How BaaS Is Helping Banks Compete in 2023
March 21, 2023
Download the latest Embedded Finance Tracker®, a Galileo and PYMNTS collaboration.
With demand for digital and embedded financial services fast on the rise, traditional banks can’t afford to ignore the changing expectations of their customer bases any longer, lest they risk becoming obsolete in favor of more modern, integrated financial experiences.
Faced with this existential imperative, financial institutions increasingly are turning to the Banking as a Service (BaaS) model, which offers a cost-effective way to serve existing users–and efficiently gain new customers–through contextual digital channels.
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BaaS benefits for banks.
A recent study conducted by Galileo in cooperation with American Banker revealed that:
78% of C-suite-level bank leaders were prioritizing adding BaaS capabilities
77% of institutions prioritizing BaaS cited remaining competitive as a key motivation for doing so
59% of BaaS-prioritizing banks already were at least in the testing phase of BaaS capabilities
The above statistics are of little surprise when considering the bevy of advantages BaaS offers banks, including:
New revenue streams from selling API-based access to core banking products and services to non-bank partners
Enhanced customer acquisition and retention by reaching the large and dedicated customer bases of third-party brands
Modernizing technological capabilities via building and delivering banking products using the tech systems of nonbank partners and third-party BaaS enablers
Continued relevance, by enabling banks to fundamentally reshape their value proposition and role within the financial services ecosystem
Finding the right BaaS partner.
Given the technological requirements involved, embarking on a BaaS journey may feel they have their work cut out for them, especially if they have little experience with digital banking. That’s where BaaS platform technology providers come in.
Specializing in integrating banks’ services with those of non-bank brands, these specialists bridge technological, implementation and compliance gaps, serving as a crucial link in the BaaS ecosystem.
Given the key role these BaaS enablers play, it’s imperative for banks to ensure they’re choosing the right partner through which to offer their services to non-bank brands–and the highly valuable customer bases those brands serve.
To learn more about how financial institutions can leverage Banking as a Service and find the right enablement partner, download the latest Embedded Finance Tracker®, a Galileo and PYMNTS collaboration.
Click here for our in-depth guide to how banks can benefit from BaaS.
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