BROOKFIELD, Wis.—If credit unions are to be successful with the rapidly growing buy now, pay later (BNPL) offerings, there are several steps they absolutely must take, several analysts have told CUToday.info.
Such as the need to be available at the point of sale. Such as finding ways to overcome the hurdles of membership that are slowing BNPL product offerings from CUs, forcing credit unions to make some hard choices. Such as offering education to members.
As CUToday.info has reported, any additional steps turn consumers away as they instead opt for the speedy BNPL options from merchants or other lenders at the point of sale.
“You've got to make sure the credit union is in this from the beginning of the transaction, at the point of purchase,” said Theo Curey, SVP, business unit president, credit union solutions, Fiserv, noting the company is working on a BNPL product for credit unions that will address this matter. “That's where our card capabilities come in. Our card capabilities in relationship with a fintech is going to allow credit unions to be at the point of purchase to offer a BNPL payment option.”
Curey said Fiserv will coordinate the new offering through its CardHub product, which enables credit and debit cardholders to digitally manage their cards and see their spending under one unified platform delivered online or through a mobile banking app.
Curey reminded that consumers will always migrate to the easiest, fastest option.
“We're going to have to work with the credit unions to identify different ways to make this product effective, as there are different types of credit unions with different types of charters,” Curey said. “Some have more restrictive rules. The key is we will have to identify in real time if they are already a member of the credit union or if they are eligible to join.”
Get Educated
Mike Homer, VP, product management, depository Institutions with Fiserv, emphasized the importance of education in the BNPL process. As CUToday.info has reported, the CFPB is looking into BNPL offerings, sharing concerns over consumers overextending themselves with a product that provides easy credit. BNPL offerings, too, often do not rely on a thorough credit check.
“What we have to look out for with BNPL, which is actually more important, is financial education,” Homer said. “We're talking about people who are spending money that they don't necessarily have, so somebody needs to counsel them. Credit unions are uniquely positioned—they are trusted by their members to look out for their financial well-being. Members know credit unions are trying to serve them and carry them into their financial futures—and not helping them get into a bad credit situation.”
An Assist from Fintechs
Just as fintechs can be big CU competitors in the BNPL space, they, too, can assist credit unions. Homer said Fiserv is working to help credit unions create strong and effective partnerships with the tech upstarts.
“We are building out a developer portal that will allow credit unions to look at the capabilities of fintechs and figure out the ones that are the right fit for them,” said Homer.
Homer said credit unions don’t have to be large and have deep pockets to partner with fintechs, and that the developer portal will support all asset sizes of institutions.
“The portal will help credit unions of all sizes understand who is out there in the fintech marketplace, what their capabilities are, and how they can help their organization,” said Homer.