary in its scope.
Another among these is Sanjiv Bajaj, Managing Director and Chairman of Bajaj Finserv, also hailed as one of the best fintech leaders in India. On the important role played by financial services, he says, “We cannot be a developed country if the bottom 40% of our population is excluded from financial services…We need to ensure access to financial services products for all…I believe innovation will make all that different as we try to build out national financial services champions.”
Save Now, Pay Later (SNPL) is the next big thing, pushing customers toward better financial wellness. But how does it work, and what are its big-picture implications? Read on to find out.
The Save-Now-Pay-Later elevator pitch
As a traditionally financially conservative nation, it is high time for options other than those offering instant gratification to emerge. Enter SNPL, a model that builds on the goal-based saving principle familiar to the Indian citizen. Here, top innovative leaders, like those at Multiple, leverage fintech to add value to spending and saving.
SNPL allows consumers to park funds with merchants for a set expense. Upon the ‘goal’ being met, the merchant offers an additional reward in the form of gift cards, discounts, or cashback. These can also count as a form of returns, and so the SNPL model offers consumers greater value when spending towards their aspirations.
Unpacking the Save-Now-Pay-Later benefit
SNPL combines investment and e-commerce to offer a more rewarding saving experience. The need for this business model arose from a few pain points of BNPL, particularly the potential for a debt trap.
For perspective, the benefits of this revolutionary model can be divided as follows:
1. Buying without a credit
The Save-Now-Pay-Later model promotes investing toward aspirational expenses rather than impulse credit-enabled purchases. It focuses on creating value through saving.
2. Cashback and discounts
With SNPL, the merchant agrees to reward the consumer for their patronage. This makes sustainable spending a reality, and an easily accessible one at that.
3. Inculcates the habit of saving
SNPL reinforces and rewards the principles of saving and investing. Consumers must set aside a set sum consistently enough to reap the benefits on offer. This has the potential to realign financial habits, and inculcate those that create long-term value.
Chinks in the Save-Now-Pay-Later armour
The SNPL model does have its challenges for fintech leaders to solve before any manner of wide-scale adoption can happen. One of these chinks is delayed gratification, and this can hurt buy-in. Secondly, visibility and trust are currently hard to garner. Part of this can be due to its nascent stage and different entities regulating the SNPL model.
This has the potential to become a minefield for all parties involved. Lastly, there is the risk of the offer being rescinded by the merchant or the SNPL platform or the purchase being abandoned at the last minute.
The Save-Now-Pay-Later Roadmap
When looked at from a broader perspective, the SNPL business model is a win-win-win situation for all the parties involved in it. Thought leader understand that the early challenges exist and will eventually work to get them ironed out.
This is because the SNPL model can tap into BNPL’s market. This is expected to rise to 100 million by 2026, suggesting an opportunity for wide-scale success. However, these are unrealized gains, and much of it boils down to how quickly and effectively these top financial leaders can crack down on the nuances of SNPL.
Lastly, conscious consumption, as a concept and practice, is on the rise and gaining traction. Consumers are moving away from wasteful expenditures and looking to harness value with their finances. SNPL has the potential to meet these needs as experts suggest it offers up to 2X the returns for consumers.
Regarding adoption, SNPL is still in its nascent stages, but it has no dearth of opportunities. Top financial leaders will invest in it and explore it, with many top innovative leaders already working towards using it to create a more financially inclusive tomorrow. When buyer’s remorse is surging, SNPL can bridge the gap overlooked by BNPL.