BNPL: BANKS Point-of-sale finance technology has changed the nature – and availability – of credit. But in the banks’ hands, it could revolutionise it, says Jifiti’s Co-founder Yaacov Martin Buy now, pay later (BNPL) fintech Jifiti has a simple mission: to enable banks and lenders to give consumers access to affordable and responsible credit products at point-of-sale (POS) – in store and online. Three words jump out from that. Enabling banks in the BNPL space allows for an even wider and deeper reinvention of credit, beyond the smaller ticket items that the likes of Klarna and PayPal’s Pay In 3 facilitate. Bank institutions have the financial clout to potentially revolutionise the way finance is provided. Additionally, many would say that greater access to BNPL for consumers, in-store and online, is a natural democratisation of finance. Removing draconian barriers to lending is only providing the instant gratification for products that punters are already accustomed to, through the likes of Amazon and on-demand TV. But, on the flip side, can we ensure that lending is responsible? With easier access to credit, are we in danger of encouraging potentially reckless borrowing by consumers? Clearly, there is a balance to be struck. Traditionally, banks have been risk-averse players, relying on interest rates to reap revenue, but in the current low-interest-rate environment, there is a need to boost their balance sheets. And this is where an offering in the BNPL space may be a game changer, according to Jifiti co-founder Yaacov Martin. Calling banks Jifiti’s ‘sweet spot’, Martin explains: “I think we all know what banks are very good at, and what they have struggled
with – and it’s become pronounced over the last two years or so, as we’ve seen the BNPL industry explode. Some of the new-age BNPL providers have deployed incredibly well, primarily on e-commerce sites, quickly and efficiently, with a very smooth and easy user experience. Banks, less so. But what banks have to offer is tough to compete with – very competitive pricing on the funds they are able to lend. “They’re able to go deeper and larger, in terms of loan size, and allow programmes to last for a much longer period of time. They have the balance sheet and they, mostly, have the underwriting capabilities. What they’ve struggled with is deployment – and that is the gap we fill. We enable banks and other lenders to really scale their POS finance business.” Clearly, banks offering accessible BNPL functions will be a much-needed leg-up for retailers fighting to rebuild post-pandemic, but also a sea-change for consumers who, even with a fantastic credit score, have to jump through hoops to enjoy still-onerous finance terms. “These type of BNPL finance products are not only for situations where a consumer has no credit left on their existing card,” Martin points out. “They are supposed to provide them with a more affordable credit line, and, at the end of the day, banks are always going to be cheaper when providing BNPL services to merchants and customers, due to their lower cost of capital and other advantages of scale.” A multinational player, the company’s white-labelled financing platform enables banks and lenders to easily and seamlessly deploy their loan programmes at any POS – online, in-store and via call centre. The inspiration for Jifiti’s current business model grew out of its history of providing various POS and online checkout services. “We found that integration with merchant systems – specifically POS in-store – is a tremendous headache. It is expensive and lengthens the onboarding process significantly. “At the end of the day, deployment for
banks and lenders is dependent on the ease and speed of integration with these systems. Having figured out how to either eliminate or speed up integration in other sectors, we realised this was the next industry where we could provide real value – to banks, merchants looking to increase sales, and consumers too.” Martin says Jifiti’s role as a facilitator alleviates much of the angst surrounding routes to credit. Its partnerships can either be merchant or bank-driven. Retailers can select from any of the banks it already partners with or choose another they want to work with, in which case Jifiti partners with that bank to serve as their platform for deployment of POS finance. Either way, Martin says, it’s relatively easy for a merchant to be up and running with a BNPL product. “On the other hand – and maybe this happens more often – we partner with a bank to serve as their platform for deployment of POS financing, and, in those cases, merchants will come through our funnels. The banks’ merchant services or business development and sales team will onboard the merchants through our platform,” he explains. Martin uses the purchase of new living room furniture, as an example of how easy and consumer-friendly buying a high-value item facilitated by a bank-originated larger loan can be in practice. “With something like this, the customer is probably going to want to physically see or touch the item. So they can apply for BNPL through their own mobile device on site. They’re able to immediately start an application, there will be signage with a QR code, or a link, branded for the specific merchant and bank behind the programme,” Martin says. “Next, they’ll fill out a fairly short application form, usually about seven fields, with their information, and a credit decision will be rendered immediately. Then, as a consumer, they will be either provided with the funds on a digital card to complete their
BANKINGONBNPL 78
TheFintechMagazine | Issue 21
www.fintechf.com
