Banks, credit unions still cool to BNPL

American Banker's 2026 BNPL Tradeoff Survey

The benefits of BNPL for banks

Key takeaway: Institutions that offer BNPL say the products help generate revenue and remain competitive against peers.

More than half of respondents currently offering BNPL say the lending products are generating revenue (58%) as well as helping their institution remain competitive against peers (58%). 

Other benefits identified include cross-selling (46%), assistance in building relationships with merchants (37%), facilitating embedded finance with partner ecosystems (34%) and attracting customers to financial super apps (28%).

Granting consumers the ability to break up large purchases into more manageable fixed payments is part of a broader consumer play by banks and credit unions seeking to enter previously underserved markets.

Sara Elinson, managing director and partner in L.E.K. Consulting's financial services practice, told American Banker that budget concerns could push the availability of BNPL into other market segments.

"I think there will be more categories in which consumers will want to have it available," Elinson said. "I think we'll see more of it creeping into everyday items — groceries, pharmacies and potentially more into the physical point of sale."

How do bankers feel about BNPL?

Key takeaway: The share of bankers that said BNPL is good for banks and customers outnumbered that of professionals who felt the opposite.

Bankers are warming up to the idea of BNPL for both their institutions and consumers, but many remain on the fence as to how beneficial these products really are.

Roughly one-third of respondents agree with the sentiment that BNPL on the whole is beneficial for banks (32%), while 46% were neutral on this perspective and 19% disagreed.

When asked about the impact of BNPL on customers, 42% agreed that the lending products were beneficial. Roughly 27% were neutral and 27% disagreed with the sentiment.

The dismantling of the Consumer Financial Protection Bureau has changed the regulatory landscape surrounding BNPL, as the bureau changes its stance on the products from its prior position under former CFPB Director Rohit Chopra. Now, experts say, banks and credit unions have less hurdles to contend with.

Joe Heck, U.S. chief executive for Zip Co., told American Banker that critics of BNPL aren't taking the time to understand why such products are growing in use but rather stigmatizing them.

BNPL, Heck said, is the first step in the right direction of reconfiguring financial products in a simpler and easier to use format.

"This is where we have to do better as financial people. … I just don't think the right attitude is to say that people need to spend more time educating themselves on financial services," Heck said. "We've got to spend more time making it simpler and to me, that's what I get excited about."

How does the size of a bank impact the benefits of BNPL?

Key takeaway: National bankers were the most optimistic about BNPL, while community banks were the most pessimistic.

Not all bankers are as eager to adopt BNPL offerings as their peers.

Close to half of national bankers agreed that BNPL is good for banks as a whole (48%), while 40% were neutral and 11% disagreed.

Regional bankers were mostly neutral about the benefits of BNPL for banks (52%), while 36% responded in the affirmative and 9% in the negative.

Community bankers had the greatest share of respondents who disagreed that BNPL was good for banks as a whole (32%) compared to 23% who agreed. Roughly 44% neither agreed nor disagreed.

Credit unions were the group most on the fence about BNPL's impact on institutions as a whole (64%), with 7% agreeing that BNPL is good and 25% disagreeing.

Unclear regulations are holding many back from diving deeper into the BNPL space, leaving fintech BNPL providers with a fairly controlling presence in the market and banks left on the sidelines.

Recent data on BNPL usage published by JD Power in March found that 37% of all consumers and 50% of consumers under 40 used BNPL to make a purchase in the past 90 days from their response time. This is a year-over-year increase of five percentage points.

Sean Gelles, senior director of banking and payments at JD Power, told American Banker that awareness gaps in bank-offered products is hamstringing usage among customers.

"Many people, especially in the under-40 demographic, know about Klarna, Afterpay and Affirm," Gelles said. "But many, many customers of larger financial institutions don't even know that their banks offer these products."

Do bankers feel like they're getting what they pay for with BNPL?

Key takeaway: More than half agree that their BNPL offerings create value for their institution.

Banks with a foothold in the BNPL market are largely in agreement that the lending products are creating value for their institutions.

Of the respondents who currently offer BNPL, two-thirds agreed with the perspective that their BNPL offerings deliver value to their institution, while 28% neither agreed or disagreed and 4% disagreed.

While banks continue to weigh whether to offer BNPL to customers, firms such as Affirm, Klarna and others continue to deepen their market presence or even expand into the banking industry.

Lane Greer, solutions engineering lead at Fullstory, told American Banker via email that BNPL can be a vital competitive tool for smaller financial institutions.

"For these smaller institutions, BNPL is a defensive necessity," Greer said. "If a local bank doesn't offer a way to split a $500 emergency car repair, their customer will find a fintech that will."