One in three Singaporean consumers turn to BNPL to manage money: study

But consumers’ aversion to debt pulls back wider adoption, RFI Global found.

Singapore consumers are turning to buy now, pay later (BNPL) services as a means to help them budget and improve cash management, a survey found.

One in three users of BNPL in Singapore are choosing the option due to its convenience (35%), help in budgeting (34%), lack of interest charges (33%), and improved cash flow management (25%), according to a report by financial services data and insights consultancy RFI Global.

Despite being on the rise, BNPL adoption in the country still faces several hurdles, one of which is consumers’ aversion to debt. Consumers surveyed reportedly do not want to buy things they cannot afford, even ranking this as one of the key reasons why they do not use BNPL. 

It is a sentiment shared by their peers globally. Standard Chartered’s Future Money survey found that since the pandemic, people around the world were most concerned with meeting their daily expenses (37%). Rising inflation will further increase the efforts people make to better manage their money, RFI Global said. 
 
“The majority of BNPL users are millennials who want to manage their money more efficiently and avoid debt,” said Kate Wilson, global head of consumer credit, deposits, and payments at RFI Global. “Indeed, our research suggests that most BNPL users are averse to debt. They want to buy what they can afford and are aware of the dangers and cost of credit.

Banks more trusted
Consumers were also found to have more trust in banks than pure-play BNPL providers, giving them an unparalleled opportunity for new revenue-generating business lines.

“The high degree of consumer trust in banks presents an opportunity for them to launch their own services,” said Wilson. 

Already, some banks are already dipping their toes in - such as Barclays through its partnership with Amazon - and many more are considering launching BNPL services. 

Banks should act now as they have a limited window of opportunity to do this before fintech BNPL brands win customer trust and loyalty themselves.

“To compete, banks will need to leverage their trust advantage and improve upon the focus that the fintech providers place on providing a great customer experience. They will also need to remain competitive on price and other incentives,” Wilson said.