Advantages Of Banking As A Service Which Everyone Should Know

Most experts claim Banking as a Service (BaaS) to be a win-win situation for businesses, banks and customers. This model enables companies to provide a range of financial services and products to their customers without having to pledge or secure their own banking licenses. E-money providers and licensed banks move forward with BaaS to offer digital banking services to non-banking businesses. Click here to know more about the structure of Banking as a Service. First, let us discover all the facts about its advantages to all the associated parties.

Benefits of BaaS Model To Banks

Licensed banks and banking service providers benefit largely from the BaaS model. Depending upon how well they integrate the system with their customers (the businesses they associate with), banks can reap the following benefits.

1.   Increase In Revenue Generating Sources

With BaaS, banks can use APIs to share data securely with reliable third-party financial institutions. Banks enjoy customer trust and funding capabilities at a large scale whereas tech companies take the lead on fast connectivity and innovation. Both these parties can work together with Banking as a Service to generate high revenues.

2.   Acts As An Initiative To Save Costs

BaaS does not require banks to invest in any form of technological development. They can reap benefits from reliable partnerships by accessing the well-developed solutions offered by the tech firms.

3.   Progress In Customer Insights

Every third-party collaboration yields an increase in the number of customers. With this reach, banks get insights into their spending habits and preferences. Banks can utilise this information and come up with personalised offers and gifts.

Benefits of BaaS Model To Fintech Members

Banking as a Service is also beneficial to Fintech members. As long as these third parties have the required resources to utilise this model, they can reap the following benefits.

1.   Access To More Customers

The trust banks enjoy in the market is not easily penetrable by new firms and businesses. With a successful integration with leading banks, firms can leverage this enormous trust to expand their customer base. This simple procedure is way more convenient and cost-effective than one may perceive.

2.   Rise In The Pace of Startup Launch

Acquiring a valid bank license is neither an overnight task nor a cost-saving option. It requires enormous capital requirements which are not possible for all firms to access. Fintech members and businesses can efficiently bypass this licence regulation and utilise banking capabilities using the BaaS model. This way, the rise in startups is quite natural and economical.

Benefits of BaaS Model To The End-Customers

The end-customers, who utilise the products of this collaborative Banking as a Service model, also reap benefits.

1.   Innovative Financial Services & Products

BaaS increases the level of competition in the market which invokes firms to take possible initiatives to improve the quality of their financial products and services. This healthy competition leads to an improvement in the market output available to customers. Therefore, customers reap the passive impact of BaaS integration.

2.   Reap Superior Experience

Leading tech giants have habituated today’s customers with high-quality services and advanced technologies. This rise has led to an increase in customer expectations too. The BaaS model keeps this competition alive and active to allow customers to enjoy the superior experience they expect from the service providers.

Banking as a Service is a developing model with a wide range of features and benefits for all the parties associated with it. Businesses just have to identify the most trustworthy service provider who can help them multiply these advantages and set new standards of financial services. With a progressive model like BaaS, online businesses can reach new heights of success!