Banking As A Service platforms provide several services beyond integrated e-wallet or automated card payment. It simply involves digitalizing and distributing financial services that is mostly sought after. As technology advances, the more people are likely to seek speedy, more accessible and wholesome financial services. The average individual has several banking needs, hence through BaaS, these needs can be met.
BaaS is the way through which banking services and infrastructure are incorporated into financial institutions, fintech companies, and other non-bank organizations thereby enhancing their operational processes and procedures. BaaS platforms offer a cost-effective way for businesses of all shapes and sizes to offer various banking services without needing to become a bank themselves. Through BaaS, every organization can provide access to a broad scale of financial services. In this article, we will discuss the list of services and products provided by BaaS platform
Services Provided by BaaS Companies
- Account opening and management:
Customers, clients, and users can open a personal account on the business site that allows them access to financial services. Businesses could adopt this model into their operations for several purposes. By allowing customers to create personal accounts, businesses empower them to personalize their trading experience, it increases their sense of community, commitment, and connectivity to the brand.
Allowing customers to create their own account on the site is a means of empowering them to belong.
Incorporating BaaS platforms into their business, Fintech companies, e-commerce platforms, and other non-bank organizations can provide the infrastructure for account opening and management. Thereby making it possible for them to experience a seamless onboarding process, open virtual accounts in real time, instantly activate their accounts and enjoy real-time account management.
- Payment processing
Every For-profit business model definitely includes payment receipt or a payout point. Hence, businesses need to be quite intentional about how they request and receive payment from their target market. Also, considering the natural psychology which motivates people to hold rather than spend money, payment systems ought to be as simplified, seamless and straightforward as possible.
By incorporating BaaS platforms in the business model, fintech companies and other organizations can provide payment processing services, which enables them to accept and process payments with zero hassles. This relieves the organization of extra cost and time that could have been exhausted in trying to accept, process and record a series of transactions.
The Baas platform can handle the acceptance, processing and recording of transactions, including authorization, settlement, and reconciliation. Thereby providing businesses with a cost-effective way to process payments, eliminating the need to invest in expensive payment infrastructure.
- Loan and credit services
As consumer economic power drops, the greater the need for businesses to provide credit Services to their customers to enable them access their products/services as soon as they need it. In 2021, 23% of all small business loan applicants chose an online lender, compared to 20% in 2020. This shows the growing trend in the need for banking solutions.
Using BaaS platforms, businesses can provide financial products such as loan and credit services to their customers. The platform automatically provides the infrastructure for loan origination, processes the application process, underwriting, and servicing the loan. Businesses could collaborate with credit bureaus to assess credit scoring factors in using BaaS platforms. By effectively accessing the credit scoring system, this can help businesses make better credit decisions. One great example of BaaS assisted credit facility is the “Buy Now, Pay Later” product by Carbon Zero. Through this product, they’ve been able to empower their customers, increase their revenue and expand their market reach to over 3 million active users. This innovation allows customers to purchase an item and postpone payment to a speculated time upon credit scoring approval. Although this is a common practice in European countries, the innovation is just growing its roots in Nigeria. Fairmoney and other innovative credit-led companies closing the gap in accessibility to credit have hit several incredible milestones. Since its establishment in 2017, it has disbursed more than ₦70 billion. Truly, credit facilities are of great necessity in the ecommerce space today.
- Compliance and regulatory support
Compliance and regulatory support can be a concerning topic in sales, especially in developing countries. Hence, keeping tabs of these regulations and compliance laws can be quite overwhelming for several organizations. Hence, BaaS providers in partnering with organizations of all types to expand their offerings, must provide Know Your Customer (KYC) and Anti-Money Laundering (AML) services. Thereby helping their clients comply with banking regulations, necessary compliance requirements, and preventing financial crimes.
In this regard, BaaS platforms should be constantly updated to address the ever evolving regulations and guidelines surrounding the financial market. They must ensure to exercise great vigilance and cautiousness.
For Financial institutions who need to stay informed, adopting BaaS can help to interpret and implement a wide array of evolving regulations accurately. This includes staying informed about amendments and new regulatory requirements. Failure to do so can result in severe consequences, including hefty fines and reputational damage.
However, a key challenge for many organizations is the place of balancing customer privacy with compliance requirements. Whereby through BaaS, we must gather sensitive customer data for KYC and AML checks while also ensuring robust data security measures to protect individual privacy.
- Financial Reporting
Financial reporting is an essential part of financial management that every organization needs to optimize. BaaS doesn’t just enhance payment channels or provide credit systems, it also offers financial reporting services which enables businesses to access financial reporting tools. Compiling accumulated financial data over a period of time, BaaS platforms analyze this information to generate comprehensive reports. Usually, these platforms can also integrate with accounting software, allowing users to download a copy for official purposes. At the end, this empowers businesses with a complete financial management solution.
In conclusion, BaaS platforms provide a wide range of services and products to fintech companies, e-commerce platforms, and other non-bank organizations. Want to expand your service offerings by adopting BaaS? Let’s help you build the smartest solution.
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