To PMs: What do you think about BNPL?

BNPL is inherently loss making, you need a 70:30 mix of interest players and zero interest players to be profitable. The dominance of CC and no perceived monetary benefit to users will limit its growth.

First principle - “Lending is a business of collection, not distribution!” Some of the players those who got bust in recent past focused entirely on distribution. Collections never got attention even in product development cycles. I know some folks those who took money from such BNPL players and returned ZERO money. Zestmoney is one such example of company with mountain of NPAs Second - “Some businesses by nature itself are boring”🥱 Retail lending is nothing new, old banks are running this business for many decades profitably. Adding some friction to lending journeys give time for lender/borrower to learn more about each-other. The zip-zap disbursals by BNPL players left small time for everyone to realise the seriousness of money. So if I have to build a new BNPL, I will focus on the above two levers - 1. Ensure collections are figured out clearly with phygital infrastructure in place. 2. Introduce some frictions for borrowers, let’s say not letting them utilise the full limits, break the limits in smaller chunks. Periodic revisions of limits using tech. Let me know if this makes any sense!

There’s a large population in south east Asia which is out of credit bureau records and financially illiterate at the same time. Though the margins for an intermediary providing BNPL are low, aggressive dark patterns can fetch you money if done right. The possibility of coupling user growth with one NBFC/ financial house and using it to drive more partnerships and hence more loaded loan books seems to be the play. I’m not from finance so can’t comment on what it’d mean over a longer period of time

I was really interested in trying bnpl but the rate of interest always put me off. If i can afford a product, bnpl doesn't make sense because I'm paying extra money for the same product. If i can't afford a product, bnpl still doesn't make sense because I probably shouldn't be buying it in the first place if i can't afford it. Financing options with banks are anyways better than fintech, might as well get personal loan or credit card for purchases instead.

The lending partners behind the some of the apps are scam companies. Worst customer support, reporting false information to CIBIL , and leaking personal data. Better to avoid bnpl apps or do good research on their lending partners.

BNPL is literally the definition of a loan. Jokes aside, lending is not a distribution business, it’s a collection business. Unless the collection of outstanding dues is fixed, I don’t see anything succeeding.

On a personal level, I don’t believe in BNPL. But I have a certain background, upbringing and privilege that puts me in that position. But given the recent data I read about it. I believe it has potential, imagine no low net worth individuals with SMEs getting access to credit at reasonable prices. They could use that money to grow their business (Too the liberty to add loans to BNPL) because BNPL is essentially being used to onboard customers to credit, monitor their credit behaviour (CIBIL etc) to provide them access to credit.

With BNPL , customer retention becomes very tough because if a consumer is getting access to any product which is somewhat good , there are higher chances that he will look for something better in the same domain - onboarding the customers via subscription based model or buy then use allows the companies to experiment with the features while customer is arrived at the platform till the next renewal but that's not the good case with BNPL -ARR gets drop by a greater percentage as new users don't add any value until or unless they're coming back to products due to some USP

The mix needed for interest paying users in a BNPL portfolio has not been achieved yet by any growing economy, I don’t see why this would be any different. BNPL can be a hook to get users in and then create personal loan, co branded credit card products based on user data etc. However, it is still not clear how an org burning money on BNPL can make so much profit through unsecured lending that overall profitability can be achieved. One model that can work is if BNPL gets massive distribution so much so that you start seeing it across all large ticket purchases where you’re able to charge partners, I don’t see how this can become profitable.

except life saving bare necessities, any person who indulges in this BNPL is the biggest fool of 21st century.