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Banking as a Service - beyond brick-and-mortar into the future

by Bruno Macedo | 8 November, 2018

2018 Is without doubt a year to remember as PSD2 brought the opportunity for banks and fintechs to explore synergies as never before. The open access to banking customers' financial data and the evolution of cloud services has enabled the development of completely new consumer-oriented products and services. This presents an amazing opportunity for banks and third parties like fintechs to work together. Taking advantage of application programming interfaces (APIs) to innovate, digitize and disrupt the market, they can enhance the customer experience, easily scale the product and service catalogue and lower costs (which is much more than banks and fintechs could do on their own).

This new, global API-driven world has created a shared, massively-automated, regulated, data‑intensive paradigm that is sure to create difficult strategic questions for retail banks worldwide. Banks now face the reality that their legacy mainframe technologies hamper their ability to quickly introduce and scale up new initiatives, and that they need to downsize their traditional brick-and-mortar branches. Issues like regulatory compliance, customer preferences, new technologies, new market incumbents, cyber security, big data, artificial intelligence services, and change costs become crucial for today’s banks in their challenge to keep up with market changes and to protect their future.

The BaaS strategy solution

Banking as a Service (BaaS) gives banks a distinctive advantage by offering an end-to-end process that allows full execution of a bank’s financial services over the Web. By adopting a BaaS solution, banks can orchestrate processes and customer journeys in such a way that they are able to completely transform the customer experience. End-to-end BaaS platforms offer the best combination of open banking and digitization with exceptionally low costs when compared with other digital solutions.

BaaS empowers banks of all sizes to securely and rapidly enhance their digital offerings by leveraging pre-built banking APIs and other 3rd party applications and services. It allows banks to generate new revenue opportunities by ensuring faster deliveries of tailored and innovative products and services, engaging clients wherever they are in their financial lifecycle.

BaaS is not enough, Banks need end-to-end BaaS

Banks should not adopt a standard BaaS solution but should strive to adapt an end-to-end BaaS solution that provides a full 360-degree view all the way from consumer to product. Only with a deeper insight into consumers at every stage of the financial lifecycle in an efficient process will banks be able to anticipate market needs and be able to respond faster and more accurately. Embracing an end-to-end BaaS strategy quite simply gives customers fewer reasons to shop around because they feel closer to their bank’s products and services, and banks will reap the benefit of greater process efficiencies and cost savings.

It’s clear that end-to-end BaaS is the next step in banking strategy, and it will play a crucial role in the banking industry. BaaS represents a huge opportunity for banks to accelerate their digitization and provide the personalization flexibility that consumers are quietly demanding, without having to engage in heavy and costly solutions.

Bruno Macedo

Topics: Digital Banking Technology and Trends

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