CBA’s latest foray into the BNPL space was greeted with fanfare by Australian financial services as one of the most competitive responses to the dominance of incumbents such as Afterpay.

“Customer needs are evolving and this new offering from BNPL aims to give customers more choice on how they choose to pay and when, depending on the option that suits them best,” said the CEO of CBA Angus Sullivan’s retail banking group.

“As Australia’s leading digital bank, we believe we are best placed to offer our customers a sensible and responsible option for BNPL based on trends and insights gained from real-time transaction data over many years. ”

The product will only be available to current CBA customers, will be linked to CBA bank accounts and will require a credit check for access. Late fees would be $10 per missed payment, which the product's tie-in to existing banking services would greatly discourage - try taking out a home loan - while the credit check would make it unlikely the product would attract users who are likely to fall into debt anyway. default.

One aspect that CBA touts is that the product does not charge additional fees to businesses – a controversial aspect of other BNPL products, but from which much of their revenue is derived. The product also cannot be used for gambling. These features appear to be aimed at protecting it against some of the regulatory risks that competing products face, rather than attracting customers.

So what is the play? CBA appears to have entered the BNPL space – which it has already tried to conquer with interest-free credit cards and its partnership with Klarna – as a customer retention exercise. Younger customers are less interested in credit cards, while BNPL's product is also in line with CBA's brand, which has focused heavily on digital innovation in recent years.

CBA fired the starting gun. Westpac flirted with the space through its partnership with Afterpay, but more of the big banks are likely to start rolling out their own offerings as customers demand access to what is fast becoming an integral part of the consumer experience.