BNPL's Best Day Ever on Cyber Monday 🤑; N26 forecasts profitability in 2024 👀; BlackRock bets Big on AI 🤖
FinTech is Eating the World, 8 December
Hey Everyone,
TGIF! What a week it was… 🤯 And it’s not even over as today we’re looking at Cyber Monday which was BNPL’s best day ever (latest data + some bonus dives into two BNPL giants), N26 which forecasts profitability in 2024 (what changed + deeper dives into N26 and their mistakes), and BlackRock that bets Big on AI (why it’s huge + more bonus reads on AI + Finance). So let’s jump straight into the fascinating stuff 🌶
BNPL's Best Day Ever on Cyber Monday 🤑
The news 🗞️ Buy Now, Pay Later (BNPL) service providers had their highest-grossing day ever on Cyber Monday 2023, processing a whopping $940 million in payments for online purchases.
That represents a massive 42.5% increase over 2022, according to Adobe ADBE 0.00%↑ Analytics data.
Let’s take a look at this.
More on this 👉 BNPL users are buying more per order as well, with 11% more items per BNPL order compared to last year. Clearly, consumers are relying on installment purchasing to stretch their holiday budgets amid economic uncertainty.
BNPL enables larger cart sizes while spacing out payments interest-free, which makes it an ideal choice for people looking to have some spare cash now.
Winners 🏆 Leading BNPL providers Klarna and Afterpay prepared for the holiday sales surge by enhancing their apps and features. Their foresight paid off, with Afterpay seeing a 19% year-over-year jump in Cyber Weekend transactions.
App usage alone climbed 16%. Not bad 👏
Demand drivers 📈 Consumers cite budgeting help as a top reason for choosing BNPL, along with accessing credit if they can't qualify for cards. BNPL loans sidestep high credit card interest rates.
But with BNPL's growth, providers must balance opportunities with risks. If some portion of BNPL borrowers default, providers' revenues suffer. Delinquencies may rise given 40% of Afterpay users and a third of all BNPL consumers have subprime credit scores under 620.
Still, the services democratize access to credit otherwise unavailable.
✈️ THE TAKEAWAY
What’s next? 🤔 BNPL's banner Cyber Monday bodes well for solid holiday sales contributions. But post-holiday loan performance bears monitoring to gauge any deterioration of borrower repayment patterns. If more consumers overextend themselves, 2024 may bring a BNPL debt hangover. Despite that, both Affirm AFRM 0.00%↑ and Klarna seem to be well-positioned to handle that. Still bullish.
ICYMI: Strong growth & profitability: Affirm is becoming a force to be reckoned with 📈 [strong growth & profitability is making me optimistic + some bonus dives into Affirm]
Klarna's remarkable comeback: how the FinTech giant went from valuation collapse to potential 2024 IPO 📈 [latest numbers, how we got here, and what’s next + a look at how leveraging AI Klarna is building the Google of Shopping]