SquishyQuokka

To PMs: What do you think about BNPL?

GoTo is going to launch a BNPL product with TikTok soon. As a PM what are some things that you would do for something like this to succeed?

8mo ago

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ZippyLlama

Google8mo

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.

SquishyQuokka

Gojek8mo

@I_dont_know_how_to_ It makes a ton of sense tbh. BNPL can only work if cost of capital is super low imho. I wonder how will GoTo manage this tbh.

What would you do to make it super successful?

ZippyLlama

Google8mo

It's been cracked by Bajaj finance, in the offline segment especially in the furniture market. You offer zero cost with some shaddy charges.

FluffyCupcake

Amazon8mo

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 -

Ensure collections are figured out clearly with phygital infrastructure in place.
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!

SquishyQuokka

Gojek8mo

@ElonMast It makes some sense, yes. But it goes against the ethos of Silicon Valley funded rage of acquiring users with insane money burning.

FluffyCupcake

Amazon8mo

That’s the reason SV tech isn’t winning against WS lenders. It might sound bad but we should understand tech is an enabler, fundamentals of business remains same.

SquishyBanana

Stealth8mo

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.

SquishyQuokka

Gojek8mo

@holdencaulfield Very true actually. As a PM what would you focus on?

DerpyPanda

Gojek8mo

How are you assessing the BNPL limit to begin with? That will restrict your NPA losses. What is the payment policy and late payment charges? I once got late payment charges waived off just by calling customer care. At the end of the day, the more partnerships you do, better are the chances of growth, so integration SDK and third party onboarding should be super easy with great CX.
Cashback on BNPL usage can be a big play here to improve adoption but I have seen customers getting more attracted to upfront discounts in India atleast. Personally I don't use any BNPL app since at the end of the day, it is a personal loan and I don't want to have a loan against my name every month in CIBIL books. I also feel it is a loan trap for innocent folks like college students, low wage workers.

GigglyBanana

Stealth8mo

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

SquishyQuokka

Gojek8mo

@Dihaadi You are hinting at something that not many will realize. It is a ploy to disburse as many loans as possible to acquire users today in hope of future demand.

SillyJellybean

Stealth8mo

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.