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Mambu and Deloitte identify five steps for BNPL success

As Malaysia eagerly awaits news on the recipients of digital banking licenses, one service that continues to gain momentum in the country is Buy Now Pay Later (BNPL). What started as a short-term financing platform has now grown into one of the biggest industries in fintech.

In fact, the booming global market for BNPL services is projected to be worth US$3.98 trillion by 2030, growing at a CAGR of 45.7%. In Malaysia, BNPL payments are expected to grow by 109.5% to reach US$ 601 million in 2022. Adoption of BNPL is expected to continue growing steadily, at a CAGR of 49% from 2022 to 2028.

With that said, Deloitte and cloud banking platform Mambu has identified the five steps merchants and fintech need to embrace in building a successful BNPL offering. The ‘Deloitte and Mambu Guide to BNPL’ identifies five core building blocks for businesses looking to develop a BNPL solution in an increasingly competitive environment.

The five steps are:

  • Value proposition – defining and understanding what merchants and customers need and developing a model to solve their key pain points
  • Technology and data – developing a tech stack with best-of-breed partners to enable real-time decisions as well as the creation of next-generation solutions that deliver distinctive customer experiences
  • Risk and compliance – designing a risk framework that provides a competitive edge, from in-built fraud detection and management to defining the risk appetite, model, and strategy
  • Skills and capabilities – investing in specialized talent in critical areas to compliment businesses’ existing teams as well as build their brand and differentiate their product in the market
  • Go-to-market – bundling the offering within a business’ portfolio and bringing the minimum viable product to life.

The report also stated that more than half of consumers (56%) cite the ability to test a product before making a payment as a key driver for using BNPL, apart from convenience and affordability. Other growth factors include widespread merchant adoption, as well as accelerated market traction during the pandemic.


William Dale, Commercial Director at Mambu APAC. (Source – Mambu)

For William Dale, Commercial Director at Mambu APAC, BNPL is positively booming in Malaysia, and, coupled with the new digital banking licenses soon to be issued by Bank Negara Malaysia, the Malaysian financial services industry is in for a period of enormous change and growth.

“New innovations like BNPL service on credit cards and insurance have already hit the market, and we’re seeing several examples of established banks collaborating with new BNPL fintech to meet consumer expectations. It goes without saying that BNPL is an area of the massive potential for banks and financial service providers, as well as for retailers,” commented Dale.

João Caldeira, Partner at Deloitte added, “BNPL is now a key sales and conversion driver for retailers and e-commerce providers. Merchants, if they have not done so already, are looking around for an embedded finance solution that can help them design BNPL experiences at speed and at a low cost. The bottom line is that it’s a new revenue driver and has the ability to quickly add seamless installment-based payments at the point of a decision can change a business.”

At the same time, Bank Negara Malaysia is also working with the Ministry of Finance and Securities Commission Malaysia to enact the Consumer Credit Act in 2022 to strengthen regulatory arrangements for all consumer credit activities including BNPL offered by non-bank operators.

In its 2021 Annual Report, the central bank said BNPL schemes offered by non-bank operators currently do not fall within the regulatory purview of BNM or any regulatory agency. The central bank also said that in some cases, the total charges levied by BNPL providers on customers may be higher than the total interest and charges imposed by conventional lenders.