Can BNPL Be Part of a Balanced Financial Strategy?

Can BNPL Be Part of a Balanced Financial Strategy?

by May 23, 2023

The rising popularity of Buy Now, Pay Later (BNPL) services among Millennials and Gen Zs in Singapore underscores a gap in financial literacy within these demographics. 

Many young Singaporeans are drawn to the convenience of BNPL services, often overlooking the potential pitfalls associated with them. Although these services address immediate financial needs, focusing on long-term financial planning is crucial for managing budgets according to one’s lifestyle.

The challenge of financial management is further exacerbated for these age groups by increasing living costs and the pressure to keep up with their peers. However, there is a silver lining as digital wealth tools become more accessible to the general public. 

Financial providers now have the opportunity to play an instrumental role in guiding Millennials and Gen Zs toward making informed decisions, promoting a more secure future for these generations.

The role of financial providers in improving financial literacy

Financial planning is essential for people of all ages, but it is significant for Singaporean Millennials and Gen Zs who face rising living costs and taxes. According to a recent survey by the National Youth Council, over 50 percent of Singaporeans aged 16 to 34 engage in financial planning. 

Still, less than half feel confident in their skills and knowledge to manage their finances and meet financial goals. This highlights the need for practical financial planning tools that are accessible and easy to use.


Laurent Bertrand

In an interview with Fintech News Singapore, CEO, and Co-Founder of Singapore fintech BetterTradeOff Laurent Bertrand said that financial providers can play a crucial role in helping Millennials and Gen Zs improve their financial literacy and make sound financial decisions. 

Digital solutions such as goal-based calculators and budgeting apps are either too simple to provide a comprehensive view of one’s finances or too expensive to scale beyond high net-worth, private banking customers. 

However, some platforms are designed to dramatically simplify the process of building a sound and comprehensive financial plan for consumers and advisers. 

“Financial providers can leverage such platforms to provide sound, comprehensive, and compliant financial advice to all their customers, including young ones who may not be a high priority from a wealth management standpoint,” said Laurent.

Balancing financial management with BNPL services

Laurent addressed the risk of customers falling into debt traps due to the increasing popularity of BNPL services. This concern is supported by a 2021 study by Milieu Insight, which found that roughly 19 percent of Singaporeans aged 16 and older had tried tech-enabled BNPL services. Adoption rates were exceptionally high among younger generations, highlighting their openness to this alternative payment method.


To mitigate such risks, Laurent emphasized the importance of financial planning in helping young individuals understand their expenses and the value of investing. 

He explained that consumers could make more informed financial decisions by showcasing the benefits of compounding interest and dollar-cost averaging.

As emerging consumer credit solutions like BNPL continue to gain market share, traditional banks are confronted with increased competition. However, these banks still maintain a competitive edge in trust, thanks to their long-standing efforts to build strong brand names and reputations. 

Laurent suggested that banks could use financial planning to understand better and serve younger customers, stating that the wealth of data obtained from comprehensive financial plans enables banks to offer more personalized products and advice.

“By doing so reciprocally, the more data customers provide, the more banks can offer in return,” said Laurent. This approach fosters a mutually beneficial relationship between banks and their customers, promoting responsible financial management.

The BNPL bubble: Will it burst?

The rise of BNPL services has led some experts to predict an imminent bubble in the industry. While it’s difficult to say whether this bubble is about to burst, changes are coming to the industry. One notable change is increased regulation. 

In October last year, the Monetary Authority of Singapore (MAS) implemented new regulations to protect BNPL customers. These regulations include safeguards around creditworthiness, transparent fees, and ethical marketing practices. 

“Customers are not permitted to have outstanding payments exceeding S$2,000 unless they undergo an additional credit assessment, which is one of the safeguards put in place to protect BNPL users,” said Laurent.

While these regulations may impact the ongoing development of BNPL services, they should not spell the end of the industry altogether.

For consumers who rely on BNPL services, these changes may mean a shift in how they use them. However, this shift is likely to be one that ultimately protects them. With more straightforward guidelines around creditworthiness and fair fees, consumers can feel more confident using BNPL services. 

While it remains to be seen how the industry will evolve in the coming years, one thing is sure: the era of unchecked growth in the BNPL industry is coming to an end, and both consumers and providers will need to adapt to these changes.

The ‘Save Now, Buy Later’ concept and its place in the financial landscape

Laurent viewed the ‘Save Now, Buy Later’ (SNBL) concept as an exciting alternative to BNPL. Merchants benefit from this development by extending flexible payment options to customers, facilitating larger purchases that might have otherwise been out of reach. 

“Simultaneously, banks stand to gain from this trend by engaging customers through savings accounts and utilizing merchants as a conduit for customer acquisition, particularly when shoppers sign up for SNBL solutions via the merchant,” said Laurent.

However, the users reap the most rewards from this financial shift, enjoying discounts on their purchases, circumventing the substantial risks inherent in BNPL schemes, and cultivating a mindset focused on saving and responsible spending. Banks can capitalize on this momentum by introducing these customers to investment opportunities.

“The partnership between Apple and Goldman Sachs, which introduced high-yield savings accounts for Apple Card users, is a prime example and strong endorsement of the SNBL concept. It will be fascinating to observe this approach’s evolution and potential impact on the financial landscape,” added Laurent.