Increasing Consumer Demand Drives Banking as a Service

TechCapTechCap, Banking as a Service (BaaS)

Written by J S

June 02, 2022

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TechCapTechCap, Banking as a Service (BaaS)

Demand for connected, fast, convenient and personalised banking is rising steadily among both businesses and consumers. As such, meeting changing user expectations is driving a growing interest in Banking as a Service (BaaS), where banks open up their Application Program Interfaces (APIs) to allow third parties to create their own financial products.

Banking as a Service: Significant Benefits

Essential for consumer retention, engagement and meeting changing expectations Banking as a Service offers digital onboarding, smoother payment solutions and the opportunity for more interconnected financial experiences. These are significant benefits and experiences that are steadily rising in popularity since the global pandemic, where consumers developed digital-savvy habits.

Meeting Demand

In order to meet demand, small and medium-sized enterprises, in particular, are now building financial services into their products by partnering with innovative payment processors. This technology is transforming retail banking, reshaping customer relationships and paving the way for FinTechs—one of the fastest-growing areas for venture capitalists.

According to a report by Future Market Insights (FMI) the outlook for BaaS remains impressive. FMI forecasts sales to surpass US$ 12.2 Bn by the end of 2031.

The Key Findings of The FMI Banking as a Service Report Also Include:

  • BaaS will account for the leading market share and continue to retain its dominance through 2031.
  • FinTechs are expected to be the leading end-users of BaaS platforms—accounting for a share of nearly 26%.
  • The UK market will register the highest sales across Europe—accounting for nearly 29% of the market share
  • SME organisations will register growth at 16.6% CAGR.
  • Large organisations will account for half of all global BaaS market sales.

Encompassing a core banking solution, digital technologies have radically altered the landscape of banking in the last few years. Seizing BaaS to help nonfinancial companies to offer next-gen solutions has become a top priority for financial institutions and the financial services industry.

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