Temenos launches the first AI-driven Buy-Now-Pay-Later banking service on the Temenos Banking Cloud

Geneva, Switzerland–(BUSINESS WIRE)–Temenos (SIX: TEMN), the banking software company, today announced the launch of its Buy-Now-Pay-Later banking service. This offering will unlock new revenue opportunities for banks and fintechs, help them reach new markets, and cement their relationships with consumers and merchants through alternative credit products.

Temenos BNPL, combined with patented Explainable AI, can help banks create ethical lending programs by providing transparency in automated decisions and matching BNPL customers with appropriate credit offers based on their history.

As more consumers turn to e-commerce amid the pandemic, point-of-sale installment loans have grown in popularity and value. Consumer credit and installment loans have been revolutionized in the era of Banking-as-a-Service (BaaS) by BNPL, which integrates seamlessly into the customer’s buying journey to offer consumers a seamless digital experience and easy access to point-of-sale financing. It also helps merchants improve retail customer acquisition, wallet share, and retention. In 2021, online revenue through BNPL increased by 45% compared to 2019.¹ McKinsey estimates that fintechs have embezzled up to $10 billion in annual revenue from banks over the past ~24 months with BNPL offerings.²

BNPL offers significant benefits to fintechs and banks alike. Fintechs benefit from rapid customer and merchant acquisition with relatively lower credit risk and more payment transactions. At the same time, banks can strengthen engagement with their customers, increase wallet share and loyalty by creating seamless and convenient shopping experiences. BNPL can be profitable for incumbent banks that can build on their strengths, including providing greater flexibility in loan terms and higher utilization of capital through faster loan turnover and lower regulatory capital. Additionally, BNPL presents cross-selling opportunities with potentially more engaged bank and non-bank customers.

The Temenos Buy-Now-Pay-Later banking service is consumable independently through Temenos Banking Cloud. It is independent of the underlying core banking system, being deployed alongside Temenos Transact or any other core banking solution and incorporates industry best practices while providing responsible lending capabilities to help providers adapt changes in regulations. By offering the BNPL banking service, Temenos provides a fully flexible, fee-based solution that allows banks to quickly introduce BNPL at scale without having to provide new IT infrastructure, so they can focus on the customer experience.

By integrating XAI, Temenos enables customers to pre-approve loan applications or offer variable installments in real time based on pre-determined criteria, including soft and hard credit scoring, while providing transparency on how decisions are made. This allows banks and fintechs to lend ethically, provides transparency on recommended payment schedules during the application process, and ensures consumers can afford repayments.

A global payments provider launched its Buy-Now-Pay-Later service on the Temenos Banking Cloud, growing to 22 million loan applications in just nine months, the fastest and most successful product launch in history of the company. 70% of its customers are regular users who love the product, with 50% using it again within three months.

Ginger Schmeltzer, Strategic Advisor, Retail Banking and Payments, Aite-Novarica Group: “Buy-Now-Pay-Later continues to grow in popularity, resulting in increased adoption by retailers like Target and Amazon as well as a growing number of small and medium-sized merchants. The Temenos SaaS solution for BNPL, coupled with embedded AI, combines proven technology with increased decision-making speed, efficiency, scalability and transparency. BNPL as a robust and flexible Temenos service will make this new business model available to businesses of all sizes, from credit unions and challengers, to global payments providers and Tier 1 banks.”

Max Chuard, CEO of Temenos, said: “In a fiercely competitive market, financial service providers need to evaluate new business models to generate revenue. As a strategic technology provider to over 3,000 banks globally, we are committed to empowering our customers to pioneer and adopt these profitable new business models. Buy-Now-Pay-Later has shown the industry that we can find new solutions to old problems. It challenged the way we think about customer engagement, acquisition and retention. We are very pleased to launch this new solution to enable our customers to offer fast, transparent and scalable alternative financing.

– Ends –

About Temenos

Temenos AG (SIX: TEMN) is the world leader in banking software. More than 3,000 banks worldwide, including 41 of the top 50 banks, trust Temenos to handle both day-to-day transactions and customer interactions for more than 1.2 billion banking customers. Temenos offers cloud-native, cloud-independent and AI-powered front office, core banking, payment and fund administration software, enabling banks to deliver seamless omnichannel customer experiences and reach operational excellence.

Temenos software has been proven to enable its top performing customers to achieve cost-to-income ratios of 26.8%, half the industry average, and returns on equity of 29%, three times the industry average. These customers also invest 51% of their IT budget in growth and innovation versus maintenance, twice the industry average, proving that banks’ IT investment adds tangible value to their business.

For more information, visit www.temenos.com.

¹ Holiday shopping 2021: 4 ways shoppers have changed since the pandemic began (cnbc.com)

² Buy Now, Pay Later: Five Business Models to Compete | McKinsey