The news: Monzo is planning to launch its own buy now, pay later (BNPL) product and could unveil it soon, per the Evening Standard. BNPL is a credit card alternative that lets customers make installment payments for their purchases.
The UK neobank’s version will be differentiated from the growing number of players in the space by offering affordability checks for users and reporting repayment histories to credit-checking agencies.
Trendspotting: Monzo is set to join a slew of companies that are in both banking and BNPL, including:
The big takeaway: If Monzo can roll out a BNPL arm that garners a good reputation, it could build loyalty among its large customer base, which stood at 5 million as of its most recent annual report.
Cross-promotion among existing customers can help the neobank quickly build a following for the product.
Data suggests that Monzo has a market opening, per findings from a 2020 Capco survey:
The neobank’s affordability and credit reporting—particularly, its affordability oversight for borrowers—may also enhance the reputation of its BNPL arm. Of late, the product type has been raising concerns that it could stick borrowers with too much debt.