Finastra: Banking-as-a-Service gains unstoppable momentum

The research canvassed the opinions of 1,600 senior industry executives, exploring the opportunities presented by Banking-as-a-Service (BaaS) – to provide retail or wholesale banking products and services to customers in context, as a service, using an existing licensed institution’s secure, regulated infrastructure with modern API-driven platforms. 

The Finastra research reveals the true extent of the appetite for BaaS, with almost 85% of respondents already implementing or planning to implement BaaS over the next 12-18 months. Key findings include: 

• More than 80% of regulated financial services providers expect the overall BaaS market to grow. Of these, 30% expect it to grow by more than 50% per year over the next five years. 
• BaaS represents a USD 7 trillion opportunity - distributors, including retailers, ecommerce firms, and other consumer brands, are migrating towards BaaS solutions and expect overall growth to exceed 70% per year over the next three years; 60-70% of distributors want to increase their spending on financial partnerships (including BaaS).
• SME lending, corporate lending and corporate treasury/FX services are poised to gain the highest traction. Simplifying SME lending through BaaS is expected to drive growth of 30% by 2024.
• The majority of enablers, including bigtechs and fintechs, expect the overall BaaS market to grow by more than 50% over the next five years. Some 40-50% of enablers want to increase their partnerships with distributors and financial services providers by more than 50% in the next five years.

Finastra’s research shows that financial services providers need four key capabilities to work with distributors and enablers and to monetise BaaS. From a technology perspective, these include: 

From a product perspective, providers need dynamic and compelling offerings to entice customers.  

Learn more about the BaaS opportunities available for distributors, enablers and providers – and the growth potential of different market segments – in the full market assessment report here.