Save Now Buy Later (SNBL) wants to reinvent destination savings

This year, a new concept, born in India, is beginning to emerge: Save Now Buy Later (SNBL). In contrast to the immediate and impulsive buying behaviour encouraged by the BNPL, the SNBL solution offers benefits to consumers, but also to financial institutions, through its loyalty-building power. Starting out as a marketing concept designed to capitalise on the opposition to the BNPL, the SNBL also responds to a fundamental trend around the need to reinvest in savings and is now being emulated.

FACTS

• The basic principle is to offer consumers the opportunity to save for a purchase goal. While waiting for the purchase, the money is invested and placed, so that this model pays off for the user if they agree to defer their purchase over time.

• The pioneer of this system is Multipl, a startup founded in Bangalore in 2020. In India, where the average salary is still less than $200, the fintech has found an alternative to credit for the expenses of people who do not have immediate purchasing power.

• Multipl's model is to create partnerships with brands, allowing consumers to receive discounts (around 10%) when they save. Multipl invests this money over time in financial instruments using a robo-avisor.

• The startup raised $3 million in May 2022. The platform has around 60 partner brands, including Decathlon, for which it acts as a marketplace, just as Klarna does in the BNPL world.

• Multipl is paid on an affiliate model, the service being free for the consumer.

CHALLENGES

• A well-defined core target, financial inclusion and young people: the fintech ecosystem in India is highly developed; the dynamic is mainly based on the financial inclusion needs of the population. These startups also offer solutions to young people who are unable or unwilling to take credit.

• A new acquisition channel for retailers: for brands, it is a new purchasing channel and a way to build consumer loyalty before they even decide to buy a product. A sort of reverse loyalty programme. The final price of the product is guaranteed and the money can be returned at any time if no purchase is made.

• A real alternative to turn the regulatory threat of BNPL into a real opportunity: in the context of rising interest rates and inflation, weighing on household budgets and solvency, alternatives are developing as BNPL regulation is tightening. At least in Europe, where the revised Consumer Credit Directive is expected to be approved in early 2023. In this context, SNBL represents an attractive alternative for profiles weakened by the crisis.

MARKET PERSPECTIVE

• Since the launch of Multipl, several players have entered this market. Such as Accrue Savings, founded in 2021 in the United States, the Indian startups Hubble Money and Tortoise, or the Austrian neo-bank Monkee (notably a partner of Booking.com and eBay).

• Finfi has also added a "Save now, buy later" feature to its platform for financial well-being. With this new purchase-linked savings scheme, users can save money in an account maintained by the Reserve Bank of India (RBI) and get a discount on the product once they have accumulated enough money to purchase it. The solution is connected to Finfi's payroll platform. With this employer-sponsored product, employees have access to short-term financing solutions that use their earned but not yet collected salary.

• In a related development, the UK neo-bank Starling Bank also recently announced the launch of a new destintation savings feature. It allows its customers to save for specific purchases and then allocate them the ability to issue virtual cards for each type of purchase.