- Key insights: Affirm at its first investor forum since 2023 outlined plans for Affirm Edge, a new product that will integrate its buy now/pay later and installment loans directly into banking apps.
- What's at stake: Affirm is looking to build a network to rival that of Visa, Mastercard and American Express, and sees banking apps as a major opportunity for expansion.
- Forward look: The company estimates the total addressable market for Affirm Edge to be $140 billion.
Affirm is looking for new places to sell its installment loans, including inside of banking apps.
At its first investor forum since 2023, the buy now/pay later lender outlined new medium-term growth targets, including its plans for Affirm Edge. The product enables bank customers to engage with Affirm directly in their banking app, see their purchasing power and browse the lender's marketplace.
"We are very excited about Affirm Edge and the opportunity to enable banks and credit unions to deliver BNPL to their customers, within their products, on their surfaces," Chief Revenue Officer Wayne Pommen said during the investor forum on Tuesday.
Affirm will sell the product through technology resellers
"The opportunity is enormous," Chief Operating Officer Michael Linford told reporters at a media roundtable on Wednesday. "And it's very consistent with where we want to go as a business, which is we want ubiquity in our products being available wherever consumers are, at your debit card or your bank or checking out on Amazon.com."
Affirm estimates that Edge's total addressable market is $140 billion, driven by the 130 million active debit card users, with 54% preferring mobile banking and roughly $2,000 of annual incremental spend per user.
Offering BNPL within its digital ecosystem helps keep transactions in-house and develop deeper relationships with its customer base, said Phil Lehner, president of consumer lending at Old National Bank — which is in talks with Affirm to offer the product.
"Our customers are using [BNPL], plain and simple. Last year, we did over 60 million in transactions through buy now, pay later. Currently, today, we have 40,000 customers that have an active pay plan with buy now, pay later," Lehner said at the investor forum. "So for us, it's how do we get into that transaction so that customers are doing that transaction with us at Old National Bank, and thinking about us first."
Offering BNPL also helps make Old National's debit card product "more strategic" and less transactional.
"Customers are not only going to use the debit card for those short, everyday, basic purchases, but think about the more strategic, pre-planned purchases," Lehner said. "We are firm believers that we're going to get many more swipes with our debit card and it gives it the flexibility to truly be top of wallet. You don't have to wonder if you need to pull out a credit card or debit card. This one card can do it all."
Old National has not yet signed an agreement with Affirm to offer Edge, but Affirm hopes to add it and other banks to its roster this year.
"My theory for a long time has been, there has to be one [bank] that says 'I'm live and it's great,' and then it will be everyone. No one wants to be the first," Affirm CEO Max Levchin told reporters. "In the banking world, if you're the one doing a pilot with a Silicon Valley startup, and something goes sour, you know there'll be a regulator."
Compliance worries are the main roadblocks to banks adopting buy now/ pay later, according to
The announcement of its embedded product came as the company laid out new medium-term growth targets. The company expects annual gross merchandise value growth to come in north of 25%, which will eventually net medium-term annual trailing-12-month GMV of $100 billion. By comparison, in its third fiscal quarter, its trailing-12-month GMV was $46 billion, and at its last investor day in November 2023, it was $21 billion.
That outlook does not include any upside from Edge, or opportunities presented by
"Affirm has been building a competitive moat across the ecosystem of distribution partners, deep relationships with its consumers and merchant networks, Jefferies analyst John Hecht said in a research note. "We see meaningful incremental scaling runway across point of sale, direct-to-consumer platforms (cards and wallets), international expansions, as well as banking services in the medium term."
