The Afterpay Ltd (ASX: APT) share price continues to climb today, up 4.44% to $104.96 at the time of writing. This is despite differing views on the buy now, pay later (BNPL) leader from two major banks over the past week, and comes after a 3.9% rise across last week.
Why the disagreement over Afterpay?
Westpac Banking Corp (ASX: WBC) CEO Peter King has defended the decision to provide Afterpay with access to the Westpac's deposit and transaction accounts. Some analysts had disagreed with the move, believing the bank would lose its relationship with younger customers. But Mr King told shareholders at the Westpac AGM recently:
When we look at banking and how it is provided, we think it is fundamentally changing. Other banks are seeking to provide infrastructure to fintechs and this is a market Westpac wants to be in.
Westpac's banking as a service platform will allow Afterpay to provide branded saving and transaction accounts. It will then be able to link these to customers' existing Afterpay accounts. This provides Afterpay's customers with an alternative to traditional banking, and gives Afterpay a scalable platform to expand globally. When this was announced the Afterpay share price spiked 7%.
Currently, National Australia Bank Ltd (ASX: NAB) is leading the banks in terms of warehouse finance arrangements, or debt funding for fintech companies.
However, Australia and New Zealand Banking GrpLtd (ASX: ANZ) has a different view. In an interview with Ticky Fullerton of Sky News, outgoing chairman David Gonski declared his skepticism of the BNPL business. ANZ CEO Mr Shayne Elliot went further, saying that Afterpay's 3.5 million customers were generally not high savers motivated to buy their own homes, and therefore were not a good fit with the bank.
Forces driving the Afterpay share price
Despite these differing viewpoints, Afterpay continues to display strong growth metrics in every quarterly update. The recent first quarter FY21 update saw sales grow by 9% than the record underlying sales of Q4FY20. Moreover, the company's active users has increased to 11.2 million, with the US reaching over 6.5 million.
Furthermore, 45% of like for like sales growth is driven by millennials. Gen X and Gen Z then form 25% and 24% respectively. Lastly, the company's number of active merchants has increased to 63.8 k. An increase of 70% year on year.
Foolish takeaway
The Afterpay share price has continued to grow despite the entrance of payments giants like Paypal Holdings Inc (NASDAQ: PYPL), or the views of senior financial players. The company continues to sign strategic alliances like the one with Westpac, while continuing to report solid results quarter on quarter.
