BaaS( Banking As A Service)

Baas is a model that allows online banks and third parties to connect directly to banking systems through Application Programing Interface (API’s). It starts with a fintech, digital bank or third-party provider paying a fee to access the Bass platform.

Soon, nearly every company will be a financial services company and get a significant portion of their revenue from financial services. ?BaaS how it's going to fundamentally change banking for everyone.

Startups in the field will be able to launch their companies faster and cheaper.?Existing financial services institutions can launch new products quickly or spend less on IT maintenance.

Every single company, even those that have nothing to do with financial services today, will have the opportunity to launch Fintech for the first time. All those benefits will accrue to us as consumers in the form of more choice, better products, and more affordable prices.

The financial institution exposes its APIs to a third-party provider providing access to the systems and information. According to fintech experts, there are two Baas monetization strategies:

1)???Charging customers, a monthly fee to access the Bass platform

2)????Charging for each use service.

What are the advantages of BaaS?

?For clients –

1)Excellent services: Baas providers are trying to meet the needs of banking customers who are digital natives and tech savvy.

2) Innovative solutions: It is customer centric. ?BaaS offers all the necessary functions in one place.

For Banks -

1) Use of banking services like BaaS provides new lines and revenue streams. And 2) Banks understand the needs of their customers by analyzing the performance of a third-party Baas provider.

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Non-banking financial institutions, enterprises and fintech companies that provide Baas play a big role.

Bankers by default: Such enterprises become bankers even though they are in the banking business. They Prefer to act as a third party and earn money by acting as an intermediary between the financial institution and the customer.

Customer Recognition and Trust: By linking with well-known banking institutions BaaS providers build on the bank's reputation. They earn the trust of their customers in a short span of time.

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?????????????????????????????????????????????Disadvantages of BaaS

1)Threat to Customer Base:?Competition can shrink a bank’s customer base as banks face the constant danger of losing some of their market shares to better serving non-banking financial institutions.

2) No Direct Interaction: If the users want to interact with the financial institutions, they won't get it with BaaS accounts.

3) Security: ?The information is less secure as users use two companies for banking transactions. The information is exposed in two ways instead of one

How to choose banking as a service provider?

1)Reputation: Look for reviews and testimonials to form an objective opinion.

2) relevance of services: Take a close look at the services offered by a particular provider to ensure they meet your business requirements.

3)Ownership of services. Check if the proposed API's and solutions are provided by the company or owned by third parties.

4) Scalability: Does the potential partner have the tech stack, resources, and stamina to play the long game? Does it have compatibility and speed to market? It will tell you how fast and reliable the supplier can deliver the solution you need.????????????????????????????????????????????

????????????????????????????Personalization in services offered in Corporate

All of us get specific advertisements on our mail. Imagine a world where you can get specific products. There will be a high level of personalization and flexibility. Fintech experts call it human banking. BaaS will allow banks to act as enablers, allowing them to focus on the customer. Banks will have technology stacks that reduces it technical debt.

Another aspect of evolution in BaaS is the innovation into the corporate space. There's been a huge amount of innovation in the consumer space, which has driven digital banking.

That's where a lot of the activities are now shifting.

As the banks modernize their technology debt and accelerate innovation, they're also focusing on services to the corporates and the SME's.

There are endless opportunities. Banks find it difficult to prioritize the opportunities and understand where the value is in BaaS.

????????????????????????????????????????????Top BaaS Companies

1)Bancorp: It has $6.2 billion in assets and $232 billion in annual accumulative processing volume. It started as a branchless bank and now is a leader in digital financial services.

2)Fidor Bank: ?Found in 2009, Fidor has its own BASS platform. It runs on proprietary OS and is a cloud based modular system.

3)Treezor: It's a Paris based banking platform as a service, a one stop-payment solution.

??????????????????????????????????????????????????Conclusion

BaaS has been particularly instrumental in the growth of fintech companies and the development of innovative financial products, such as digital wallets, and peer-to-peer lending platforms.

BaaS enables non-banking companies, such as fintech startups, technology companies, and other financial service providers, to offer banking-related services without becoming licensed banks themselves. This approach can help accelerate innovation, improve customer experiences, and create new revenue streams.

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