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Banking as a Service - The Future of Finance

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Synergic Softek Solutions
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A drastic change, we have seen in digital marketing caused by the blood curdling pandemic. Online businesses see huge growth due to too much customer engagement in the digital world. Banking sectors now adopt online engagement with Banking as a Service which is one epic collaboration of online banking and fintech businesses.


Many digital marketers said that by 2026, businesses with benefits of banking as a service will see effective growth which helps to reach up to USD 43.15 billion. Recently many Indian GenZ users already have online bank accounts. According to researchers, in the next five years, more than 397 million users will adopt online banking. This is prominent proof of how customers want to spin around online services.


Seeing the growth of customers' needs, fintech and non-banking companies have started to provide banking services by collaborating with traditional banks. As more banking sectors go for this type of partnership, they will see their growth in the digital world. These collaborations have worked through banking as a service model.


What is Banking as a Service?


Banking as a Service allows non-banking companies or fintech businesses to offer core banking services to their clients by collaborating with solely traditional banks. Non-banking companies and fintech businesses interact with traditional banks through APIs.


For example, if you have a retail store, you can offer your customers debit cards to buy anything they want with this debit card from your store. So, as a benefit they get, customers don't have to use the cards of their sole banks. They don't need to carry any cash if they use this debit card. This will help you to build a strong relationship with customers and it will give you more prominent insight into what your customers need.


The more they use your card the more you gain customer engagement with your business. With BaaS, businesses are able to offer many online banking services such as loans, debit cards, online payment options, insurance options and more to their customers by making partnerships with traditional banks. BaaS allows fintech businesses or non-banking companies to offer banking services on the internet without having any banking license. This BaaS model permits making a partnership between non-banking businesses and banking sectors aimed at profits. Many digital marketers are called BaaS “white label banking”.


Top Benefits of Banking as a Service as The Future of Finance


Many popular companies like Apple, Google, and Facebook have already started the online banking process. So, in the digital world, there is already a competitive vibe for other financial institutions that still haven’t started offering banking services online.


But the BaaS model gives them a chance to restructure their process to be part of an online financial scenario for maintaining their online visibility on the internet. With this new strategic move, the banking sectors have got an opportunity to look for more revenue and growth and gain more customer engagement. Here are the top benefits of banking as a service, are mentioned below:


  • Increasing customer engagement
  • Enhancing revenue
  • Reducing cost


1. Increasing customer engagement


For banks, it became quite difficult to attract new customers due to the advancement of digital marketing. BaaS strategy allows banks to collaborate with fintech businesses or non-banking businesses offering online banking services. It helps them to meet a large number of customers who are interested in that process. Because users always look for short and easy processes where they don’t have to do any physical work. BaaS is the best way to involve them with online banking methods.


2. Enhancing revenue


BaaS allows banks to provide online banking services by partnering with fintech businesses through APIs which allows banks to share banking data with third-party entities. This process becomes the new method of gaining more revenue. As a matter of fact, 43% of banks want to charge a fee for API transactions.


The Tech and Fintech industries lead in innovation and speed. Conversely, banks enjoy the trust of their customers and have huge funding capacities at their disposal. Together, both institutions are able to discover new ways of generating revenue.


3. Reducing cost


Besides generating revenue for banks, BaaS can also help them reduce costs. Technology development is not a priority for banks. As a result, they have access to ready-made solutions, enabling them to benefit from partnerships with third parties. It can actually be used to help banks forecast their profitability and make further investments. Consequently, 77% of banks intend to invest in initiatives focused on open banking for commercial clients.


Conclusion:


BaaS creates a revolution in online banking, it is proven that this is the future of finance. For fintech businesses who haven’t adopted it, it is high time to collaborate with banks. BaaS offers 360 degrees services to increase better customer engagement. We hope this article on the top benefits of banking as a service helps you to understand it better. We believe that BaaS can be a profitable solution for banks to become involved in the digital world and gain more revenue and customer engagement.


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