The financial industry is one of many that is affected by technological developments. COVID-19 was a real game-changer leading 60% of banks to the closure or shortened opening hours of branches.
Beyond that, the Digital Banking Maturity 2020 report reveals that after the pandemic, numerous leaders in the banking sector adapted new digital features, such as account opening (34%), remote identification & verification (23%), and contactless payments (18%).
Banking-as-a-Service is a tool that helps banks to win the digitalization race. This model accelerates the adoption of financial services, as well as the emergence of new digital retail banking channels. If the BaaS model intrigued you and you are down to know more about how it functions and boosts the tech ecosystem, keep reading.
What is Banking as a Service?
Banking-as-a-Service, also generally abbreviated as BaaS, follows the same model as Software-as-a-Service, Mobility-as-a-Service, or Blockchain-as-a-Service. It’s when you pay for banking applications and services as you use them instead of building them on your own.
Thanks to this, companies can operate under the license of the bank and offer various services that can be customized with their own brand. In short, you do not have to develop new applications or platforms from scratch anymore. Banking as a Service fully got you covered.
How does BaaS work?
Let’s imagine a retail brand wants to offer loans to its customers, create bank accounts or issue branded cards. How can the company do it without holding a banking license or having a team of developers to build a solution to meet this need? Moreover, the financial products also involve the technical and regulatory requirements that are very complex to manage and keep the record of. This is where different financial players come into play, including digital banks, fintechs, and others.
Digital banks serve companies as providers of the required elements (banking license, compliance, risk…
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