The Future of Banking is Collaborative
BaaS may be a recent buzzword, but the concept is anything but new. Partnerships between banks and retailers, airline brands and dealerships have existed for over a decade. The difference is that they were harder and more expensive to deploy. Thanks to modern technology and specifically APIs, that has all changed and given way to embedded finance. Blanc Labs helps financial institutions and fintechs with strategy, roadmaps and implementation, resulting in successful BaaS partnerships.
BaaS Strategy and Engagement
Our framework helps you define your role in the evolving financial ecosystem, helps you identify opportunities in the BaaS value chain, and execute new solutions using APIs.
Tech Foundation Check
Our approach to BaaS begins with auditing current core systems, applications and integration endpoints to understand how a Banking as a Service approach could be enabled with your current tech stack.
BaaS Model Identification
Our strategy engagement deals with fundamental questions around desirability, feasibility and viability scoring of a BaaS offering. We work collaboratively with cross-functional stakeholders to identify which configuration (provider-only, provider-aggregator, distributor-only, distributor-aggregator) best suits your organization’s and market needs while considering the competitive landscape.
Platform and Partner Selection
Based on your organization’s goals and selected configuration, we help you identify the right partners based on strategic goals and priorities, and risk assessment.
Building the Business Case
Building the Business Case
New revenue streams
This is the most immediate benefit of Banking as a Service. Enable new products and services on a one-time basis or through subscription model.
Better customer acquisition and retention
Third-party providers represent a large number of dedicated customers. These customers are a potential audience whom you can reach and acquire at a significantly lower cost. BaaS is also helpful in retaining existing customers by delivering new products and platforms that they may already be familiar with.
Banking as a whole, continues to be held back by legacy infrastructure and inflexible core systems. Banking as a Service is a way out. Through API-led integrations, banks can introduce leaner and flexible platforms developed by non-banking and third-party providers.
Banking as a Service Insights
What is Banking as a Service (BaaS)?
Banking as a Service (BaaS) is a relatively new concept in the financial industry that allows non-bank entities to provide financial services through the use of APIs offered by traditional banks. BaaS enables businesses to integrate banking and financial services into their own platforms, products, or applications without the need to build these services from scratch or become a licensed bank themselves.
How does Banking as a Service (BaaS) work for platforms?
BaaS works for platforms by allowing them to integrate banking and financial services seamlessly into their existing offerings. BaaS applications include customer onboarding, Know-Your-Customer (KYC) and anti-money laundering (AML) checks; payments and transfers; balance inquiries and account information, among others. BaaS providers, being licensed financial institutions, handle the regulatory aspects of offering banking services. They ensure that the transactions and services offered through the platform follow financial regulations and industry standards. This relieves the platform from the burden of dealing with complex regulatory requirements. By relying on BaaS for banking services, platforms can focus on their core competencies and unique offerings. They don’t need to divert resources to develop and maintain complex banking infrastructures, leaving that responsibility to the BaaS provider.
Are BaaS and Embedded Finance the same?
Banking as a Service (BaaS) and Embedded Finance are related concepts but they are not the same. BaaS is a model that allows non-bank entities, such as fintech companies, e-commerce platforms, or other businesses, to access and utilize banking-related services through APIs provided by traditional banks. BaaS acts as a bridge between traditional banking institutions and non-bank businesses, enabling these businesses to offer financial services to their customers without becoming licensed banks themselves.
On the other hand, Embedded Finance refers to the integration of financial services like payments, lending, insurance, savings, etc., directly into non-financial platforms or applications. In this model, companies that are not traditional financial institutions, such as e-commerce platforms, ride-hailing apps, or social media platforms, incorporate financial products and services as part of their core offering. Embedded finance allows non-financial platforms to meet their customers’ financial needs without redirecting them to external financial institutions.