Ethical BNPL solutions are just two design students away …

We sent freelance journalist Hannah Duncan to report on one of the most refreshing and memorable BNPL presentations of her life. Here’s what happened when Hannah headed off to London’s Royal College of Art.

Baby Spice pigtails. Sickly sweet displays of bubble tea. And the unmistakable crackle of youthful energy. Every inch of yesterday’s Royal College of Art Exhibition fizzled and glowed with creative vision … It was the last place you’d expect to find a presentation on Buy Now Pay Later. (BNPL). Navigating through the maze of video art, thumping rave rooms, and dangling butterflies, I wondered if I’d gatecrashed the wrong conference. At 32, I was at least seven years older than everyone else. And certainly the only one in heels and office wear. I almost felt like an art piece myself. A nod to the corporate woman of yesteryear.

But nope. Definitely in the right place. Soon enough, I found myself in a clunky 80s lift with the enchanting Kam Chana, Head of the RCA’s Future Finance Lab. Something of a legend, Kam is also the founder of Resonate Joy. It’s a stealth company with the goal of empowering people to have a better relationship with their money.

As we chugged up four floors, Kam explained how two of her Master’s students have been designing ethical financial experiences for Gen-Zs… and not before time. These are the kind of stories I love writing.

For Gen-Zs, Klarna is the face of BNPL

Turning into the room, I was greeted with a striking black poster. “BNPL’s Dark Side”, it popped. Standing (almost) confidently in front were two 25-year-old Service Design students, Aishwarya Narvekar and Mahima Madhok. I liked them instantly. You could tell straight away that they were clever. Maybe more than they realize.

With the smallest of deep breaths, Aishwarya began. She talked me through weeks and layers of BNPL research. What makes this study different is that Aishwarya and Mahima surveyed their own peers in the college. They know the participants personally, they move in the same world.

An interesting finding is that while almost nobody had heard of “BNPL” or “Buy Now Pay Later”, everyone knew “Klarna”. According to Citizen’s Advice, marketing is heavily targeted toward students and Gen-Zs. 57% of young people have received tailored ads on Instagram, TikTok, or Twitter.

A kitten with a snake’s body

Typical design students, Aishwarya and Mahima asked their peers to draw BNPL, as if it were a character. The results were diverse, and yet, somehow the same theme ran throughout. Several people drew an ominous half-angel, half-devil figure. An evil genie came up too. Memorably, one drew the face of a kitten with the body of a snake.

So, why do so many students feel that BNPL – or Klarna – is a duplicitous friend? A devil disguised as an angel? A modern-day Shakespearean villain? It’s probably to do with how quickly and effortlessly young people like them can fall into BNPL debt cycles.

Reports found 51% of 18-34-year-olds are forced into borrowing money to pay off their BNPL debt. And 30% of all ages have been slapped with a fee that they didn’t expect. “Buy Now Pay Later borrowing can be like quicksand – easy to slip into and very difficult to get out of”, states Citizen’s Advice.

The debt boom began in 2020, when BNPL raked in a considerable £2.7 billion, quadrupling pre-pandemic revenue. But a shocking two in five borrowers had no idea they’d even used the seamless service.

Today, those who face debt collectors will see interest rates rocket, as the cost of living crisis continues to disproportionately affect young people.

“It usually starts small”, reveals Mahima. “But eventually it’s so easy and so smooth, it becomes kind of addictive”.

A personal BNPL fortune teller

Aishwarya and Mahima want to prevent more financial nightmares from hitting their peers. Shifting over to a vibrant orange display, they walked me through the brighter side of BNPL. “There needs to be a more human-centered lens”, nods Aishwarya, who hopes to work in fintech herself one day. “It needs to be more emotional, more behavioral”.

The ambitious students explained their initial proposals for ethical design solutions. Beautifully, they came in the form of helpful characters, or guardian angels.

My favourite was the fortune teller – complete with iconic headwear and crystal ball. This mystical online character uses data and statistics to predict your financial future. Reminiscent of the helpful 90s Microsoft paper clip, “Clippy”, the fortune teller pings up to reveal how the purchase will impact your future. For example, “If you buy these £120 sneakers now, you will not hit your holiday saving goal of £500 in time”.

To use a bit of fintech speak, the fortune teller is a chatbot algorithm that blends hyper-personalization with real-time open banking and embedded finance to help Gen-Zs reach their goals in a meaningful way. BAM!

But it goes further still, Aishwarya and Mahima don’t think that Gen-Zs are as money-obsessed as those of us with a fully-developed pre-frontal cortex. Instead, under-26-year-olds want to enjoy things and experiences. (Ah, remember that?). So, instead of, “You will not hit your holiday saving goal of £500 in time”… Something that might work better could be, “You’ll have to drink beer on your holiday, because you won’t be able to afford your favorite margaritas if you buy these sneakers”. Then put pictures of the items to make it more real. Or better still, look into the long-term future. Show images of houses, PHDs, and post-student life.

“Give it more of a human touch”, Aishwarya laughs. “Numbers are boring”.

Aishwarya and Mahima are here to bring the fun back into fintech, but in an ethical way… What could be better than that?

“Something that empowers me in the long-run”

Of course, the awkward elephant in the room is that these solutions mean that BNPL will lose revenue. But Aishwarya and Mahima don’t agree.

“Something that empowers me in the long run is where my loyalty would go”, explained Mahima. And, given that this opinion is built on weeks of conversions with her peers, I’d imagine that’s probably the Gen-Z consensus too.

We also discussed how BNPL firms could generate their revenue away from flimsy purchases. Students and young people have much more of a need to spread their payments for water or electricity bills, rather than drunken pizza orders.

To get create a better world, and build meaningful loyalty, fintechs must look beyond their office walls for inspiration. Head into art colleges, explore new worlds, and employ people from all walks of life… They might just solve a major industry crisis for you.

So, the ultimate question: Can two unpaid Gen-Z students create a better solution than billions of dollar’s worth of bankers and fintech? Of course not.

… They can do so much better.