As FinTech business models continue to evolve, there are a number of new terms floating around to describe the different components that make it up. One of those terms is Banking as a Service (otherwise known as BaaS).
At Orenda, it’s our mission to make BaaS more accessible, which is why we’re partnered with a range of industry-leading providers who make it possible for businesses of all sizes and sectors to benefit from products that enhance customer journeys and create new revenue streams.
However, as the rate of evolution is picking up pace, it can be difficult to keep up with the meaning behind the language. Luckily, we’re here to help clear up some of the key information and help you to navigate what is a fast-developing landscape.
This article covers what Banking as a Service is, how it compares to embedded finance, and how you can benefit from implementing BaaS products into your own business’s offering.
So, what is Banking as a Service?
Banking as a Service is one of the latest digital transformations in FinTech. Plugging the gaps of incumbent institutions, BaaS is a pivotal solution enabling consumer-facing brands across a variety of sectors to partake in FinTech.
But what exactly is it?
BaaS are the products that allow traditionally non-financial entities to build financial services into their offering. As a result, brands can offer seamless end-to-end customer journeys that are convenient, increase channel engagement and ultimately enhance end-customer value.
Is Banking as a Service the same as embedded finance?
Embedded finance and Banking as a Service are two phrases that are often used interchangeably, but they’re not actually the same thing.
BaaS sits on the supply side of embedded finance. Meanwhile, embedded finance is fully integrated into a brand’s existing offering, and consumers will be less aware of the fact that they’re using services from a different financial supplier.
This means that BaaS is the platform and products that sit behind embedded finance and enables it. In practice, you can have BaaS on its own, but you can’t have embedded finance without BaaS. Essentially, the two work hand-in-hand to streamline and optimise user experience.
Orenda’s BaaS providers
Our growing number of best-in-class, fully regulated BaaS providers allow our clients to access a whole variety of products that you can embed into your own financial services.
Some of our providers include:
- EML Payment
Each of these providers offers different capabilities, from business and consumer accounts to payment networks and much more.
As consumer demands continue to grow, brands that are prioritising convenience and streamlined customer journeys now will be the ones to reap the benefits. This is due to the fact that digital channels are far more engaging than specific banking channels, and we all know that higher engagement creates more opportunities to sell more and retain customers in the process.
If you want to achieve this within your own brand, Banking as a Service needs to play a central role in improving your offering.