Banking as a Service is a system that allows non-bank businesses to embed financial services into their products. For example, companies that are not licensed banks may offer loans or payment services to customers by integrating digital banking into their systems. To make this possible, banks can either create their own platforms or work with third-party providers offering BaaS solutions.
Forward-looking businesses across all industries see enormous potential in embedding financial services in their products. Relationships with customers increasingly include financial interactions, which can increase Total Market and deepen existing customer ties. Adding financial products is not without hurdles, and businesses realize that they need a strong financial industry partner to help them succeed in this emerging banking as a service (BaaS) ecosystem.
The following are three key characteristics, businesses could benefit from having in a BaaS provider and partnership.
Companies with a global customer base need a BaaS provider that can support global embedded finance solutions. But even large financial companies with cross-border branch networks may lack consistency in the services they offer in different locales. These banks often have evolved financial products independent of one another in different geographies, which presents a challenge for a BaaS partner trying to work with its provider to create a globally consistent customer journey.
2.The necessary technology
Technology will bring the full promise of embedded finance solutions to life, such as a rich set of vital APIs to expose core financial capabilities in a modular and flexible way. What’s more, consumers and corporates now expect real-time functionality that is always available and easy to integrate with. The BaaS provider’s system must be built to deliver this—in much the same way that electric utility service is expected to never go offline. Along with resilience and availability, security is important too. And finally, the BaaS provider’s technology needs to be flexible, as every company and digital platform has a unique set of customers with varied needs and challenges.
3.Built-in regulatory, risk and legal expertise
Embedded finance introduces a certain distance between the end user of a financial product and the BaaS Provider. This means the BaaS provider must have appropriate legal and compliance frameworks to manage risk without introducing friction into the end-user transactions. The relationship between the BaaS provider and the BaaS Partner introduces many legal and compliance obligations that must be jointly met. These range from know-your-customer (KYC) rules and anti-money-laundering (AML) and anti-fraud regulations, to more subtle requirements. Implementing effective controls at multiple client touchpoints is hard, but doing so in a way that doesn’t complicate the BaaS offering or the integration is even harder.
We believe that BaaS will bring together digital technology platforms and finance to change the shape of economies and most sectors for years to come. iPeakoin's BaaS solution enables enterprises to remove the need for manual data entry and reconcile business expenses easier, quickly, and accurately. This new integration offers modern solutions for organizations to manage their expenses in a quick, seamless and straightforward way.
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As a neobank, iPeakoin builds a new generation of banking for all businesses to operate without borders and restrictions. We aim to create social value, serve the public good and drive sustainable growth for our customers.