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How to make BNPL even better? Focus on these three areas



By Nandan Sheth, CEO, Splitit


Nandan Sheth

Buy now pay later (BNPL) has remained a hot topic of conversation for a good reason. Consumers love interest-free installments and merchants like the increase in sales. BNPL accounted for 2.1% of global e-commerce sales in 2021. With over 50% of consumers saying they plan on using a BNPL service this year, there are no signs of slowing down. Yet, many businesses are now starting to feel the greater implications on their business and bottom line.

I have had many conversations with mid-market and enterprise merchants across the globe over the last couple of years. While the impact of BNPL has been generally positive, a few key issues have come to light that hamper the effectiveness of BNPL. If we can improve these three key areas, we can improve the experience while creating a more responsible option for consumers.


Removing the added friction at checkout

The high friction inherent in legacy BNPL delivers sub-optimal performance for both the consumer and the merchant. The friction is clear at three critical parts of the checkout process: payment choice, application or registration, and purchase approval. However, much of this friction can either be removed or significantly reduced.

The first friction consumers will face is navigating the growing myriad of payment options at checkout, from choosing between debit or credit card, a digital wallet or choosing between BNPL providers. Too many options create a choice overload that has negative consequences on sales. Studies have shown people become paralyzed by the possibilities and avoid choosing one altogether or deal with regrets once they’ve made a choice.

The next key point of friction is the lengthy application process. An application can create up to seven extra steps at checkout that can take the consumer away from the merchant’s website, collate personal details, or even submit customers to a credit check to see if they’re approved.


Improve the conversion funnel to optimize performance

One of the core benefits of BNPL is increasing checkout conversion rates – and it does. BNPL can increase conversion rates 20-30% and lift average ticket sales 30-50%. Yet, there are ways we can improve the BNPL conversion funnel.

The biggest area for improvement is in the approval process. Legacy BNPL providers have mediocre approval rates at best. The industry average for approval rates is around 40-50% and as low as 30% depending on the vertical and demographic. Nothing is more disheartening to the shopper than being declined at checkout. The negative impact can not only lead to a lost sale but can damage the shopper’s relationship with the merchant.

Improving approval rates will lead to a better customer experience and enhance the efficacy of BNPL. Several technological advancements are helping in this area. Artificial intelligence (AI) is one example which looks at several factors to make a better lending decision. AI decisioning engines can make faster, less risky approval decisions.

Another option is to unlock existing and approved credit lines. Consumers tend to shy away from using credit cards because of high interest rates. But at the same time, 45% of consumers pay off their credit card balance each month. Credit cards have a unique advantage over BNPL – there is no need for an application because the credit is already issued and available at any time.

Splitit is making it easier to unlock the credit the consumer already has on their current cards. Splitit breaks up larger purchases into smaller, interest-free monthly installment payments. This solution combats the declining conversion funnel, removes the tedious registration process giving customers a clear, simple way to pay over time.


Close the chasm between consumers, merchants and the payments ecosystem

BNPL has unintentionally created a chasm between consumers and merchants as well as the rest of the payments ecosystem. Closing these chasms will go a long way in delivering a better experience for the entire payments ecosystem.

Merchants are starting to feel disenfranchised from their customers by legacy BNPL and rightly so. Businesses focus significant expenses and resources to attract and turn prospects into customers. With BNPL, consumers are now working with an entirely different brand at the most critical part of the checkout process where consumers value trust and security the most.

When consumers use a legacy BNPL service or download their app, they receive emails, alerts and notifications from the BNPL service letting them know of upcoming deals and events and encouraging them to visit the app. For the consumer, it makes sense to follow the lead for the best deal. But for the original business, it can lead to a lost sale and a lost customer.

Merchants should look for a partner that can incorporate BNPL as seamlessly as possible in their existing checkout flow, ideally with a merchant-branded experience to help alleviate brand confusion and provide a more elegant experience for the consumer. They should seek a solution without a lengthy application process and with high approval rates for their target customer, adding zero friction to the checkout.

The rapid growth of BNPL is also creating a strain on other relationships in the payments ecosystem, most notably with financial institutions, card networks, card issuers and acquirers. The shift in transactions from credit or debit to a BNPL has trickle-down impacts across the entire ecosystem.

Why does this matter? Several recent surveys show consumers prefer and trust their relationships with their financial institutions or credit cards more than with third-party services and providers. One survey notes more than half (53%) of consumers would consider a BNPL service offered by a bank extremely appealing than 35% that prefer a pure-play BNPL. Another survey shows nearly 50% would prefer to use BNPL that uses their existing credit card.

Closing the chasm and creating more symbiotic relationships in the payments ecosystem delivers a better front-end and back-end experience, especially for merchants. This can be accomplished by providing a more agile and contemporary orchestration technology layer that brings all the constituents closer rather than driving them apart.

The fact is that BNPL is here to stay. Its rapid growth is a testament to the need and desire for the service. Installment payments allow customers to pay for products or services in a way that works for them. Whilst, businesses can give their customers greater financial control, which cannot be undervalued. By working on improving these three key areas, we can create a more robust and future-proof BNPL option that benefits the entire payments ecosystem.







How to identify the signs that your IT department need restructuring



Eric Lefebvre, Chief Technology Officer at Sovos


For firms to execute transformations and meet their overall vision, it is crucial that their CIOs are able to recognise the signs that their department is in need of some internal change. In the current economic climate, CIOs working to fulfil their organisation’s priorities and meet business goals might hesitate to acknowledge that their IT department needs restructuring, never mind be able to identify the signs.

However, these problems rarely fix themselves and organisational restructuring requires conviction and determination from leadership for it to occur successfully. So, what are some of the key signs that CIOs should look out for?

Eric Lefebvre


Struggling to keep up with industry demands

CIOs unsurprisingly are working in an extremely demanding environment at the moment. Meeting these evolving demands is crucial for companies. When demands are not met and not handled properly, this can have a lasting impact on organisational goals and objectives, and even impact the way in which transformations are put into effect.

Depending on the organisation’s structure, the way in which being unable to keep up with demands manifests itself can differ. Despite double digit reductions across the industry, the search for talent across the tech world continues, project costs continue to rise as the cost of labour has increased and schedules have been disrupted by significant attrition. Many companies will also find business costs, such as that of third-party software, are higher than planned and technology debt continues to pile up faster than it can be sunset.

Whilst leadership teams might dedicate their department’s attention on the factors discussed above, they may find that their team will fall short when it comes to timely deliverables and helping maintain your organisation’s tech stack and guide its business transformations. Looking beyond the immediate problems of high costs and considering an internal reshuffle may be the solution for many IT departments.


Internal conflict within the team

Organisational designs with underlying issues can cause constant friction, especially when they go unacknowledged. An IT department that lives in conflict will certainly be reflected in results and less than successful tech transformations. CIOs will find that by adopting an organisational design which works through staffing issues, will better innovate, especially if they can all work together.

Department leads should have a strong understanding of their team’s work environment and guide them through any long-term or potential problems. When an individual is working in a demanding or complex industry, working well with your team shouldn’t be the main impediment to innovation. By acting quickly to eliminate internal conflict, CIOs can better lead and ensure their team’s focus is entirely on producing more optimal outcomes.


Delays are commonplace

When a large amount of your team’s time is spent setting objectives, budgets and timelines for the projects they are working on, it is vital that they are met. When delays are coming from the IT department, they will inevitably hinder the development of any business transformation, especially if it prompts teams to spend excessive amounts of time rearranging budgets and timelines and therefore hindering innovation.

IT departments are a crucial aspect in many different parts of a company’s transformations, so remaining on track when it comes to timelines and innovation is critical to operational plans. If delays have become commonplace in an IT team, and external factors are impacting projects, CIOs should look at restructuring an IT department to solve these issues.

The strongest team relationships do not happen by accident and are the result of good planning, strong leadership and a motivated team. CIOs can ensure this by providing vision and long-term strategy with clear goals and objectives to produce high levels of quality output.

When internal issues are noticed in an IT department, and are noticeably impacting team morale or productivity, this should indicate the need for departmental restructuring. Be that due to an inability to meet market demands, issues with productivity and meeting deadlines or internal conflict, these issues all risk a department’s functionality and an organisation’s ability to achieve its goals. In short, don’t overlook the warning signs!


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Top banking trends of 2023 and global outlook of banking and fintech for the year ahead



Author: Professor Marco Mongiello, Pro Vice-Chancellor, The University of Law Business School


You’d be forgiven for assuming that the global outlook for banking and fintech will be dominated by the usual suspects:

Artificial Intelligence – AI plays an increasingly prominent role in banking and fintech by enabling personalised services, fraud detection, predictive analytics, use of chatbots and robo-advisors.

Blockchain and Cryptocurrency – the secure, decentralised and swift system for financial transactions that blockchain has brought to the fore a few years ago, is now becoming ubiquitous. An increasing number of transactions are recorded through blockchains technology, primarily in the cryptocurrency market.

Digital Banking and fintech – accelerated by COVID-19 pandemic, the adoption of digital banking is a trend that will persist as customers have become accustomed to the convenience and efficiency of digital banking. Moreover, fintech enables access to financial services for previously underserved populations in developing countries or less affluent social groups in more affluent societies. This includes mobile banking services, peer-to-peer lending platforms, and microfinance solutions.

Open Banking – another global trend is the use of open APIs (Application Programming Interfaces) that allow third-party developers to build apps to facilitate customers’ access to financial data and services from banks.

Nonetheless, the challenges posed by these rapid changes are reminders that banking, an industry that by its very nature needs to be conservative, risk averse and solid, wobbles on the unchartered grounds of fast and turbulent innovation, where entrepreneurship instead thrives. The underlying rationales of banking and fast digital innovation are not incompatible but do need solid operations and thought-through decision-making to avoid causing catastrophic collapses.

The recent examples of Silicon Valley Bank, Silvergate, FTX and Wirecard are stark reminders that digital entrepreneurship applied to banking doesn’t just bring to customers the visible transformation of valuable new services, but also dents (perhaps as an unexpected consequence) the rationale itself of the role of banks in the global economy. Moreover, the central banks’ ability to contain the effects of single banks’ defaults is no longer a certainty, as experienced just over a decade ago and more recently. The markets’ sentiments are hardly reassured by the commitments of even the most coveted players, such as the European Central Bank, the Federal Reserve, and the President of the United States himself.

Regulators are lagging behind and their attempts to catch up may cause further seismic shocks to the global banking system. For example, another trend that is emerging is one of artificial intelligence decision-centres (i.e., decentralised offices of banks which take autonomous decisions on behalf of investors) outside the most stringent regulatory environments, enabling banks to operate globally more efficiently and more competitively. And we can expect that regulators will close the gap either abruptly, as it is currently happening in China, where private banks are subject to an escalation of regulatory and monitoring restrictions, or more gradually as it is happening in Europe and in the US.

The questions we face, as individual or trade customers of our high street banks, as direct investors or clients of managed funds, are whether banking will become more user-friendly yet, for our daily use but riskier, too, or is it simply becoming more efficient, transparent and also safer.

I’m afraid that the answer is by no means an obvious one. Therefore, caution, level-headed decision- making and critical thinking have never been as important as these days. Whether you are looking after your family savings or growing your pension reserve, the imperative is that you keep updated about the providers of the financial services you rely upon as well as about the general regulations that apply to your financial transactions. This is where, for example, you need to be familiar with your rights in case of cyber fraud, as well as learning how to minimise the risk of becoming a victim thereof. Also, taking additional steps to evaluate the credibility, solidity and reliability of the online provider of that app that was recommended by a trusted friend, may prove a very good move.

Similarly, whether you are the CFO of a medium or large company, or are a sole trader wrestling with your own business’s finances, you need to reflect on what you really want from your bank in the first place. That is before you started to be swayed by the whirlpool of offers of ‘opportunities’ to multiply your financial investments. Chances are that your initial approach to your bank was dictated by either a need for financing your working capital, as per your budget and strategic plans, or to find a safe place for your temporarily idle liquidity. Perhaps you were also after some basic treasury services such as swift payments and debt collection. Maybe some other financial services closely related to your business operations, e.g. factoring. The advice is to give very careful consideration to services that are more remote from your business, because the trend for the next years is that more and more of those will be offered to you. But many new services will disappoint those who, sadly, cannot afford financial mishaps as they look to run and grow their business.


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