Fintech Futures

What’s Driving BNPL Industry Consolidation?

January 11, 2022

Banks & Lenders

Financial Services

The year 2021 was the start of massive consolidation in the Buy Now Pay Later (BNPL) space.

Square (now Block) bought Buy Now Pay Later (BNPL) fintech Afterpay for $29 billion.

Why are fintechs demanding (and getting) such high price tags?

What is it about BNPL that is driving consolidation?

Regulation plays its part

A big theme in 2022 will be regulation of the BNPL industry. It’s already begun, with the Consumer Financial Protection Bureau (CFPB) cracking down and probing the activities of Klarna, PayPal, Afterpay, Affirma and Zip.

Fintechs will look to partner or consolidate with banks to comply with upcoming regulation.

Banks will want to collaborate with fintechs to access the technology needed to compete in the growing sector.

But regulation is just one aspect driving the need for consolidation.

Successful partnerships are not only those that allow for regulatory compliance but those based on the alignment of values and enhancement of the core strengths of each party.

Yaacov Martin, CEO of Jifiti in Fintech Futures

What will the BNPL landscape look like in 2022?

Mergers and acquisitions (M&As) often result in the larger entity swallowing up the other.

But the real power of consolidation is achieved when each company retains its own core strengths and values.

True partnership stimulates mutual growth through cross-pollination.

There will be cases of companies, like Square, buying out BNPL fintechs. But I believe that the most rewarding type of consolidation will be that of true partnership – of banks partnering with tech companies to leverage their competitive advantage and become strong BNPL players.

Read the full article in Fintech Futures.

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