24/06/2024 9:32 AM


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What non-financial businesses should know about banking-as-a-service

For years, the cost and complexity of building financial services have restricted everyone but banking institutions from the space. Any non-financial brand that wished to offer its own lending or banking solution would be forced to offer a third-party product.

What every non-financial business should know about Banking-as-a-Service

As the embedded banking sector hurtles towards becoming a massive global industry, with some predicting a total global value of $7 billion in the next decade, offering a selection of embedded financial solutions is fast becoming the norm for businesses of all descriptions – writes Ion Fratiloiu, head of commercial at Yobota.

For a business that wishes to keep up with customer expectations, Banking-as-a-Service (BaaS) is emerging as the best solution to this issue. But what should non-financial companies know before picking a BaaS partner?

Better with BaaS

The underlying technology of financial products is complex, as are the regulatory and compliance requirements that govern them.

Every business should remain focused on its core offering, and for non-financial businesses, this means leaving the balance sheet and technical considerations to their Baas partner – and with the right Banking-as-a-Service partner, offering their own personalised, responsive products is no hardship.

Any first-party financial solution must be prepared to integrate with legacy technology and scale automatically with the business. The key here is APIs, which allow the chosen product to integrate seamlessly into the existing architecture, and with modern, white-labelled BaaS solutions, the branding and appearance are consistent throughout the customer journey.

Why BaaS matters 

Embedded finance solutions are not just a handy accessory – they are fast becoming par for the course in the eyes of consumers. 90% of financial services experts agreed that client expectations are higher today than they were a year ago, and businesses – financial or otherwise – need to take notice.

Today’s consumer expects that their personal information and banking details will be stored and recalled by their chosen brands during transactions. What’s more, encountering friction on their purchasing journey can adversely affect their opinion of that brand, making seamless and effective solutions a must-have.

By integrating embedded payments into their app, Starbucks were able to start saving customers’ preferred payment methods automatically, making future transactions quicker and reducing friction at the point of sale. While embedded payment solutions like these seemed novel when they were first introduced, today consumers are beginning to take these practices as standard retail practice.

Offering proprietary financial solutions can improve customers’ experience and improve their individual relationships with the brand. What’s more, some products can generate additional revenues, and lending products like buy now, pay later (BNPL) can open the doors to larger consumer bases.

Those keen to stay ahead of the competition, meanwhile, will reap the rewards of detailed customer data. Through embedded banking services, a business can generate a better picture of what new and existing users want to see from the brand and adapt their business model in line with ever-evolving expectations.

Staying one step ahead

Banking-as-a-Service is not just a fad – it is the foundation of a paradigm shift in consumer expectations. While not every business deals with finance directly, every business deals in some way with users, clients and customers, and embedded solutions are key to keeping them happy.

Being a non-financial business is no excuse to fall behind the times, and BaaS providers are the partners that can ensure that no-one is left behind in the embedded finance revolution.


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