Austria-based Credi2 has released an embedded finance study, for which 120 decision-makers from banks were interviewed. Credi2 is a DACH embedded finance solutions company in the area of ​​"buy now, pay later" (BNPL) and subscriptions.

The fintech enables banks, retailers, and OEMs to offer modern sales financing solutions via their platform. Customers include Volkswagen Bank, Raiffeisen Bank International, and Apple. Advocacy for legislation 23% of the banking world already offers BNPL and 39% are in the implementation or planning phase.

However, in competition with non-bank financial institutions, over 60% of institutes are calling for the market to be regulated. According to the study, Millennials and Generation Z in particular appreciate the easy application, quick loan approval, and option of being able to pay for products in flexible installments. In order to meet this need for flexibility, banks are now becoming more active in the BNPL market.

A Credi2 representative states that many banks are established brands that enjoy a high level of trust and therefore don't want to gamble that away in the BNPL environment. Therefore, the majority of banks advocate that the legislature intervene and regulate BNPL products bindingly for all providers. EU wants to close loopholes in lending The reason for this demand is the assumption that some BNPL players without a banking license are not adequately checking their customers' creditworthiness.

A Credi2 representative explains that regulatory authorities worldwide and in the EU have been targeting BNPL products and their suppliers for some time. A proposed directive published by the European Commission could be implemented into German law as early as 2023. By this regulation, BNPL would be equated with classic consumer loans.

Banks then have the advantage that they have long since fulfilled the high regulatory requirements of the authorities. Traditionally, financial institutions only grant consumers credit after a strict credit check. Banks don't want to wait for legislation However, the study shows that banks do not want to wait until legislation takes force before stepping into the BNPL market.

They are already speeding up implementation. 80% rely on an external partner in order to be on the market as quickly as possible with their own solution. Three-quarters of banks are not satisfied with their background role in this, and instead, want to be visible to the customer.

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