One of the trends Accenture identified in banking in 2021 is around credit.

With the pandemic disrupting so many industries and livelihoods, of course banks need to make sure they are managing their risk well. In South Africa, we’ve seen banks at least trying to manage their risk and also help their customers manage their new circumstances by offering payment holidays, or waiving ATM fees.

But online shopping has driven the need for credit in a different way. I spoke in my last blog post about how Uber’s competitive edge turned out to be the seamless payment experience of ride hailing, not the ride hailing itself.

In the same way, online shopping providers are doing whatever they can to simplify payment, and that includes offering credit.

The truth is that credit is part of the value chain. The demand for credit is built into what we do every day.

Nobody takes out credit for the sake of it. People want it for a specific purpose. Nobody wants a car loan—they want a car. Nobody wants a bond—they want a house. Filling in the loan application is a necessary evil.

The online retailers are meeting this demand by offering “pay later” payment terms. You can now buy items online, sometimes starting at as little as a hundred rand, to be delivered now and paid for in fortnightly or monthly instalments.

One provider of this functionality is Mobicred, a company founded in 2013 by Jason Sive and Andrew Goodrich. What sets it apart from banks is that it provides credit card functionality online without the credit card. The starting qualifying salary is R5,500, which is only slightly above the minimum monthly wage.

It’s a revolving credit facility which is being baked into an increasing number of online retailers. Mobicred managed to get to 50 merchants using its platform after about a year. That included Digicape and the iStore back in 2013, but now you can buy mag wheels or beds and mattresses or fashion or any number of things from 2,500 merchants on a buy now, pay later basis. Mobicred recently announced Clicks as one of its merchants. On LinkedIn, the company lists 17 employees.

In the future, credit will be a function of just doing the transaction.

Banks don’t see it that way. If you want credit, you need to jump through rings of fire. It’s hard for banks to make credit just another component of a third-party transaction.

It’s an interesting opportunity that the banks seem to have missed, and it’s another example of disintermediation.

If I’m using a revolving credit facility for all my online purchases through Mobicred, why would I use my credit card online anymore? And who am I banking with? Sure, I need to pay Mobicred, and I need a bank account in order to qualify for credit in the first place. And sure, the jury is still out on the extent of non-performing loans that buy now, pay later lenders like Mobicred will have to carry. But it’s a profitable niche that the traditional banks have missed. More important is the argument that it’s weakening the relationship between banks and their customers.

I’d be interested to hear your thoughts on how you think the world of credit is evolving.

If you’re interested in reading Accenture’s 2021 banking trends, please download the report here.