Banking as a Service (BaaS): What, Why & How?
Banking as a Service (BaaS) refers to a model where non-banking companies can offer financial services and products through their own platform, without the need to build their own banking infrastructure. In BaaS, the non-banking companies partner with a banking provider to access the latter’s core banking systems, payment infrastructure, and other financial services.
BaaS allows non-banking companies to provide financial services to their customers, such as account opening, payments, money transfers, and lending, among others. The banking partner handles the regulatory requirements and underlying technology, while the non-banking company focuses on creating a user-friendly experience for its customers.
BaaS has grown in popularity in recent years, especially among fintech companies, as it offers a more flexible and cost-effective way to enter the financial services market. The BaaS model also benefits banks, as it expands their customer base and provides additional revenue streams.
BaaS providers typically offer their services through APIs, which allows non-banking companies to integrate financial services into their existing platforms. This results in a seamless and integrated experience for the end-users.
In summary, BaaS is a model that enables non-banking companies to offer financial services to their customers through a partnership with a banking provider. The BaaS model benefits both parties, as it allows non-banking companies to quickly enter the financial services market and provides banks with additional revenue streams and a wider customer base.
