Buy now, pay later 'validated by arrival of high-street banks'

Zilch—and other buy now, pay later providers—have been working with the regulator ahead of regulation, which is being broadly welcomed across the sector.

The arrival of high-street banks into buy now, pay later validates the sector, says an executive with a startup in the sector.

Last month, NatWest said it will launch its buy now, pay later venture in the summer, saying it's set to be the first high-street bank to move into this alternative credit sector.

Santander is also busily rolling out it buy now, pay later brand Zinia across Europe.

These banking giants will go up against the likes of Klarna, Clearpay, Laybuy and Zilch.

Rakesh Harji, chief operating officer, Zilch said: “The reality is the banks are actually validating the need for BNPL. It’s not just  NatWest, Santander will do it and lots of banks are going to come to the table and do this.”

Harji was speaking at the AltFi Festival of Finance in a session about whether buy now, pay later was reshaping the financial ecosystem.

He was speaking alongside Deborah Ware, former COO of the Financial Wellness Group, Stephen Wishart, director of fintech at TransUnion and Ben Goldsmith, MD of Goldsmith Communications.

Regulation is set to come in across the sector with the entire financial industry, including those providers of pay later services,  in broad agreement that the sector should be regulated.

Regulation is likely to see all buy now, pay later firms having to share historic lending data with the UK’s main credit reference agencies.

Harji said Zilch—and other buy now, pay later firms—had been working with the regulator ahead of the regulation, feeding in data.

Wishart said the arrival of buy now, pay later, which is now used by millions in the UK, is “probably the biggest thing” to happen in years to the credit bureau business.

Ahead of the regulation, Wishart said: “We’ve worked closely with the regulator, with the industry bodies and more importantly the BNPL players as well. 

“So we have had to do an extensive assessment of data and had to come up with a report, a framework that works for the industry and more importantly, worked for the consumer as well.”

On regulation, he said it wasn’t a silver bullet but it was about setting standards for providers and the consumer.

Ware said the actual need for buy now, pay later was evident and that consumer feedback has been generally positive.

But she said, “there is a real risk that people start using it more as a necessity than a convenience”.