Benefits of Banking-as-a-Service for Enterprise and MSMEs

Convenience is critical in today’s fast-paced world. Customers may find it taxing to manage their finances over different services when transacting with a brand, impacting their customer journey albeit rather unpleasantly. Fortunately, rising consumer expectations encourage the digitization of most banking processes to make customer transactions seamless.

For instance, technologies such as Banking as a Service (BaaS) make financial data exchange between services easier, even among non-banking enterprises. Meanwhile, open banking lets companies access critical financial data from multiple sources to improve their services.

The banking landscape is rapidly developing, emphasizing how efficient and convenient financial services are more crucial than ever. Data suggests that by 2028, BaaS' global market size will reach $51.2 billion, with a growth of 15.6%, setting a precedent for what everyone can expect in the banking sector.

Let’s delve deeper into what BaaS is and how it can improve the services of non-bank organizations.

What is Banking-as-a-Service (BaaS)?

Banking as a Service is a system in which non-bank businesses partner with banks and offer financial products and services to their customers. This system is possible with the bank’s application programming interfaces (APIs), a way for computer programs to communicate.

As this technology dominates the fintech landscape, it’s best to collaborate with banks and financial institutions to stay competitive. Fortunately, there are plenty of Banking-as-a-Service providers to choose from.

A top option is Brankas' Open Finance Suite, which can unlock BaaS for your organization with world-class open banking technology. This service provides an all-in-one platform for remittance, payment, loan origination, and other similar capabilities that let you build and host financial APIs to onboard partners and merchants into your ecosystem.

BaaS vs. Open Banking

Given their similarities, there’s bound to be confusion between BaaS and open banking. However, it’s crucial to differentiate the two to understand how they work.

• BaaS
  Non-bank businesses use APIs to integrate banking services into their products, much like how you can opt to finance transactions with credit cards on e-commerce sites.
• Open banking
  Non-bank businesses use APIs to collect financial data for their products and services. A typical example is how car dealers connect with banks to examine a customer’s credit score.

5 Benefits of Banking as a Service for Enterprises and MSMEs

As more businesses shift online, taking advantage of the opportunity to provide convenient banking services is becoming essential for brand loyalty. Here are some benefits BaaS delivers to expand your operations.

1. Potential to increase revenue
   
   Navigating an increasingly competitive market requires diverse income sources. However, given the digital expansion of critical industries, some revenue streams might become insufficient. Utilizing digital services like BaaS can open doors to higher income by providing customers with various financial services.
   
   For instance, e-commerce platforms may issue debit cards to their customers, charging recurring fees and facilitating revenue-sharing agreements with the bank for additional profits.
2. Access to consumers' financial data
   
   In the digital sphere, data is good as cash, offering critical insights into your customers' behaviors that can help adjust the company’s operations to maximize success.
   
   BaaS lets you gather information about your clients' spending habits from partner financial institutions. Knowing how and when customers receive, spend, and save money can help you leverage their habits through promotions and marketing campaigns.
3. Opportunity to diversify the client base
   
   While providing services to a particular group of customers is beneficial, tapping into other market sectors can open up more significant opportunities for growth. BaaS lets you focus on creating a more accessible front end built around the existing data it provides. In turn, customers from various sectors who require your services may become prospects, diversifying your client base.
4. Greater scalability
   
   As your business expands, so does the demand for a service that can keep up. Fortunately, BaaS makes growth easier as an adaptable service without the overhead needed for traditional banking platforms. It prepares your operations to proliferate into new markets cost-effectively.
   
   Given the platform’s API-driven capabilities, the entire system is modular. You may develop strategies based on the company’s needs, such as your preferred partner bank.
5. Maintain digital competitiveness
   
   With access to customer spending habits, you can implement campaigns that boost your brand visibility and customer loyalty, giving you an edge over competitors.
   
   Moreover, creating a scalable system where customers can purchase your products or services directly on your website prevents you from interrupting their customer journey. Making transactions effortless for customers can entice them to choose your brand over others, which is vital in the highly competitive digital landscape.

Simplify Your Customers' Finances

BaaS benefits lead to one central idea—grow your business by improving customer experience. Integrating financial services directly on your website makes transactions seamless. In turn, you can increase revenues and remain competitive while significantly enhancing the customers' experience with your brand.

Are you interested in leveraging BaaS for your enterprise? Our Open Finance Suite offers world-class open banking technology that makes BaaS integration seamless for enterprises and MSMEs. Contact us to learn more.