FSPR.ED.08_Akita Somani_converted.mp4

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FSPR.ED.08_Akita Somani_converted.vtt

English

{{00:00:05}}
Hi, I'm David Penn, Research
Analyst with Finovate.

{{00:00:07}}
We're here at FinovateSpring in San
Francisco, and joining me is Akita Somani.

{{00:00:11}}
She is the Senior Vice President
of Buy Now, Pay Later and

{{00:00:13}}
Point of Sale Lending with U.

{{00:00:15}}
S.

{{00:00:15}}
Bank.

{{00:00:16}}
Thanks for joining us.

{{00:00:17}}
Thanks, David.

{{00:00:18}}
It's great to be here having
this conversation with you.

{{00:00:20}}
I'm enjoying it.

{{00:00:20}}
I'm looking forward to it.

{{00:00:21}}
I thought maybe to start us off, you
could tell us just a little bit about

{{00:00:24}}
yourself and the work that you do at U.

{{00:00:25}}
S.

{{00:00:25}}
Bank.

{{00:00:26}}
Absolutely.

{{00:00:27}}
I've been integrally involved
with constructing and launching

{{00:00:31}}
our Buy Now, Pay Later and or
actually more accurately describe

{{00:00:34}}
our point of sale lending solution.

{{00:00:36}}
We launched late last year, we announced
it at Money 2020, and we've got a number

{{00:00:41}}
of merchants and consumers live on
that solution today, and we continue

{{00:00:45}}
to work on enhancing and scaling it.

{{00:00:48}}
Very interesting.

{{00:00:48}}
Now, last year at Finnovate Fall,
you talked about the idea that

{{00:00:51}}
there would be a proliferation
of opportunities in this space.

{{00:00:54}}
I'm wondering, now that we're
here, what are you seeing in

{{00:00:56}}
terms of the buy-now-pay-later,
or as you said, POS lending space?

{{00:01:00}}
Absolutely.

{{00:01:02}}
Given the current macro and economic
environment, given the rise in interest

{{00:01:07}}
rates and continue to be sustained at
that level, inflationary pressures, cost

{{00:01:12}}
of living pressures, and obviously, all
of the context around unemployment as

{{00:01:18}}
well, consumers are looking for simple,
secure methods to be able to continue

{{00:01:26}}
to make the purchases that they need to.

{{00:01:29}}
And we're not just talking about
an impulse purchase of a 200 pair

{{00:01:33}}
of sneakers, which is really cool,
but also core things like I need

{{00:01:38}}
to renovate a part of my home or I
need to get my HVAC system replaced.

{{00:01:43}}
And therefore, point of sale lending
actually presents a clean, simple,

{{00:01:49}}
easy way for consumers to get access
to financing at the point that they're

{{00:01:54}}
deciding to make that purchase in
a seamless way, entirely digitally

{{00:01:59}}
delivered in a way that consumers
understand their options are not

{{00:02:03}}
able to actually take advantage of a
flexible payment option at that point.

{{00:02:10}}
And therefore, it continues to present
a lot of opportunities both from the

{{00:02:13}}
businesses that are looking to continue
to grow in this environment but also

{{00:02:18}}
for consumers where they can make a
choice whether they want to use their

{{00:02:22}}
credit card to make a payment, whether
they take advantage of a point of sale

{{00:02:25}}
financing option, or they just want to
use their bank account to make a payment.

{{00:02:30}}
It's all about providing options
and therefore the opportunities

{{00:02:33}}
continue to expand and grow.

{{00:02:35}}
Very interesting.

{{00:02:36}}
I want to talk about  the relationship
between point of sale financing and some

{{00:02:40}}
of these other, you mentioned credit cards
in a minute, but one thing I did want

{{00:02:43}}
to talk about just now is the idea of
regulation and the idea of the regulation

{{00:02:46}}
that might be coming down the pipe.

{{00:02:47}}
What do you see in terms of potential
regulation in this space and since

{{00:02:52}}
the regulation hasn't arrived yet,
how do you prepare, how do you deal

{{00:02:54}}
with the uncertainty of not knowing
exactly what's going to come at you?

{{00:02:57}}
So I think there are two or three key
aspects to know about regulation and

{{00:03:02}}
how these solutions are constructed.

{{00:03:04}}
So buy now pay later, unfortunately,
has been synonymous with the paid for

{{00:03:11}}
product that's proliferated itself in
the market, which is associated with

{{00:03:15}}
you making a purchase and then paying
in four installments over six weeks.

{{00:03:20}}
And that is also significantly
associated with those non discretionary

{{00:03:24}}
purchases that I spoke about earlier.

{{00:03:27}}
A lot of the providers of that product
are fintechs who are not regulated and

{{00:03:33}}
therefore not subject to simple things
like making disclosures clean and simple

{{00:03:39}}
for consumers when they're taking the
product, understanding what fee might

{{00:03:43}}
be  apply if they make a late payment
or miss a payment and or understand the

{{00:03:49}}
interest that they are signing up for.

{{00:03:51}}
So a number of these factors have
led the regulator to establish some

{{00:03:56}}
ground rules in terms of how consumer
interests need to be protected in

{{00:04:04}}
this ecosystem to avoid things like a
debt trap, stacking up debt, also just

{{00:04:11}}
managing their ability to pay as well
as consumers understanding their rights

{{00:04:16}}
and the ability to utilize this product.

{{00:04:19}}
As one of several payment
options rather than, winding

{{00:04:25}}
themselves down a bad credit path.

{{00:04:29}}
It's interesting that we, again, we
were talking about the idea of the

{{00:04:32}}
relationship between this more new
financing form and some of the other ones.

{{00:04:35}}
Do you sense that there's a likelihood
that over time point of sale financing,

{{00:04:40}}
credit cards will happily coexist?

{{00:04:42}}
Or do you suspect that over
time something's got to give?

{{00:04:46}}
Absolutely.

{{00:04:47}}
So I think there are again a
few perspectives there, right?

{{00:04:50}}
One is that, as I mentioned earlier,
this is one of several payment options

{{00:04:56}}
being offered to the consumer, which
means that all of these different forms

{{00:05:00}}
of products will exist for different
use cases that the consumer might have.

{{00:05:06}}
At the same time, the intention is
to be able to translate a traditional

{{00:05:11}}
installment lending solution like
personal loans into a slick experience.

{{00:05:15}}
Like I said, you're making the
decision at the point of purchase.

{{00:05:18}}
And that presents a whole new way of
delivering a capability that's existed

{{00:05:22}}
with financial institutions for a really
long time, but in a very slick digital

{{00:05:26}}
experience, this is also reflected
in how regulators are looking at it.

{{00:05:30}}
So as a financial institution, when we
roll out a product like this, we are

{{00:05:36}}
mandated by regulation to comply with
all of those requirements which protect

{{00:05:40}}
consumers' interests, the merchants'
interests, And to ensure that we are

{{00:05:45}}
doing all of the things we should
be doing as a financial institution.

{{00:05:50}}
And that's reflected in how regulators
are looking at it as well, saying

{{00:05:54}}
other providers should also comply
with the same kind of requirements

{{00:05:57}}
that apply to, say, a credit card
issued by a financial institution.

{{00:06:02}}
So for example, the latest one
around disputes and chargeback

{{00:06:05}}
rights for consumers on Buy Now
Pay Later, even though all of that

{{00:06:10}}
text is focused on paying for.

{{00:06:14}}
the intention really is to protect the
consumer's interests and the ability for

{{00:06:19}}
the consumer to say, I did not receive
the services that I paid for and took

{{00:06:24}}
a loan out on, or I was not satisfied
with the product that I got because it

{{00:06:29}}
was not what was promised, just like
you have the option on a credit card

{{00:06:33}}
to dispute that and for a provisional
credit to be issued to you while that

{{00:06:37}}
dispute gets resolved and decided.

{{00:06:40}}
The expectation of the regulator
is that the consumers get

{{00:06:43}}
treated exactly the same way.

{{00:06:46}}
And that demonstrates that it's,
the thought process is that all of

{{00:06:51}}
these products exist in a spectrum
of lending and payment options.

{{00:06:57}}
It's not one or the other, but it's
the ability to offer up choice so

{{00:07:01}}
that consumers have the flexibility
to decide what works for them.

{{00:07:05}}
That makes a lot of sense.

{{00:07:06}}
I was thinking maybe a way of wrapping
up, maybe you could tell us about some

{{00:07:09}}
of the new developments in buy now, buy
later and point of sale financing that you

{{00:07:12}}
might be involved with or things you might
be seeing in the next, say, year or so.

{{00:07:16}}
Absolutely.

{{00:07:17}}
as I mentioned several times in
this conversation, the focus is

{{00:07:20}}
on what the consumers want and
being able to offer them choices.

{{00:07:24}}
Also, the merchant's interest.

{{00:07:26}}
And our focus on having launched
the product and, getting it

{{00:07:31}}
live is really to focus on what
enhances that consumer experience.

{{00:07:35}}
What are they really looking for and
how do we serve their needs, both

{{00:07:39}}
through the digital interface, but also
in terms of the product capability.

{{00:07:43}}
And the other pieces around the merchant.

{{00:07:45}}
So how are the businesses
looking to grow their sales?

{{00:07:50}}
And how does this as an option
serve that objective of helping

{{00:07:55}}
the business grow their sales?

{{00:07:57}}
So we're intensely focused on that
consumer journey and the merchant

{{00:08:01}}
journey in verticals, where we feel
this product makes sense and can be

{{00:08:07}}
responsibly delivered whilst maintaining
that seamless digital experience, right?

{{00:08:13}}
Very, interesting.

{{00:08:14}}
Definitely something to
look forward to from U.

{{00:08:15}}
S.

{{00:08:15}}
Bank.

{{00:08:16}}
Absolutely.

{{00:08:17}}
Thanks, David.

{{00:08:18}}
Yes, thank you.

{{00:08:19}}
And thank you for joining us as well.

Hi, I'm David Penn, Research
Analyst with Finovate.

We're here at FinovateSpring in San
Francisco, and joining me is Akita Somani.

She is the Senior Vice President
of Buy Now, Pay Later and

It's great to be here having
this conversation with you.

I thought maybe to start us off, you
could tell us just a little bit about

I've been integrally involved
with constructing and launching

our Buy Now, Pay Later and or
actually more accurately describe

We launched late last year, we announced
it at Money 2020, and we've got a number

of merchants and consumers live on
that solution today, and we continue

Now, last year at Finnovate Fall,
you talked about the idea that

there would be a proliferation
of opportunities in this space.

I'm wondering, now that we're
here, what are you seeing in

terms of the buy-now-pay-later,
or as you said, POS lending space?

Given the current macro and economic
environment, given the rise in interest

rates and continue to be sustained at
that level, inflationary pressures, cost

of living pressures, and obviously, all
of the context around unemployment as

well, consumers are looking for simple,
secure methods to be able to continue

And we're not just talking about
an impulse purchase of a 200 pair

of sneakers, which is really cool,
but also core things like I need

to renovate a part of my home or I
need to get my HVAC system replaced.

And therefore, point of sale lending
actually presents a clean, simple,

easy way for consumers to get access
to financing at the point that they're

deciding to make that purchase in
a seamless way, entirely digitally

delivered in a way that consumers
understand their options are not

able to actually take advantage of a
flexible payment option at that point.

And therefore, it continues to present
a lot of opportunities both from the

businesses that are looking to continue
to grow in this environment but also

for consumers where they can make a
choice whether they want to use their

credit card to make a payment, whether
they take advantage of a point of sale

financing option, or they just want to
use their bank account to make a payment.

It's all about providing options
and therefore the opportunities

I want to talk about  the relationship
between point of sale financing and some

of these other, you mentioned credit cards
in a minute, but one thing I did want

to talk about just now is the idea of
regulation and the idea of the regulation

What do you see in terms of potential
regulation in this space and since

the regulation hasn't arrived yet,
how do you prepare, how do you deal

with the uncertainty of not knowing
exactly what's going to come at you?

So I think there are two or three key
aspects to know about regulation and

So buy now pay later, unfortunately,
has been synonymous with the paid for

product that's proliferated itself in
the market, which is associated with

you making a purchase and then paying
in four installments over six weeks.

And that is also significantly
associated with those non discretionary

A lot of the providers of that product
are fintechs who are not regulated and

therefore not subject to simple things
like making disclosures clean and simple

for consumers when they're taking the
product, understanding what fee might

be  apply if they make a late payment
or miss a payment and or understand the

So a number of these factors have
led the regulator to establish some

ground rules in terms of how consumer
interests need to be protected in

this ecosystem to avoid things like a
debt trap, stacking up debt, also just

managing their ability to pay as well
as consumers understanding their rights

As one of several payment
options rather than, winding

It's interesting that we, again, we
were talking about the idea of the

relationship between this more new
financing form and some of the other ones.

Do you sense that there's a likelihood
that over time point of sale financing,

Or do you suspect that over
time something's got to give?

So I think there are again a
few perspectives there, right?

One is that, as I mentioned earlier,
this is one of several payment options

being offered to the consumer, which
means that all of these different forms

of products will exist for different
use cases that the consumer might have.

At the same time, the intention is
to be able to translate a traditional

installment lending solution like
personal loans into a slick experience.

Like I said, you're making the
decision at the point of purchase.

And that presents a whole new way of
delivering a capability that's existed

with financial institutions for a really
long time, but in a very slick digital

experience, this is also reflected
in how regulators are looking at it.

So as a financial institution, when we
roll out a product like this, we are

mandated by regulation to comply with
all of those requirements which protect

consumers' interests, the merchants'
interests, And to ensure that we are

doing all of the things we should
be doing as a financial institution.

And that's reflected in how regulators
are looking at it as well, saying

other providers should also comply
with the same kind of requirements

that apply to, say, a credit card
issued by a financial institution.

So for example, the latest one
around disputes and chargeback

rights for consumers on Buy Now
Pay Later, even though all of that

Akita Somani, SVP of BNPL/POS Lending in the U.S. Bank, talks about U.S. Bank’s point-of-sale lending solution and its role in offering customers simple and secure financing at a time of economic challenges. She also explores various payment solutions, like buy-now-pay-later, and how they enhance customer and merchant experiences.