Banking-as-a-service (BaaS) is an end-to-end process where third parties – FinTech, non-FinTech, developers, etc. – can access and execute financial services capabilities without having to develop them organically. In this 40+ pages report, we explore various aspects of BaaS in detail - it’s history, operational models, drivers, and current global traction
Traditional or challenger banks that are direct to consumers but also offer their products and services as APIs to third-party players such as FinTechs who use it to build innovative service propositions.
Companies with or without a banking license can offer APIs on a white-labeled platform to enable FinTech players to offer specific banking services (such as issuing debit cards) or fulfill compliance requirements (such as identity & verification). In the absence of a license, these companies partner with licensed banks for compliance, ledger maintenance, and other backend rails.
FinTech players or neobanks deploy their platform as a facade for traditional banks – as a co-branded proposition. In this case, the BaaS platform, along with the customer experience and cutting edge capabilities it carries, effectively becomes a distribution and onboarding channel for the traditional bank.
Thanks to digital-first experiences and the need for pervasive availability of banking services in our daily lives, traditional models of purchasing and consuming banking services are being challenged. It is critical for banks to shift to a collaborative way of doing business with players in the ecosystem.
The road to BaaS for banks and FinTech firms is a challenging one with transformational thought process required in many aspects. Addressing them is critical to the success of implementing BaaS.
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