Is SNBL more sustainable than BNPL?

In my blog "Buy Now Pay Later - A credit in disguise? (https://www.finextra.com/blogposting/20660/buy-now-pay-later---a-credit-in-disguise) I raised already some concerns about the Buy Now Pay Later movement. While at first sight it seems indeed a more transparent and more user-friendly solution than payments via a credit card, in reality it might be even more dangerous to push people into debt.

In a counter-reaction a few Fintech start-ups (like Accrue Savings, Sympl, Monkee…​) have raised capital to initiate a countermovement called "Save Now Buy Later" (SNBL). This movement aims to provide the same user-friendly embedded (payment) experience as BNPL, but without pushing people into credit.
Instead it stimulates people to save for something they have seen at a merchant and buy it once the required amount has been saved (so buy it in the future).
Obviously this is not a replacement for BNPL, but rather a compliment to offer the best shopping experience for every profile of customer and provide a new responsible and sustainable purchasing option.

Just like BNPL, the objective of SNBL is to reduce shopping cart abandonment for merchants. However, where BNPL resolves this by a frictionless credit option, SNBL puts a journey in place to create and maintain a good customer relation and engagement while the customer saves the necessary amount to buy the desired object/service. This is done via:

• An embedded saving feature on the merchant’s website, i.e. allow to select the product/service in which you are interested, quickly open a no-fee digital savings account and save money towards eventually buying the product.

• An automated and easy to use saving plan, where the deposit frequency and amount and/or target date can be defined by the user or pre-defined by the SNBL provider (based on certain rules defined by the merchant)

• Regular communication by the merchant to the customer

• Incentives (e.g. cash rewards) given by the merchant when certain saving milestones are reached (gamification). This incentivizes the customer to continue saving.

• User-friendly purchasing (via a virtual debit card) of the product once the required amount is reached

• Value-added services, like automatic soliciting of friends and family (via social media) to contribute

The functionality is therefore very similar to the concept of "Saving Goals" available in most PFM apps today (see my blog "PFM, BFM, Financial Butler, Financial Cockpit, Account Aggregator…​ - Will the cumbersome administrative tasks on your financials finally be taken over by your financial institution? - https://bankloch.blogspot.com/2020/02/pfm-bfm-financial-butler-financial.html", "chapter 3.1 Saving Goal Management"), but much more embedded with the merchant offering the saving goal product/service.

The advantage is that SNBL does not only provide a solution for customers abandoning their cart because they don’t have enough money, but also for abandonment if a product is no longer available in the required quantity/size/colour/model…​ SNBL could give a way to avoid the customer switching to another merchant, while the product comes back into store. It also allows to engage with a customer, before he actually decides to do the purchase, i.e. when saving, the customer can abandon at any moment for free, i.e. he will only loose the already accrued cash incentives. This allows a merchant to engage already earlier with a customer, thus reducing consumer acquisition costs.

Just like BNPL players, SNBL players can also create several added-value services and become a primary player in a merchant ecosystem, e.g.

• The app of SNBL vendors can be turned into a marketplace, where specific (products of) merchants (being a customer of the SNBL vendor) are directly offered, meaning the SNBL vendor becomes the direct customer entry point instead of the webshop.

• SNBL vendors can use more and more their collected data for offering targeted marketing, like personalized recommendations, advertisements, discounts in the form of coupons and cashbacks…​

• SNBL vendors can increase their customer relation via their own loyalty programs

Contrary to the BNPL movement, in which a first consolidation movement is occurring and incumbents start to catch up quickly, this SNBL movement is still in its infancy stage. This gives interesting opportunities to Fintechs and incumbent banks, to invest in this movement now. In a world, where merchants go through big lengths to reduce their shopping card abandonment, SNBL can have enormous potential.

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