BaaS and Embedded Finance Opportunities for Banks
- Team WhiteSight
- 4 mins read
- Embedded Finance, Partnerships
Table of Contents
Unleashing the Power of BaaS and EmFi: Global Trends Report
In today’s rapidly evolving financial landscape, Banking-as-a-Service (BaaS) and Embedded Finance (EmFi) have emerged as critical growth areas for both Incumbent Banks and Digital-First Banks. As financial services become increasingly integrated into non-financial platforms, the opportunities for banks to scale their offerings and engage with new customer segments have never been more significant.
To dive deep into these emerging trends, WhiteSight has partnered with Brankas to release a comprehensive BaaS Global Trends Report, exploring how the convergence of API Banking, Open Banking, BaaS and Embedded Finance is shaping the future of banking. The report highlights the ongoing transformation within the financial sector and offers case studies from around the world, demonstrating how banks and fintechs are leveraging BaaS to stay competitive and innovative.
This blog provides a sneak peek into the key insights from the report, supported by two infographics that offer a visual breakdown of the latest developments in the BaaS ecosystem.
BaaS Playbook: Incumbent Banks vs. Digital-First Banks
As BaaS continues to evolve, it is evident that both Incumbent Banks and Digital-First Banks are navigating this space with distinct strategies and investments. The infographic below highlights the approaches taken by these two categories of banks in their journey toward BaaS dominance.
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Incumbent Banks: In-House Initiatives, Acquisitions, and Partnerships
For Incumbent Banks, the focus has largely been on building in-house BaaS capabilities or acquiring fintech firms that can help them integrate BaaS services quickly and efficiently. Some notable trends include:
- In-House Initiatives: Incumbents like SEB, Arkea Banking Service, and Goldman Sachs TxB are building out their BaaS offerings in-house, ensuring control over their ecosystems.
- Acquisitions: Major banks such as UniCredit and Société Générale have made strategic acquisitions of Aion Bank and Treezor, respectively, to strengthen their BaaS capabilities.
- Partnerships: Partnerships remain a key growth strategy, with banks like Fifth Third Bank, IndusInd Bank, and Netbank collaborating with BaaS enablers like Stripe, M2P, and Brankas to drive innovation and access new markets.
Digital-First Banks: Monetizing Technology and Strategic Investments
On the other hand, Digital-first Banks like Starling Bank and WeBank have taken a slightly different approach, focusing on technology monetization and strategic acquisitions:
- Technology Monetization: Starling Bank is setting the standard with its Engine by Starling platform, while WeBank is pioneering the use of Collaborative Business Operating Systems (CBOS).
- Acquisitions: Digital players are not lagging behind in acquisitions either. SoFi, for instance, acquired Galileo and Technisys, showcasing their ambition to lead in the BaaS space through aggressive investment in technology platforms.
BaaS Partnerships: Personalized Embedded Finance Propositions
The below infographic provides insight into how BaaS partnerships are enabling banks to collaborate with non-financial platforms to deliver personalized financial products. As the demand for Embedded Finance grows, these collaborations are crucial in delivering seamless financial experiences to consumers.
Established Partnerships: Leading the Way in Innovation
- Synchrony has partnered with PayPal, while Maya Bank is collaborating with Grab, showing how financial and non-financial players are working together to offer personalized solutions at scale.
- Stride Bank’s partnership with Uber is a testament to how banks are embedding financial products into the rideshare economy, offering drivers personalized financial tools.
Emerging Partnerships: The Next Wave of BaaS Players
- Solarisbank and Tomorrow are working together to launch Sustainable banking products, while Cross River has teamed up with Upgrade to expand its reach in the US credit space.
- Greendot’s partnerships with REPAY and Apple are pushing the boundaries of digital wallets and payment solutions, integrating these services into consumers’ everyday financial lives.
Large Banks Driving BaaS Adoption
- J.P. Morgan’s collaborations with Macy’s and SalonCentric reflect how large, established banks are entering the Embedded Finance space, offering white-labeled financial products that allow non-banks to integrate banking services into their customer journeys.
- HSBC and Amazon, as well as Goldman Sachs and Apple, represent leading examples of how traditional banks are embracing Embedded Finance and BaaS to engage with customers through new and engaging platforms.
Embracing BaaS for a Future-Ready Financial Ecosystem
The future of banking is here, and Banking-as-a-Service is leading the charge. As highlighted by the Whitesight BaaS Report in collaboration with Brankas, both incumbent and digital banks are recognizing the transformative potential of BaaS and EmFi. By embracing these models, they are not only future-proofing their businesses but also creating new opportunities to reach untapped markets.
Banking-as-a-Service (BaaS) – Rearchitecting Financial Services Landscape
Discover the technological advancements, market demand shifts, and regulatory environments fueling the rapid adoption of BaaS globally. Explore how the convergence of API Banking, Open Banking, and BaaS models is paving the path for new business models in the financial industry, enabling both incumbent and digital-first banks to create more agile, personalized, and scalable financial services.
Report
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