If Covid-19 caused ‘unprecedented’ to become the defining word of last year, then surely — as we move into a post-pandemic era — ‘revenge’ is in the running as the definitive one for 2021.

Ever since consumers reduced their spending — in a bid to brace for the pandemic’s impact on their personal finances — futurists have firmly planted terms such as ‘revenge travel’, ‘revenge dining’ and ‘revenge shopping’ into our collective vocabulary as they anticipated customers re-emerging from social restrictions, eager to make up for lost time.

In fact, whole industries have been banking on these predictions, hoping consumers would kickstart economic recovery by using their wallets as a means to reclaim their social lives. And now, only three months on from the lifting of government-mandated store closures in the UK, we are already starting to see revenge behaviour become a reality as retail spending exceeds pre-pandemic levels.

Revenge spending however, is a divisive concept, particularly within the fashion industry — as a sector that continuously grapples with driving overconsumption whilst simultaneously petitioning for more sustainable practices. And while fashion brands and retailers have been strategising on how to maximise customer enthusiasm to spend, money experts have been dissuading shoppers from splurging on unnecessary products and potentially incurring debt in the process..

Sitting in a pivotal position in this debate is the financial technology (fintech) industry, an ecosystem of contrasting solutions that can variously facilitate spending by spreading costs, and advocate restraint.

Fintech is an umbrella term for businesses that use technology to improve or disrupt financial services. Online banking, mobile payments, cryptocurrency and blockchain are all fintech’s, and since Covid-19 forced consumers into their homes and onto their digital devices, an increasing amount of people are using these technologies in their everyday lives to budget, save, and spend.

But when so many of the fintech services that operate within fashion derive their revenue from brand partnerships — actively promoting the retail industry’s interests whilst attracting users with propositions that claim to provide them with safe, prudent shopping experiences and payment structures — many critics question if they can genuinely do both.

Even before the pandemic, fintech was hailed as the customer-centric solution to problems that have for a long time marred the financial industry. From unbundling services from incumbent banks — finally giving them the competition they have for so long operated without — to improving low financial inclusion and literacy for the global masses, innovative fintech’s have been working hard to decentralise power from established institutions  and reroute it to the fingertips of users.

However, many of these optimistic hopes for fintech have been sidelined as criticism has begun to mount that some fintech solutions are adding an attractive veneer to an economy that relies on consumers stretching their limits and taking on debt. Take Klarna as a prime example. It only takes a quick google search for ‘buy now, pay later’ (BNPL) to see that the charges against their most popular payment option have gained considerable coverage. Plus now, with what seems like a continuous flurry of new payment platforms and apps — offering similar solutions that invite consumers to buy without knowingly breaking the bank — commentators argue that these strategically targeted offerings, aimed at female, millennial customers, are marketing debt as a minor consequence of a fashionable lifestyle.

 “This has long lasting effects on not just their future financial health but also their mental wellbeing because young people are fed this untrue narrative that instant gratification should be the norm.” I was told by Urenna Okonkwo, Co-Founder and CEO of savings app Cashmere.

And while the bulk of the attention is focused on the fintech companies that facilitate post-purchase payments,, accusations of unsustainable practices and unethical values have also stalked the brands and retailers  that offer (and sometimes promote) BNPL options for fast fashion products. Many experts have blamed these services for promoting cheap labour, adding fuel to the fire of overconsumption, and increasing the rate of unsustainable product returns with enticing ‘try before you buy’ propositions.

This is, in effect, two of the most damaging elements of contemporary consumer culture rolled into one: a fixation with newness and disposability, combined with a tacit encouragement for people to spend beyond their means.

Recently BNPL businesses have been working hard to rewrite the negative accounts surrounding their models. “With over 15 million customers and 14,000 retail partners across the UK, Klarna is one of the leading shopping and payment providers in the country. However, in the past few years, there’s been a rise in the number of misconceptions about our products which are far from the experience of our customers. That’s why we wanted to set the record straight with our ‘Discover the Truth‘ campaign, so that we could answer some of these questions and address any doubts across a variety of topics, from the average age of our consumers (33 years old), to how we make money (our BNPL products are interest free and fee free and we make money by charging retailers, not consumers).” explains a spokesperson for Klarna. “…savvy shopping and spending is at our core.”

So are commentators giving fashion consumers too little credit in their ability to use these solutions smartly, or are concerns about their effect on end users well-founded?

When financial literacy amongst Gen Z and Millennials is currently so low, it’s easy to understand why many money and fashion experts want to bring awareness to the risks of using certain financial services that offer post-purchase payment structures. But at the same time, these digitally native generations should not be underestimated as the credit-shy and discerning adopters of financial products that they are.

And it could be the subjective idea of customer empowerment that are driving these arguments. For Klarna, agency is arguably at the root of their empowering offerings, “We have built our products so that consumers can take control over their finances and make informed choices about what payment option best fits their lifestyle.”

Meanwhile, for Okonkwo, empowerment lies in knowledge, “We also provide workshops and resources educating women on how to manage their personal finances (debt management, budgeting, investing, etc) so that we are also providing a holistic service and empowering them to be great with their money so that they can afford the lifestyle that they desire.”

In actuality, many fintech’s pride themselves on helping young consumers adopt healthier spending habits in several ways. Budgeting app Cleo for example, blends AI into its Gen Z directed chat interface to engage users in — historically taboo — conversations about their finances. So when shoppers find themselves agonising over whether they can afford to splurge on a new handbag or pair of shoes, users can simply message Cleo to ask if they can afford it.

As a result, the app makes itself a valuable digital companion for any shopping excursion as an innovative tool that mitigates the consequences of financial illiteracy. And with 48% of consumers admitting to using their mobiles when in-store to inform their purchasing decisions, seeking immediate financial insights and advice  when spending could grow as social shopping evolves.

This uptick in the use of mobile devices in stores also provides the opportunity for fintech apps to connect customer’s physical behaviours with their transactional activity, creating a contextualised profile of who each consumer is. Again, an essential tool for competitive physical retailers — hoping to win back their market share from digital counterparts — who must now provide excellent customer service whilst streamlining even the most granular in-store points of friction. But with 70% of consumers still claiming that POS is their most significant pain point when shopping in-store, retailers could use mobile fintech to enhance the entire checkout experience from beginning to end.

Beyond services for spreading the cost of purchases,  other fintech solutions that aren’t as contentious are already out there -they just need to be harnessed. For example, through solely mobile payments, software such as YoYo removes the need for customers to carry multiple loyalty cards and centralises rewards in a single app. Meanwhile, deceptively simple Flux replaces paper receipts by generating digitised ones and could prevent a national loss of £558 million from purchases unable to be returned because of damages or misplaced physical receipts. Additionally, the cashback app Tail helps users generate monetary rewards that they often miss out on when purchasing from physical-only retailers.

While the list of user-facing and retail-focused fintech mobile apps goes on, many of them exist to make customer journeys easier. CoGo moves away from enhancing the efficiency of shopping and instead attempts to challenge unsustainable customer behaviours. The app currently takes advantage of Open Banking regulations that allow consumers to share their personal banking data with third parties to receive insights. Ele Ward, CoGo’s Head of Marketing and Growth explains, “Open Banking has been able to bring our vision of voting with your spending to light. With user consent and secure regulation via consents.online and the Financial Conduct Authority, we analyse users’ bank transactions to identify which businesses they’re shopping with. Then we identify opportunities for users to shift their spending to businesses that better align with their values.”

As CoGo’s mission to confront individual shoppers with the immediate and direct footprint of their consumption evolves, the app’s impact on the mindsets of fashion shoppers in particular is just beginning. Ward tells me “The clothing rental platform HURR integrated CoGo for their users, which – as a fashion first – enabled them to see the carbon emission savings when renting instead of purchasing. In action, a saving of 147kg (367 miles in a car and two trees cut down) is seen each time a £150 dress (£26 rental price) is rented.” 

Similarly, overturning the current focus of swift and effortless purchasing experiences are a new crop of fintech apps and platforms that surprisingly lengthen the checkout experience. Acting as the catalysts for consumer accessibility to luxury products, sites like Cashmere use a ‘save now, buy later’ (SNBL) model to help consumers purchase investment fashion pieces by creating a savings pot where incremental direct debits are paid in over several months.

“What Cashmere has done is democratise access and give brands access to a demographic who were previously passive fans and convert them into active customers. Now we’re seeing them save and spend £1,000 – £2,000 per year via Cashmere alone, without feeling guilty, getting themselves into debt or reducing their living standards,” says Okonkwo.

Echoing this, in creating accessibility to diversely priced products, particularly for young consumers who increasingly desire a dose of long-term monetary value within their wardrobes, payment solutions could potentially bring about the first new ripple of democratisation since affordable fast fashion.

For both aspirational luxury and eco-conscious consumers, accessible and virtual digital fashion is an attractive solution to many of their frustrations with the industry. Moreover, against the backdrop of a volatile global landscape currently causing seismic disruptions to supply chains, digital fashion has also become a primary focus for many brands and retailers. But limited availability through mostly AR try-on, photoshopped images and gaming avatars means existing digital fashion is still in experimental phases and arguably only attainable to a small pool of customers in specific contexts. As a result, digital fashion may seem a long way from mainstream consumption that allows masses of shoppers to access luxury and sustainable products in the virtual environments they readily inhabit.

It would have been hard not to hear about Non-Fungible Tokens (NFTs) in the past few months, as they generated over $2.5 billion worth of sales in 2021 to date. NFTs can exist as a digital version of anything from a tweet or emoji to a pair of trainers or music video, but their actual value is in their one-of-a-kind existence that allows users to authenticate original ownership of an asset that can be so easily copied.

Yet Fashion Coin’s CEO Kazbek Bektursunov believes that “people still don’t understand NFT’s as the opportunity for them to use…People usually think that NFTs are some magic form of being lazy to get a lot of money….” So whether or not you believe the NFT bubble will soon burst, at the very core of this trend is a maturity to the financial technologies these artworks are supported on. And this sophistication means that designers and brands are beginning to put aside their scepticism of NFTs and instead consider it an exemplary use case to realistically explore how blockchain and cryptocurrency can practically enable provenance, security, and exclusivity to their digital product offerings.

Platform Fashion Coin uses the technologies to create micro-economies within their growing community of “65,000 users”. For them, the mission is about harnessing the enthusiasm of digitally native Gen Z consumers to completely reorganise the fashion system and remove misconceptions about what digital innovation actually looks like. Currently working towards delivering Blockchain Fashion Week at the end of the year, Bektursunov claims, “We want to bring back the energy of the economy to the fashion shows” as they hope to help emerging designers sell lookbooks as NFT tokens to crowdfund from early digital fashion champions. In allowing consumers to invest in digital fashion pieces, they can emotionally and financially buy into products with the added potential for future monetary gains.

As this blending of fintech and retail accelerates, fashion brands could begin to increase their product categories by offering banking services to upsell not just their products but an entire branded lifestyle to their audiences. Apple, Sainsbury‘s and Harrods are examples of consumer-goods focused retailers that have already delivered their own financial services, using their influence to enhance the domain of their customer relationships. And as the advancement of cryptocurrency continues, fashion retailers may look even further beyond digital products and traditional financial services to themselves become a central bank that mints its own currency to be tendered by their own communities. This could be transformative for customer experiences, with shoppers receiving hyper-personalised loyalty points, rewards, and insights as they transact within these brands ecosystems.

Similarly, fintech’s are setting their sights on expansion within the commerce sector, Klarna are heavily investing in deepening customer relationships by adding more touchpoints. “Over the past year, we’ve expanded our retailer support offering to help our retail partners engage with consumers in more dynamic ways. We launched a comparison shopping service and an AI-driven styling engine and content creation platform, acquired HERO, a social shopping platform that provides in-person customer service when shopping online and, most recently, acquired APPRL, a platform that allows retailers to connect directly to content creators to create social shopping content.”

But if payment plans, social shopping, and community currency sound familiar, it is because they are. Many of the models that we see today are reiterations of tried and tested financial services offered to shoppers decades prior. While it’s easy to assume that these strategies simply rebrand traditional payment methods for the young consumer who might not remember, it leads critics to question, are these solutions actually revolutionising the financial sector as initially hoped, or repackaging historical offers through easy-access apps and services?

At a glance, it may seem as if fintech solutions can be easily categorised as either enabling easy consumption or challenging negative behaviours, but in truth, the digital finance sector’s impact on fashion consumers is not as black and white as some critics would paint it to be.

Believe it to be genuine or not, fintech’s aware of the common misconceptions about their models are investing in making a positive impact on consumers as they increasingly rely on the power coupling of fashion and finance to help them prioritise financial wellness, empowerment, and literacy as they curate more aspirational, sustainable, virtual and mindful wardrobes. 

So whatever you may think of fintech, it’s hard to argue with the fact that the technology is helping to bring about a new wave of fashion democratisation and financial decentralisation for consumers and that in itself is admirable. Because in Bektursunov’s words,” the division between good and money should be more blurred.”