Buy Now, Pay Later Moves From Checkout Perk to Credit Union Retention Tool

⦿ Executive Snapshot

• What: Credit unions are integrating buy now, pay later (BNPL) options to retain younger customers.
• Who: Credit unions, Gen Z consumers, PYMNTS Intelligence, and Velera.
• Why it matters: The shift in payment preferences among younger generations pressures credit unions to adapt their offerings to maintain engagement and transaction volume.

⦿ Key Developments

• Installment payment value has increased by 22% year over year, indicating a broadening usage across various categories like travel and services.
• 70% of Gen Z consumers prefer BNPL options from their primary financial institutions, suggesting a significant demand for such services.
• 38% of credit union members express interest in using BNPL if offered by their institution, highlighting a gap in current offerings.

⦿ Strategic Context

• Historically, younger generations were viewed as a future growth segment, but they are now active users shaping financial product decisions.
• The normalization of installment payments at checkout has raised expectations for similar options in all financial interactions, including banking.

⦿ Strategic Implications

• Immediate market consequence: Credit unions risk losing transaction volume and insights into member behavior if they do not integrate BNPL options.
• Long-term implication: Offering installment payments can enhance member engagement and help cultivate long-term financial habits among younger consumers.

⦿ Risks & Constraints

• Potential risk: Credit unions may face challenges in educating members about new payment options and ensuring they are integrated effectively into existing digital platforms.
• Potential risk: Competition from third-party BNPL providers could undermine credit unions' efforts to retain younger members if they do not act quickly.

⦿ Watchlist / Forward Signals

• Upcoming milestones: Credit unions need to develop and launch in-house BNPL options to close the current offering gap.
• Success indicators: Increased adoption rates of BNPL services among credit union members will signal effective integration and communication strategies.