Banks, Credit Unions Still Cool to BNPL

Why It Matters

BNPL represents a fast‑growing revenue and customer‑retention channel, but uneven adoption could widen the competitive gap between large banks and smaller institutions.

Key Takeaways

• 58% of banks offering BNPL say it drives revenue and competitiveness.
• National banks most optimistic; only 7% of credit unions view BNPL positively.
• 37% of consumers, 50% under 40, used BNPL in past 90 days.
• Regulatory easing after CFPB changes lowers barriers for banks to launch BNPL.
• Two‑thirds of BNPL providers say offerings create institutional value.

Pulse Analysis

Consumer appetite for buy‑now‑pay‑later continues to outpace traditional banking offerings, with JD Power reporting that 37% of all shoppers and half of those under 40 have used a BNPL product in the last quarter. This surge is prompting banks to view BNPL not merely as a niche loan but as a gateway to embedded finance, cross‑selling opportunities, and deeper merchant relationships. While fintech firms have built brand awareness around BNPL, many banks still lack consumer visibility, limiting adoption among their existing client bases.

The American Banker survey highlights a clear divide: national banks show the strongest optimism, with nearly half endorsing BNPL’s benefits, whereas community banks and credit unions remain largely neutral or skeptical. Yet, among institutions already offering the service, 58% report revenue generation and competitive advantage, and two‑thirds confirm institutional value. These findings suggest that BNPL can serve as a strategic differentiator, especially when paired with financial super‑apps or embedded payment ecosystems that attract younger, digitally native customers.

Regulatory headwinds have eased following the dismantling of the Consumer Financial Protection Bureau, reducing compliance costs and opening a clearer path for banks to launch BNPL products. However, the market still favors fintech incumbents, meaning banks must act swiftly to develop compelling, user‑friendly solutions. For smaller banks, BNPL may become a defensive necessity to retain customers facing emergencies, while larger banks can leverage scale to integrate BNPL into broader lending portfolios, driving both fee income and deeper client engagement.