Confusion, cost, and compliance
The bifurcation of BaaS and embedded banking
What's the confusion between BaaS and embedded banking? How it affects fintech players, how poor BaaS providers have impacted their businesses, and whether this has motivated them to upgrade their BaaS and embedded banking offerings or providers.
Key insights
Loose terminology leading to confusion
The term banking-as-a-service (BaaS) is a popular yet loosely defined term, with some firms taking advantage of this ambiguity, and stretching the term to encompass services such as open banking, card platforms and APIs. This has led to some confusion among fintechs when finding the best partner to meet their needs.
Fintechs are looking to change BaaS providers
31% of fintechs surveyed have changed BaaS provider, 23% are planning to, and only 8% have had no issues and will not change. This highlights how crucial it is for BaaS partners to perform well and the need for players to adapt continuously.
Future expectations of BaaS: Embedded banking
Embedded banking is a key step toward personalised and relevant experiences, as it integrates financial services directly into the platform’s business use. Fintech companies that offer Banking as a Service (BaaS) enable this integration. The focus is on meeting customers at their point of need rather than adding new services into existing bank channels.
BaaS remains domestic
The most common BaaS capabilities are domestic single-currency accounts, payments, card processing, domestic clearing, international transfer, and FX conversion services. This suggests that today, it's primarily used to fulfil the immediate demands in a home market, with the addition of international transfer and FX service needs when required.
Main reasons to seek a banking partner
Revenue growth and speed to market are primary drivers
The difference between BaaS and embedded banking
Read more about how ClearBank could be the banking partner you're looking for
About Aite-Novarica Group
Aite -Novarica Group is an advisory firm providing mission-critical insights on technology, regulations, strategy, and operations to hundreds of banks, insurers, payments providers, and investment firms – as well as the technology and service providers that support them.
Comprising former senior technology, strategy, and operations executives as well as experienced researchers and consultants, our experts provide actionable advice to our client base, leveraging deep insights developed via our extensive network of clients and other industry contacts.
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