Banking as a service is often used in the financial world these days. The rise in popularity is due to the open banking system picking pace. According to recent predictions, the industry is expected to reach a valuation of USD 43.15 billion in 2026. With this service being a giant in the future, one needs to know the basics of banking as a service platform.
What is Baas or Banking as a Service?
It allows non-banking organizations to offer popular finance services using APIs to integrate the banks in the most basic terms. Here, non-banking organizations are fintech businesses or other enterprises offering banking products different from conventional banking.
Parties involved in Baas
The following three types of organizations play an integral role in Baas.
- The bank
- The platform offering Baas
- The non-fintech businesses willing to offer Baas products
Examples of banking as a service platform
To understand the concept better, one can take this instance.
Any online ticket purchasing platform owner would want to boost sales, retain as many customers as possible, and acquire many new ones. So, they can offer the following services:
- Personalized cards for limited purchases,
- Loyalty points,
- Loans for upcoming movies,
- EMIs on new shows and more
These offerings are bound to enable the owner to achieve their business goals. However, they need a PPI or pre-paid instrument license and NBFC license to offer the loan services.
So, banking as a service platform seems to be the future of banking. The unique features will ensure that people in need receive the banking services they can benefit from.