Banking-as-a-Service: the 5 reasons for an expected success in 2020

banking-as-a-service

banking-as-a-service

Banking-as-a-Service is a term you hear a lot about in the fintech ecosystem? You wonder why such a craze? Here are the 5 reasons that explain its future success:

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1. The rise of Native Cloud

While APIs have been around for a long time, the ability to commercialize them industrially is very recent. For decades, traditional banks have relied on mainframe systems, heavy, complex systems that are very costly in terms of application maintenance.

The Cloud and Containers have completely revolutionized the way companies design and publish applications that massively reduce costs while fully automating the software development cycle.

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2. Regulatory developments

Innovation and the development of business models are supported or even initiated by the regulator. The best example? The entry into force of the so-called “PSD2” directive on open banking, which paved the way for many innovations.

Banking-as-a-Service exists elsewhere in Europe and corresponds to a fundamental evolution of the banking market. France is in the starting blocks!

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3. An opportunity to enrich the offer in all sectors

Banking, financial or payment services are increasingly integrated into all types of services! An instant messenger, a social network, a loyalty card… In many cases, they constitute an added value in the creation of offers by companies, well beyond the banking/finance offers.

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4. An expectation of integrated services from clients

Seamless, end-to-end, customizable routes… end users of the services or applications are setting the bar high. The addition of banking and financial services in their experiences responds to a clear wish: the ease and speed of use of the services and/or applications used on a daily basis. The combination of platform-based services that reduce operating costs for economic actors offers another advantage to end-users: a more attractive price!

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5. The multiplication of Fintechs partnerships

Between Fintechs or with the banks, Fintechs are part of a partnership approach with other players in the sector. The objective?  Answer in point 4.

Through these partnerships, banks find an opportunity to renew their offers and customer paths, while fintech companies put their capacity for innovation at the service of these traditional players, opening the door to an even larger customer base.