CBA’s latest foray into the BNPL space has been greeted with fanfare by Australian financial services as one of the most competitive responses to the dominance of incumbents such as Afterpay.
“Customer needs are evolving and this new BNPL offering aims to give customers more choice in how and when to pay, depending on which option suits them best,” said Angus Sullivan, group director. of CBA retail banking.
“As Australia’s leading digital bank, we believe we are best placed to offer our customers a prudent and responsible BNPL option, based on trends and insights from real-time transaction data over many years. »
The product will only be available to current CBA customers, will be linked to CBA bank accounts and will require a credit check to access. Late fees will amount to $10 per missed payment, which the product’s link to existing banking services would strongly discourage – trying to get a home loan – while the credit check would make it unlikely the product would attract users likely to default anyway.
One aspect CBA touts is that the product doesn’t charge businesses any extra fees – a controversial aspect of other BNPL products, but one from which much of their revenue comes. The product also cannot be used for gaming. These features appear to be aimed at protecting against some of the regulatory risks that competing products face rather than attracting customers.
So what is the room? CBA appears to have entered the BNPL space – which it has already tried to capture with interest-free credit cards and its partnership with Klarna – as part of a customer loyalty exercise. Younger customers are less interested in credit cards, while a BNPL product also fits with the CBA brand, which has focused heavily on digital innovation in recent years.
The ABC kicked things off. Westpac has flirted with the space through its partnership with Afterpay, but more big banks are likely to start rolling out their own offerings as customers demand access to what is quickly becoming an integral part of the consumer experience.
