Alternative LendingDigital Banking
According to reports, Monzo’s version of BNPL will include affordability checks on borrowers.
Image source: Monzo.
Digital bank Monzo is reportedly set to join the massive number of fintechs racing to offer their customers buy-now-pay-later (BNPL) services.
Just in the last week, we’ve seen both Revolut and Funding Circle announce and add BNPL offerings to their services, respectively.
First reported by the Evening Standard, Monzo’s BNPL feature is set to be revealed next week, although when asked by AltFi, a spokesperson for the bank declined to comment.
Unlike existing BNPL options, Monzo is said to be including full affordability checks for its borrowers and will be sharing data with credit bureaus.
“This makes total sense,” said 11:FS CEO David Brear. “We have been waiting for Monzo to get into the bit of banking that makes it all worth doing—and that’s lending in all its forms.”
Indeed, lending has been a sore subject for Monzo these last few years. In its latest results, Monzo’s overall lending actually fell from £143.9m to £104.6m as the bank looked to reduce its exposure during Covid-19.
The lack of lending has also dragged on Monzo’s hopes of profitability, with interest income falling from £25m to £23.9m last year.
BNPL could be a huge revenue driver for the bank, but only if it’s handled with care.
“Monzo has always been a customer-led bank and it needs to ensure it delivers [BNPL] in a way that helps customers, including vulnerable customers, to manage and improve their financial well being,” added Brear.
“While these moves are great for customers, they won’t hurt Monzo’s own finances either. I expect to see much happier shareholders and investors when the next set of results come around.”