Description
Banking as a Service (BaaS) is the delivery of banking products and services through third-party distributors. By integrating non-bank businesses with regulated financial infrastructure, BaaS offerings enable the creation of new, specialized products and faster time-to-market.
As customer dissatisfaction with existing offerings grows, BaaS solutions are rapidly gaining market share. Here are some key statistics about the state of the market:
- 30% of customers are considering switching banks
- 42% of customers have used a Buy Now, Pay Later (BNPL) service
- 2x ROAA (Return on Average Assets) for banks focused on BaaS offerings
New BaaS Configurations
Unlike traditional banks that owned the entire value chain, BaaS players typically focus on just one or two stages of the value chain. Today, successful BaaS players follow one of four configurations:
- Providers
Offer their banking license along with products, operations, and/or technology for use by aggregators, other banks, and non-financial companies (NFCs). - Provider-Aggregators
Act as providers but also combine their own capabilities with those of other providers to create a complete “ready-to-use” solution. - Distributors
Leverage their relationships with end customers to offer unique financial service propositions. - Distributor-Aggregators
Enhance the offerings they distribute by adding new products or technologies from multiple providers.
