Banking as a Service or BaaS is an advanced banking model. See how it works, its benefits, and its challenges. Read now. - by Jelvix baas guidetobaas
Almost every week, it seems, another part of our world is analyzed in an as-a-service package. This growing trend should not surprise anyone. As hardware, software, bandwidth, and protocols evolve, more processes and resources can be outsourced. This subsequent development is driving digitalization that is transforming industries around the world.
In this article, we want to overview banking as a service to shed light on its benefits, uses, and challenges.BaaS is a model that allows online banks and third parties to connect directly to banking systems through APIs, building banking offerings on top of a regulated vendor infrastructure, and unlocking new experiences.
Besides advancing open banking, traditional institutions that launch their own BaaS platforms are also opening up new revenue streams. The two main BaaS monetization strategies include charging customers a monthly fee to access the BaaS platform or charging for each used service.As the image below demonstrates, BaaS can have multiple service tiers, and customers can choose numerous of them for the business. It depends on the needs of the company.You need to distinguish between these three terms.
Besides, there is a difference between BaaS and a banking platform. The leading players in banking platforms are not third parties but the banks themselves. They use the power of financial technology to provide access to the services offered by the bank. For example, a bank could create an AI-powered tool to help users select the best investment opportunity and quickly complete their day-to-day banking transactions.
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