THE RISE OF BANKING-AS-A-SERVICE: The most innovative banks are taking advantage of disruption by inventing a new revenue stream - here's how incumbents can follow suit
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BaaS platforms enable fintechs and other third parties to connect with banks' systems via APIs to build banking offerings on top of the providers' regulated infrastructure. This means banks that launch BaaS platforms can actually benefit from fintechs entering the finance space, as it turns fintechs into customers rather than just competitors. Other benefits from launching a BaaS platform include being able to monetize such platforms, establishing strong relationships with fintechs, getting ahead of the curve in terms of open banking, and accumulating additional data from third parties.In The Rise of Banking-as-a-Service, Business Insider Intelligence looks at the benefits banks stand to gain by offering BaaS platforms, discusses key players in the industry that have already successfully launched BaaS platforms, and recommends strategies for FIs looking to move into BaaS.
Here are some key takeaways from the report:
- Offering BaaS also allows banks to unlock the opportunity presented by open banking, which is becoming a vital part of the financial services industry.
- There are two key types of players - BaaS-focused fintechs and BaaS providers with a retail banking arm - that banks will need to learn from and compete against in the BaaS space.
- Banks that have embraced digital will have an easier time ensuring that their infrastructure and systems are suitable for third parties.
- It's vital for incumbents to accurately assess third-party needs to create an in-demand portfolio of white-label BaaS products.
- Outlines what BaaS is and how it relates to open banking.
- Highlights the benefits of launching a BaaS platform, including two different monetization strategies.
- Explains what BaaS players are currently doing in the space, and outlines the services they offer.
- Discusses what incumbent players can do in order to launch their own successful BaaS platform.
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