PaymentsJournal
No Result
View All Result
SIGN UP
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
PaymentsJournal
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
No Result
View All Result
PaymentsJournal
No Result
View All Result

Banking as a Service (BaaS): The Bank behind the Bank

By Sue Brown
March 20, 2020
in Analysts Coverage, Digital Banking, Emerging Payments
0
2
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn
BaaS

This is a well written article on how banks have transformed and the challenges associated with each of yesteryears technologies. Banks, especially small banks, are well positioned to grow in the BaaS space to not only become the charter behind neobanks and challenger banks, but to use them as a growth vehicle in an extremely competitive environment.

This is one of the ways smaller community banks will be able to survive against the large banks with large budgets.

In the digital age, parents are often taught by their children. While Baby Boomers are digital immigrants, Millennials/Gen Z/Gen Alpha are all digital natives. Each generation uses the same technology but their relationship with it differs markedly. Boomers grew up seeing technology; Millennials and forward grew up knowing technology. In a similar vein, can established banks learn anything from the digital upstarts? In this blog we consider the benefits of a hosted applications infrastructure.

Building a bank from scratch is never easy and there’s a great deal to consider. Getting the technology right is essential to support profitable growth, and to comply with a growing array of complex regulations. Yet there’s been a record rise in the number of start-ups. In fact, Bloomberg predicts that the global digital banking market will exceed USD $9 billion by 2027*. How is this possible?

Most of the recent start-ups are digital-only banks. On the face of it, they have some distinct advantages. Being unencumbered with costly branch networks, legacy technology stacks and outmoded thinking, digital-only banks offer a fresh approach to banking with a total focus on the customer experience. Just as importantly, they often benefit from superior operating efficiency and can compete with incumbents on price. Customers clearly value good digital service from their banks – in the UK, 23% of bank customers have already fully switched to a digital-only bank.**

Taking a closer look reveals that many digital banks are also doing things very differently. Often, they don’t run their own core technology, but rather rely on partners or third parties – sometimes even other banks. Ironically, this age of increased competition is also one of greater collaboration. How did this happen? A look backward gives us a better view of the future…

The boom in UK of digital only challenger banks not only had to do with new technology, but the fact that the UK has a few hundred banks, whereas the United States has thousands, meaning there was a pent up need for new services that the challenger bank filled.

Overview by Sue Brown, Director, Prepaid Advisory service at Mercator Advisory Group

2
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Get the Latest News and Insights Delivered Daily

    Subscribe to the PaymentsJournal Newsletter for exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    recurring payments, PCI Compliance for small business, Fintech for Underserved Small Businesses

    Tariffs May Create an Opportunity in Small-Business Cards

    May 15, 2025
    Using the Card “Beyond” Payments to find the Holy Grail

    Using the Card “Beyond” Payments to find the Holy Grail

    May 14, 2025
    Payments Modernization

    Playing Offense and Defense: Why Now Is the Time for Payments Modernization

    May 13, 2025
    Authorization Rates

    Boosting Revenue for Merchants by Optimizing Authorization Rates

    May 12, 2025
    Why Payment Orchestration is the key to international merchant growth

    Ensuring Payment Decisions Pay for Themselves

    May 9, 2025
    cross-border

    As Businesses Reevaluate Cross-Border Relationships, Financial Institutions Can Help

    May 8, 2025
    Nacha WEB Debit Account Validation Rule Verification Solution, Quovo ACH Payment

    The Brave New Future of the Disappearing Account

    May 7, 2025
    solana financial

    After an Upgrade, Solana is Primed to Be the Blockchain of Choice for Financial Institutions

    May 6, 2025

    Linkedin-in X-twitter
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter

    ©2024 PaymentsJournal.com |  Terms of Use | Privacy Policy

    • Commercial Payments
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    No Result
    View All Result