There are many options when it comes to Banking as a Service (BaaS). How do you choose the right one for your company? This article will provide some suggestions and considerations for selecting the right BaaS platform provider.
What’s Banking As A Service?
BaaS has many benefits, but not for everyone. You must understand what BaaS is before making the move.
BaaS refers to the provision of complete banking services such as accounts or debit cards through a licensed financial institution’s secure and regulated infrastructure that is supported by API-driven platforms.
The first generation of nonbanks had to launch financial services. It was a daunting task. They had to build their technology stack starting at the bottom to support their customers. These challenges are not enough. Brands will also have to obtain a banking license and adhere to reserve bank regulations. Non-banks cannot offer financial products because of these requirements.
BaaS is a new era! This new model allows banks, fintech, and brands to embed financial services and create memorable customer experiences. The new model allows financial institutions to “share out” their banking license to brands, providing a bank stack of financial products that can all be integrated. BaaS represents a significant shift in the consumer experience.
Customers Win, Win For Brands
This is a huge opportunity. Digital brands can embed financial products to create customer experiences that are more enjoyable than ever. Customers can now have new and innovative experiences through these new business models.
What to consider when selecting a baas provider
1. Find Out How Value Will Be Created
You need to think about the problems BaaS can solve for your company to get the best value. What kind of products and services are you looking to offer? What will this do for your business and your bottom line? Banking as a service can streamline operations, increase customer engagement and create new revenue streams. Before you begin looking for providers, it is important to understand how your company can maximize the benefits of BaaS.
2. Learn What Services Are Required
After you have identified the value you want, you should consider what features you need from a BaaS platform. What functions does it need to perform? BaaS providers may not offer the same services. You need to be clear about what services you require and what the provider can offer. These considerations will help you evaluate the different banking as a service provider to find those that offer these features.
3. Control Regulatory Risk And Ensure Compliance
Most governments require that you have a banking or electronic money license to provide financial services. It is difficult and costly to obtain financial licenses. The most difficult part of the process, both for obtaining these licenses and afterward, is ensuring compliance with a complex and extensive regulatory framework. This applies regardless of where you live. It is important that the BaaS provider you choose has a strong compliance program and is current with all regulations.
Many providers allow you to create your financial service and then use their bank or EMI license. Some providers are built on top of other licensed entities. This can lead to unexpected risks and increased costs.
4. Find A Provider Who Is Committed To The Future
BaaS is still in its infancy so it’s essential to choose a provider open to investing in and developing new technologies. BaaS providers that are constantly innovating and developing new products and features are the best choice. It is a provider that is committed to the long-term success of its partners. Ask for the roadmap to see if it aligns with your vision.
5. Evaluate Pricing
When choosing a BaaS provider, pricing is also important. You shouldn’t only look at the price. You and the provider must be able to identify the value that you are getting for your money. What are the features included? Are there hidden fees? Before you make a decision, ensure that you fully understand the cost.
6. Refer To References
Don’t forget about checking references. Ask other companies who have used the platform to share their thoughts about how they found it to be easy to use, customer support, and any cons. These reviews can help you make a decision.
