How banking-as-a-service (BaaS) works and industry outlook

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Banking-as-a-Service (BaaS): How it works and why the industry is growing

To obtain a free preview of our Banking Briefing,Across industries, digital transformation is democratizing data to enable greater transparency. New technologies are opening up legacy systems to emerging startups and third parties and, in some cases, putting data directly in the hands of consumers.open banking

, in which banks provide more financial transparency options for account holders by opening their application programming interfaces for third parties to develop new services. Fintechs have been encroaching on incumbent institutions in the banking game — but by moving into the BaaS space, tech-savvy legacy banks can turn this looming threat into an opportunity.

Techy-savvy legacy banks can fend off the encroaching threat of fintechs by moving into the BaaS space to share their data and infrastructure. In a matter of years, access to this level of information will become table stakes for digitally native customers — so banks that begin now will be ahead of the curve, and likely rewarded with high demand.The BaaS process begins with a fintech or other third-party provider paying a fee to access the BaaS platform.

 

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So... like what services similar to Amazon Web Services did for in-house server hardware, but for money.

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