Banking as a Service (BaaS) allows licensed financial institutions – either with physical presences or those that are entirely digital – the ability to implement different banking technology solutions online from trusted service providers through application programming interfaces (APIs) that can be quickly launched.
While traditional banks are limited to interacting with customers within physical spaces, a BaaS model allows for interactions to take place anywhere with internet access. As a sub-type of Software as a Service, SaaS, banking as a service platforms allow financial institutions to choose the software and services that work best for their bank’s systems and goals, without the need to create their own infrastructure. BaaS provides banks the ability to complete their digital transformation in a safe and secure way underneath their existing banking license.
Banking as a service includes a wide range of financial technology, services that can be utilized by banks and fintechs, that is generally already designed with the end user in mind. Some of these financial services include a digital banking service, open banking, and digital debit cards.
BaaS platforms also allow for financial institutions to securely integrate their services with other non-bank businesses such as airlines or social media platforms to incorporate new streams of revenue. This type of service platform benefits from having existing infrastructure and security measures that are in place from the service provider, rather than having to be created by the financial institution.
With BaaS, financial institutions can expect: