Described as an “opportunity”, banking as a service (BaaS) is just one aspect of the transformation of the global banking sector. The aim of banking as a service is to seamlessly integrate as many different service providers as needed into one comprehensive process so that financial service can be completed in an effective and timely manner. Established financial institutions and challenger banks are using application programming interfaces or APIs to deliver banking services, digitally.
But what does this mean?
For consumers, banking as a service makes it straightforward to accomplish a task – be it getting paid, buying a house or redeeming a voucher. For banks, providing third parties with access to existing customers’ bank data and to banking functionality will allow them to offer far better experiences to their customers and enable banks to create completely new and innovative consumer-oriented products and services.
Below is a brief outline of banking as a service and how it is changing the game for the banking industry:
- BaaS enables the full execution of a bank’s financial services via the Internet.
- BaaS platforms provide a combination of open banking and digitisation, with exceptionally low costs.
- Bringing existing legacy systems and 3rd party applications and services together, banks of all sizes can securely enhance and escalate their digital offerings. This makes it easier create new revenue opportunities.
- BaaS also helps banks to deliver tailored products and services to their customers faster than they could in the past.
- BaaS provides an opportunity for traditional banks and fintechs to work together.
- Banks looking to move their technology stack to the cloud no longer have to build infrastructure themselves. They can simply, use third party providers to host much of or the entire banking infrastructure.
According to CIO, “the impact of BaaS will only grow, as banks continue to focus on consumer needs, expectations and technology-enabled capabilities” and as they innovate in an attempt to keep up with their competition. Need help surviving the digital age? We’re always here to give you advice. Simply complete the form below and we’ll get back to you.