For the global banking sector, one of the ways to gauge a bank’s success is the number of new branch locations it adds to its service roster. However, surging inflation rates have put physical expansion on hold for numerous financial institutions, driving others to consider expansion into the digital field. This has resulted in the creation of Banking as a Service (BaaS.)
For BaaS, licensed banks integrate their online banking services directly into services offered by non-banking establishments. In doing so, consumers are given more options through which to conduct transactions, essentially empowering them in the process.
BaaS solutions developers work directly with banks, companies, and even FinTech startups by replacing outdated technologies and service methods with API software that is more efficient and effective in terms of connecting institutions with their customer base.
Innovation is the Name of the Game
One key benefit that BaaS offers is that it offers a blank canvas for innovations that will drive up profitability, flexibility, and efficiency within the banking sector – something which stands to benefit both banks and their customers.
BaaS solutions likewise expand the scope of financial services as these enabled busnesses in other industries to meet their customers half way through payment and banking options that can improve engagement as well as institutional loyalty.
According to Amit Parikh, executive vice-president for banking platform services at FinTech company Green Dot, BaaS enables businesses and their customers to do financial transactions in a more contextual manner that is both convenient and offers improved visibility into an establishment’s cash flow.
Parikh added that both parties may currently be using too many applications or platforms for managing their money; in which case, a need for a better transactional experience may prompt their shift to BaaS.
Benefits for All
For his part, Treasury Prime CEO Chris Dean opines that offering improved access to banking services via BaaS solutions expands the reach of the financial sector, as business owners can create their own payment ecosystems to reduce payment friction and even create a new set of revenue streams.
Consumers, on the other hand, will be drawn in by the convenient way they can do banking transactions, as well as the possibility of earning rewards and discounts from their favorite establishments.
Dean added that BaaS could also be seen as a boon for entrepreneurs as these technologies will help them launch their businesses and even access capital.