BAAS: Banking as a service brings Industry disruption

Prashant Bansal *

Individual Researcher, Edison, NJ, USA.
 
Review
International Journal of Science and Research Archive, 2024, 13(01), 1258–1263.
Article DOI: 10.30574/ijsra.2024.13.1.1708
Publication history: 
Received on 03 August 2024; revised on 11 September 2024; accepted on 13 September 2024
 
Abstract: 
Banking as a Service (BaaS) has emerged as a transformative force in the financial sector, challenging traditional banking models and offering innovative solutions. BaaS enables non-financial institutions to integrate banking services into their own products and platforms, leveraging the technology and infrastructure of licensed banks. This disruption has far-reaching implications for both established financial institutions and fintech startups.
For traditional banks, BaaS presents an opportunity to expand their reach and generate new revenue streams by partnering with non-financial businesses. By offering their banking services through BaaS platforms, banks can tap into new customer segments and diversify their income sources. However, this also poses challenges, as banks must adapt to the changing competitive landscape and ensure their technology infrastructure can support BaaS offerings.
For fintech startups, BaaS provides a cost-effective and efficient way to enter the financial market. By leveraging BaaS solutions, these startups can focus on developing innovative products and services without the need for significant upfront investments in banking infrastructure. This has led to a surge in fintech innovation, with startups offering a wide range of financial products and services, from payments and lending to wealth management. The disruption caused by BaaS is also driving a shift towards open banking, which promotes the sharing of customer data and financial information between banks and third-party providers. This increased transparency and competition is benefiting consumers by providing them with more choice and flexibility in their financial products and services.
 
Keywords: 
BAAS; Open Banking; Embedded Finance; Digital Banking; API; Customer experience
 
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