Why position yourself as a BaaS platform

Offering financial products and services has ceased to be exclusive to traditional banks. As fintechs emerged and grew, helping to democratize access to digital accounts, credit cards, and loans, institutions from various segments began positioning themselves as providers of these products and services.

Strengthening Embedded Finance

Players acting as a Banking-as-a-Service (BaaS) platform have been essential in this market transformation because they allow companies from different sectors to "plug in" to their systems through APIs. Thus, it results in offering quick and easy access to financial products and services to increasingly specific target audiences.

As proven by the market, we are in an era in which most companies have already incorporated or are preparing to join some type of financial product or service, regardless of their core business.

And this is already present in our daily lives, as we see airlines, major retail brands, and the beverage industry offering their own digital accounts for free. Embedded Finance is an essential concept to optimize the value chain, generate revenue on the transactions that naturally happen in these ecosystems, and, most importantly, evolve the customer journey.

Gartner has stated in its latest Hype Cycle for Digital Banking Transformation that BaaS strategies will become even more popular in the following years - by the end of 2024, around one third of all banks with more than US$ 1 billion in assets will have adopted a BaaS platform positioning.

Advantages of the platform strategy

When an institution offers its BaaS services to the market, in addition to incorporating an extremely relevant and profitable product into its portfolio, it starts to position itself as a platform, enabling the creation of ecosystems by opening its APIs to other institutions and considerably increasing its capillarity. In addition to generating revenue from the sale of this product, institutions can benefit from rebate fees from wire transfers, bill payments and credit card transactions, for example.

It is a desirable offer to its target audience, providing its customers with significant competitive advantages:

- Financial services and products offered without the need to create a fintech from scratch
- White label model
- Investment savings in back-office and implementation
- Quick business model validation
- Accelerated time-to-market

There are cases in which fintechs start operating less than a month after the contract with their BaaS provider is signed. Even if your institution still needs a comprehensive portfolio, you can add more products and services to your platform through partnerships, complementing your offer and enriching the customer journey.

Synergy with Open Finance

This is the opportune time for positioning as a BaaS platform due to the emergence of Open Finance. This concept has been increasingly integrating both traditional and new entrants around interoperability, agility, and the sharing of data and services. Companies from all industries want to benefit from this extensive network that’s created, enabling new business opportunities. The quickest way is through BaaS.

To become a BaaS platform is to take a leading role in the market and participate directly in democratizing access to financial services and products for the entire population. With the right APIs and the best strategies, this task can be easier than you think. You can rely on Sensedia to take this big step! To know more, contact us!