How Fintech is Transforming Financial Flexibility: Insights from an Industry Expert
By Mr. Jitin Bhasin
The way we spend, save, and manage money has evolved dramatically, thanks to fintech innovations. Two key models—Buy Now, Pay Later (BNPL) and Embedded Finance—are not just changing the way people pay but also reshaping financial access for everyday individuals.
You’ve probably been there—you’re scrolling through Amazon, eyeing a new gadget or a pair of sneakers, but you pause because of the price tag. This is exactly the moment Buy Now, Pay Later (BNPL) was designed for.
Platforms like ZestMoney or Simpl let you split the cost of smaller purchases—typically between ₹3,000 and ₹5,000—into manageable, interest-free installments.
Why BNPL Works
- Accessibility: No need for a credit card or a long credit history, making BNPL ideal for younger professionals.
- Convenience: Instant access to desired items while spreading out the cost.
- Psychological Ease: Paying in parts feels less intimidating, boosting sales for many retailers.
However, despite its appeal, BNPL is not without its pitfalls. Regulators have raised concerns about borrowers converting everyday expenses into BNPL transactions, often without realizing the compounding debt they’re accruing. A report from the Reserve Bank of India highlights that over-leveraged borrowers are driving up delinquency rates in unsecured loans. For instance, borrowers with multiple loans are now a significant concern, reflecting a broader risk to financial stability.
The Risks of BNPL
- Overconsumption: BNPL can encourage indiscreet spending, with borrowers using it for food, gadgets, or apparel without fully considering repayment obligations.
- Credit Risk: Missed payments can lead to strict penalties, exacerbating financial strain.
Enter Embedded Finance
What happens when you’re staring down a big expense, like a medical bill or education fees? That’s where Embedded Finance takes over.
Embedded Finance integrates financing options directly into high-cost services like healthcare, education, travel, and weddings. This model allows individuals to tackle significant expenses—₹50,000 or even ₹5,00,000—without depleting savings.
Why Embedded Finance is a Game-Changer
- Flexibility: Pay in installments, often with zero interest, for critical expenses.
- Wide Applications: From healthcare and alternate therapies to wedding planning, it caters to life’s major milestones.
- Need-Based: Unlike BNPL, Embedded Finance focuses on essential, well-considered expenditures.
For example, you’re unlikely to undergo a cosmetic procedure or dental surgery simply because financing is available. These are deliberate decisions tied to life-changing outcomes, emphasizing responsible lending practices.
BNPL vs. Embedded Finance: A Comparison
| Feature | Buy Now, Pay Later (BNPL) | Embedded Finance |
| Ticket Size | ₹3,000–₹5,000 | ₹50,000–₹5,00,000+ |
| Frequency | Frequent, everyday purchases | Infrequent, significant expenses |
| Use Cases | Gadgets, apparel, subscriptions | Healthcare, education, weddings |
| Credit Limit | Lower, typically a few thousand | Higher, up to ₹5,00,000+ |
The RBI’s warnings about rising delinquencies in unsecured credit underline the importance of responsible lending. The borrower-level delinquency rate for unsecured loans stands at 3.5% as of Q3 2024, with many borrowers juggling multiple loans. This interconnected liability increases the risk of defaults, particularly with BNPL models.
By contrast, Embedded Finance encourages financial discipline by aligning credit with essential, one-time expenses rather than fueling impulsive spending.
COVID-19 changed how we think about money and financial security. Millennials and Gen Z—who make up 60% of the workforce—are driving the demand for flexible financial solutions.
BNPL is perfect for enjoying every day conveniences without guilt. Embedded Finance, on the other hand, supports life’s pivotal moments. Together, they reflect the real magic of fintech: empowerment.
At its core, fintech is levelling the playing field, making affordability about possibility rather than privilege. Whether it’s BNPL for a gadget or Embedded Finance for a medical procedure, the message is clear—money should never be a barrier to living your best life.
(The author is Mr. Jitin Bhasin, CEO and Founder, SaveIN, and the views expressed in this article are his own)
