From being a buzzword in the Fintech world, Baas has become the engine driver of innovation in customer experience across every industry. Several organizations has adopted Baas Solutions as a strategy to enhance their service delivery and value proposition. Beyond regulatory challenges in providing financial solutions, research proves that customers mostly use non-bank payment channels in their day-to-day transaction, thereby creating an array of opportunities for every service/product based industry.
What is Baas?
The concept of Baas (in full Banking As A Service) is a financial term that highlights the automation in providing financial services using technology. In some other words, BaaS involves providing banking products and services through third-party distributors such as mobile apps and online payment getways. It is simply integrating refined financial infrastructure into common business operations, hence enabling specialized propositions and enhancing faster payment solutions.
Opportunities Baas Provides Across Every Industry
- Improved Customer Experience:
According to a statistical report by Deloitte, 30% of customers are considering switching banks, while 42% of customers have used a Buy Now, Pay Later service. It provides a leverage for organizations to enhance end-customer relationships by offering unique financial services propositions.
Adopting financial services into your business expands your business model and provide an out-of-box solution that keeps you relevant to the consumers. Changes in taste and trends has made several customers weary of existing solutions and they’re looking out for exciting experiences even as they engage with their favorite brands. Innovaton is the new principle of customer engagement. Customers have the opportunity to obtain good quality financial services via channels and brands that they trust.
BaaS can enable banks to integrate their financial products directly into e-commerce platforms, allowing customers to access credit or installment plans at the point of payment. It also allow non-banks to offer a mobile wallet solution, which has become the payment method of choice for 21% of people in the UK in 2024.
By integrating BaaS, retail businesses and non-financial organizations can offer seamless payments, reducing the rate of cart abandonment in e-commerce or enhancing subscription models.
Hence, the user experience is simplified, and customers can thrive within their ecosystem.
2. Increased Competitiveness
With several payment gateways and numerous payment options, the market is highly accessible and there’s a growing competition amongst financial organizations.
Customers have more options now in accessing financial solutions and services than ever before. Hence, the business with the most optimized solution is definitely sure to win the game. However, adopting BaaS, building mobile banking apps or digital wallet systems can be quite expensive and difficult. Hence, they could partner with a third-party BaaS provider that offers this service and integrate the solution more quickly and affordably. BariumTech helps organizations stay ahead of the competition by providing optimized financial solutions.
3. Greater Market Reach:
Expanding market reach and customer base can be quite challenging and expensive in a competitive industry like banking, retail, or healthcare. However, by providing distinguished and seamless customer processes, businesses could appeal to a wider range of audience. To save cost, businesses can develop new partnerships with solutions oriented organizations to access new markets. For example, a bank could partner with a large online retailer to offer embedded financing options at the checkout.
According to a study by Allied Market Research, the global BaaS market is expected to grow to $11.34 billion by 2031, with a compound annual growth rate (CAGR) of 17.1% from 2022 to 2031. This growth highlights how companies across sectors, such as retail, tech, and e-commerce, can attract new customers by embedding financial services, thus tapping into a broader market.
4. Optimized Financial Management:
By adopting BaaS solutions, businesses can now have full control over their financial management without needing to become a licensed bank. Organizations can provide payments, lending, and digital wallets, as well as generate a comprehensive financial analytical statement. Incorporating financial tools in your day-to-day business operations, non-financial organizations can generate real-time financial insights, compute financial analysis, automate transactions, and reduce operational costs associated with handling financial services independently. Eventually, they can control their financial ecosystem, how they receive money, monitor transactions, and reduce expenses on external financial services.
5. Data and Analytics Opportunities
By adopting BaaS and offering financial services, businesses and non-financial companies can gain comprehensive and deep insights about their business operations. Finances provide insights on overall business performance which can guide decision making. Using these financial tools, businesses can gain perspective into their customers’ purchasing habits and financial behaviors. Using this information, businesses can cross sell through personalized marketing, as well as provide better customer service that encourages customer engagement and patronage. According to a survey by Plaid in 2022: 88% of businesses using embedded finance platforms (BaaS) reported that access to customer financial data provided valuable insights for improving business strategies.
6. Value-Added Services:
Finances are a huge part of organizations as well as individuals life. Hence, providing financial services that encourages your customers to exchange value over your platform gets you more incorporated into their lifestyle. Through tailored offers & reward systems, you can strengthen customer loyalty and support. Personalized financial services like savings accounts, loyalty rewards, or installment payment options help non-financial organizations retain customers by embedding themselves deeper into their financial lives.
Non-banking organizations and common businesses can provide financial solutions without needing to be a bank. So you can go ahead to generate revenue by incorporating smart financial solutions by offering branded credit cards, loans, or insurance services. This financial services can be packaged with other basic solutions the business already provides, thereby generating more value for the customer. They could also generate additional revenue through transaction fees, commissions, and interest rates as well as other profit avenues.
Conclusion
Increasing customer retention and business performance calls for strategic business decisions and actions. Hence chief executives across numerous industries ‒ including banking, retail, construction and healthcare need to begin to consider margin lines through which they can improve their business performance by adopting baas solutions.
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