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Finastra launches BNPL alternative

Finastra launches BNPL alternative

Following the news of Finastra’s new product, an embedded consumer lending solution, Finastra’s senior director of solution management, Banking-as-a-Service (BaaS), and orchestration, Jeannette Kescenovitz comments on the new service.

Discussing the solution in the context of Finastra’s current offering, Kescenovitz notes: “Historically, financial institutions have used our products to offer lending services direct to consumer. We have thousands of financial institutions in the US running on our software. Embedded finance has opened up a $7 trillion opportunity, shifting finance out of banks and into contextual channels consumers use on a daily basis.”

Finastra’s ‘Embedded Consumer Lending,’ will provide customers with an alternative payment option to Buy Now Pay Later (BNPL). The solution is differentiated from BNPL as it applies to higher value purchases, whereas BNPL is typically unregulated and limited to those below £1,000 or £2,000.

“The Finastra Embedded Consumer Lending solution brings traditional, regulated lending products to consumers with the safety net of the risk and compliance capabilities of traditional banks.”

Using BaaS to ensure consumers gain access to a marketplace of distributors and merchants, the solution offers a less costly and more secure option in POS financing. Finastra states that the solution will benefit providers, merchants, and consumers by acting as a scalable platform in which financial institutions and distributors can interact and grow.

Kescenovitz states: “Seattle Bank is the first bank signed as a BaaS ‘provider’, Loanstar Technologies is integrated into the solution as a POS solution, as a ‘distributor’, and our distributors bring a network of hundreds of merchants across the US.”
Through embedded lending, financial institutions can expand their marketplace and their products can reach a wider range of merchants and customers.

The solution has been announced at a critical time as new legislation for BNPL is being rolled out in the UK. The UK government is calling BNPL lenders to implement affordability checks to protect consumers from debt crises. The slow-moving authorisation process is leading to a downturn in BNPL share value, therefore embedded lending has become more significant.

Embedded finance is becoming more prevalent among banks and fintechs, delivering financial institutions, distributors, and consumers with more options in POS financing. The flexibility that embedded finance produces broadens the reach of financial services and has the potential to transform payments.

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