CSP | CUSTOMER SERVICE PROFILES 3 Considerations For Banking as a Service BaaS
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28 September, 2022

Financial institutions have the unique opportunity to serve other B2C organizations as a partner for their embedded finance platforms. Explained most simply, embedded finance are bank-like services offered by non-banking institutions. Features like accounts, flexibility of payment and access to credit define embedded finance, but the process can be facilitated by a financial institution who serves as a steward of these features.

The competitive value offer of ecommerce brands and companies is flexibility and accessibility of financing and enhanced customer loyalty, and this empowers financial institutions to provide their banking as a service to these organizations. Consider the following when positioning your financial institution for this type of partnership:

Scale and Profitability

The biggest advantage of banking as a service for financial institutions is the scalability. Partnering with large ecommerce organizations offers the opportunity to provide the regulatory compliance and infrastructure necessary in exchange for a major broadening of your customer base. Ecommerce can open the door for new relationships and new opportunities to expand your footprint and quickly grow your revenue.

The Transition to API

If your organization hasn’t already transitioned to an API, the opportunity provided by banking as a service is a ripe one. On top of creating a more universally accessible platform open for collaboration, FinTech organizations will more easily be able to access your customer data. This accessibility creates an opportunity for manipulation, syndication and interpretation of customer data into valuable new tools and opportunities to deepen your customer relationships, whether through embedded finance or through your own proprietary services.

FinTechs Are Your Friend

Speaking of FinTechs, these organizations offer major opportunities for your bank or credit union in the form of innovation and collaboration. FinTechs are constantly springing up and evolving every year, offering new services, finding unique and valuable ways to enhance the customer experience and filling gaps in the marketplace, particularly between banks and retailers.

Importantly, banks and credit unions provide an invaluable piece of the puzzle to FinTechs and retailers in the form of security and compliance, features that new players don’t have the experience, history or legal know-how to navigate effectively. The ability of banks and credit unions to make this meaningful contribution to an industry full of innovation and change allows it them to maximize their value while outsourcing and partnering with other organizations to spread their footprint and enhance their technological capabilities.