Digital transformation democratizes data across sectors, allowing greater transparency and improved consumer experiences. New technologies allow growing businesses and third parties access to old systems and, in some cases, place data firmly in customers’ hands.
Banking-as-a-Service platforms are a fundamental component of open banking in financial services. Companies give additional financial transparency alternatives for account holders by providing their application software (APIs) for third parties to build new services.
Fintechs & digital banks have already been intruding on incumbent financial institutions and undermining established business models. Still, tech-savvy legacy banks may convert this impending danger into an opportunity by entering the BaaS industry.
What is banking as a service?
banking as a service platform are an end-to-end paradigm that lets digital banks & other third parties interface with banks’ systems directly via APIs, allowing them to develop banking solutions on top of the providers’ regulated infrastructure and altering the global financial environment.
By entering into the BaaS industry to share its data and infrastructure, tech-savvy older enterprises can stave off the fintech threat. Access to this kind of data will become standard for digitally native consumers in a few years, so banks that start now are ahead of the game and likely compensated with solid demand.
Industry forecast for banking-as-a-service
Several nations have already begun to implement open banking legislation, signaling that the financial services sector is headed toward a period in which sharing data and infrastructure has become the norm.