Monkee - The Save now Buy Later alternative to BNPL

Can ‘Save now Buy later’ become the alternative to ‘Buy now Pay later’?

Buy Now Pay Later (BNPL) continues to dominate news in fintech with hundreds of BNPL startups around the world fighting for a piece of the pie, all competing for consumers who want to spread payments over time. While paying in installment isn’t new, the rapid rise in popularity of BNPL and easy access to credit has increasingly sparked concerns that it will encourage unsustainable consumption patterns and debt.

Numerous studies have been conducted to show that a large share of BNPL customers have faced interest and/or late fees for their purchases and seen negative impact on their credit ratings. This unregulated lending is ringing alarm bells not just from consumer protection organizations, but is also seen critical by an increasing number of merchants. Besides the high costs of BNPL solutions for merchants, questions arise how to ethically promote these types of plans and make all the different fees and interest rates transparent to consumers. Brands like Patagonia increasingly reflect their social responsibility not just in how they produce and source their products or in what donations they make, but also in the financial options they offer to their customers. 

As BNPL will continue to grow, we see evidence of significant consumer traction for a new trend of responsible buying. A trend that we will call Save Now Buy Later (SNBL). And with Monkee we want to be a leading force of this movement – we want to offer an alternative to BNPL by incentivizing consumers to save up for the things that they really want, instead of spending money they don’t already have. 

Over the last 40 years we saw a lot of innovation in the area of lending including credit cards and BNPL. But very little innovation has occurred in the savings arena and even less has been done to incentive savings. Quite the opposite is the case, as headlines about inflationary risk are leading many people to the wrong conclusions: While those messages have been targeted at people who have tens or even hundreds of thousand Euros on their savings or current accounts, many people living in medium to lower-income households just read the headline and interpret them in a way that it is better to just spend all their money. (And yes, people who have hundreds of thousands of Euros sitting on their accounts should be thinking about how to protect it from losing value by investing it in broadly diversified investment products, but unfortunately that's not the issue for the large part of society.)

At Monkee we are convinced that consumer credit doesn't need to be the only option for consumers to fulfill their needs or dreams. We are offering a tool that empowers consumers to save and even rewards them for saving up for the things they really want. This is a powerful win-win situation, as consumers are reaching their goals faster and merchants get a way to attract and retain customers by backing a responsible purchasing option

With Monkee we are offering our users a way of organizing money according to its purpose. While money is fungible in principle, numerous studies in the area of behavioral economics have shown us that earmarking money for a specific purpose is a powerful self-control instrument. Each customer account is made up of multiple sub-accounts, that can be labeled and where users can add a specific goal-amount and -date. Those sub-accounts may be the digital equivalent of budgeting "envelopes", holding funds for specific purposes and goals like vacation, annual insurance premium or the bike for their children.  

To put money into their sub-accounts, users can save manually with just 2 clicks, they can set-up saving rules, an autopilot or team up with friends or family to jointly chip away for a saving goal. Additionally, Monkee approaches users with digital nudges, to motivate them to save a few extra Euros here and there to reach their goals faster. Over time the app gets smarter and learns when and how to approach the user to get a positive response. The short feedback cycles and gamified approach to savings offers a gratifying way for a user to reach their financial goals. Something very different to what more traditional financial services products would offer.

With the FutureBoost we offer our users an innovative, synthetic yield on their savings. While they buy things that they need or want at one of our more than 300 retail partners, they receive up to 20% of their money back as cash contribution to their account to let their savings grow. On average our users grow their savings by over 10% annually just by making part of their purchases at one of our partners.  

Comparison Save now buy later, Buy now pay later and credit cards

People spend where they save

Why should merchants contribute to the savings goals of our users? To put it simply: People spend where they save. Our Monkee retail partners get sticky, differentiated loyalty and create positive consumer touch points. Monkee individually recommends partner merchants based on savings patterns and purchasing behavior, leading to relevant traffic and significantly higher sales conversion compared to benchmarks. 

Allowing people to shop where they save dramatically increases ‘share of wallet’ and Monkee partners can reach customers much earlier at the ‘intention stage of the purchasing funnel’ and lock in loyalty with a compelling growth rate on their spending power.

Can "Save now Buy later" be the new "Buy now Pay later"?

BNPL is not just popular with consumers but also with investors. Over the last years companies in this area have raised several Billion USD in investments. And though investors could expect the industry to continue to grow, there are several negative realities that need to be carefully considered: from ethical considerations to almost certain regulatory pushbacks across many jurisdictions. 

After first large investments into Save now, Buy later players in the US we can expect to see more venture dollars go in this direction in Europe as well, as investors are going to see the double bottom line of SNBL - doing good and at the same time realizing high returns

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