Case Study | 26 August 2025
How a U.S.-Based FinTech Company Transformed Its Lending Model by Accurately Assessing Its Market Position
Posted by : Preeti Wani
As the digital financial technology sector continues to evolve rapidly, even well-designed products can fail if they don't match changing customer demands and market trends. This case study examines the experience of a FinTech company in the U.S. that launched a feature-rich Buy Now, Pay Later (BNPL) service but struggled to gain popularity in a crowded market. Facing low customer interaction and limited merchant interest, the company approached Research Nester analysts for a thorough assessment of its market position. With the insights gained, it was able to identify main weaknesses, fine-tune its services, and transform its BNPL platform into a high-performing growth engine.
An overview:
- The FinTech company had recently introduced a Buy Now, Pay Later (BNPL) offering as part of its digital lending solutions portfolio, aimed at targeting millennials and Gen Z shoppers.
- The platform was merged with top e-commerce websites and mobile apps, offering real-time lending decisions, flexible payment terms, and zero-interest options.
- Although being technically robust, the BNPL product faced low adoption due to a saturated market environment, stiff competition, a lack of product distinction, and low merchant engagement.
- With rising loan defaults, tighter regulations, and changing customer behavior, the leadership recognized the need for a detailed strategic audit.
- They partnered with RNPL analysts to perform a comprehensive competitive landscape study, user behavior analysis, and performance benchmarking exercise to recalibrate their product positioning and growth path.
The Story
The FinTech company was established in 2010 in Austin, Texas, with a main focus on digital wallets and micro-payments. After securing approximately USD 4 million in seed capital, it quickly grew in popularity for offering innovative, low-fee solutions that catered to freelancers and gig economy workers. By 2015, the company grabbed Series B funding worth USD 26 million and began expanding into credit scoring and risk modeling. Their data science team formed unique tools that evaluated a borrower’s creditworthiness based on non-traditional indicators such as mobile phone usage, utility payments, and social behavior.
In 2019, inspired by the growing popularity of point-of-sale lending and the rising popularity of Buy Now, Pay Later platforms, the company launched its own BNPL service called FlexPay. It was made to offer:
- Instant credit approval under 2 minutes
- Zero interest for repayment within 30 days
- Three-to-six-month installment plans for larger purchases
- Seamless integration with merchants via plug-and-play APIs
Despite high expectations, the product struggled to gain market share. Many E-commerce merchants showed unwillingness due to low conversion rates, and customer retention was weaker than industry norms. The company was also not well-positioned against dominating players providing aggressive promotions, discounts, and cashbacks.
By the end of 2020, internal testing revealed that customer acquisition costs were unsustainably higher, average loan amounts were declining, and the product lacked a distinct identity. This pushed the leadership to seek external strategic guidance from Research Nester’s Professional Line to understand why their well-engineered product wasn’t performing and how to pivot effectively.
Our Solution:
RNPL consultants undertook a multi-layered research and analysis initiative over 12 weeks. The project included:
- A full competitive analysis study covering 15 BNPL players in the U.S. and 7 in international markets.
- A SWOT and GAP analysis of the client’s product against market leaders.
- A deep-dive sentiment review from over 50,000 app ratings, online reviews, and discussion threads.
- Direct feedback recorded from 3,500 users and 80+ merchants to handle challenges and consumer expectations.
The key findings are:
- Limited Merchant Incentives: In contrast to its competitors, the company’s merchant onboarding program lacked financial incentives or extra perks such as co-branded campaigns or transaction-based discount offers.
- High Customer Fall-offs: The product had a 28% checkout drop-off rate, mainly due to a complicated application journey and limited repayment flexibility.
- Underutilized Data Infrastructure: The internal risk engine was highly sophisticated, but was not being utilized for cross-product promotions or dynamic credit line adjustments.
- Absence of Sustainable Messaging: Gen Z customers were increasingly preferring BNPL providers with strong sustainability initiatives, something the company had not thought of.
Strategic Recommendations by RNPL Analysts:
Merchant-Centric Repositioning
- Launch a loyalty-driven merchant rewards program with shared marketing assets, conversion analytics, and early access to customer data insights.
- Allow white-label BNPL options for boutique e-commerce merchants.
Customer Experience Optimization
- Simplify onboarding by using biometric authentication, pre-approved offers, and smart reminders.
- Introduce payment rescheduling features and fee-free postponement for up to 7 days.
Data Activation Strategy
- Segment users based on behavior to offer custom credit terms. Use AI-driven segmentation to customize limits and promotional offers.
- Create a loyalty layer where timely repayments improve scorecards and offer better rates.
Brand Differentiation via Impact Lending
- Introduce a GreenPay BNPL version for sustainable brands, offering lower rates and visible carbon offset tracking.
- Use ESG-coordinated messaging in all Gen Z targeting efforts.
Performance Benchmarking and Realignment
- Establish quarterly KPIs such as Net Promoter Score (NPS), merchant retention rate, and loan delinquency ratio.
- Regularly benchmark these against Tier 1 BNPL providers to adjust product roadmap and GTM strategies.
By Q1 of 2021, the company began using these measures under RNPL’s supervision.
Results
The holistic reset provided measurable and sustainable results over the next 2 years.
Revenue and Customer Metrics:
- By Q3 2021, the company noticed a 55% rise in successful BNPL transactions quarter-over-quarter.
- Average loan value went up from USD 180 to USD 290, driven by customer confidence and tailored offers.
- Monthly active users (MAUs) increased by 4x between January 2021 and March 2022.
Merchant Engagement:
- The merchant partnership program saw a 60% rise in new signups within six months.
- Over 300 mid-size e-commerce platforms integrated the FlexPay API in 2022 alone.
- Co-marketing campaigns with sustainability-focused merchants received double the average CTR compared to baseline campaigns.
Financial and Brand Impact:
- In FY 2020, revenue from FlexPay was just USD 3.2 million.
- After the implementation of RNPL approaches, BNPL revenue surged to USD 11.6 million in FY 2021.
- In FY 2022, revenue increased to USD 19.8 million, due to the sustained role of increasing user trust and strong merchant retention.
- The brand’s TrustPilot score improved from 3.4 to 4.6, and it was awarded the Most Promising BNPL Platform by a top FinTech publication.
The company has now initiated efforts to spread operations into Latin American and Southeast Asian markets, equipped with a refined model and a replicable growth playbook developed through its collaboration with RNPL.
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