Apr 26, 2022

Which Factors to Consider Before Using Banking as a Service for Your Fintech?

Home » Which Factors to Consider Before Using Banking as a Service for Your Fintech?

Consumers expect their payments to go through quickly and without problems in an increasingly cashless world. They can conveniently make payments directly from their bank account over their mobile devices. The speed and efficiency of these payments put the power back in the hands of the consumer. If they do not like the way how their payments are processed, they can easily switch providers.

Fintech institutions, such as Electronic Money Institutions (EMI), Payment Institutions (PI), and Payment Service Providers (PSPs), must address the needs of their customers with seamless solutions. Thankfully, Banking-as-a-Service (BaaS) technology enables fintech institutions to address the need for convenience while enhancing customer payment experiences.


Meeting New Consumer Expectations

It is vital for banks and other traditional financial institutions to partner with leading financial technology providers. These partnerships will help them meet the needs of evolving business and consumer payment expectations. Conventional financial institutions are also working with fintech companies to develop B2C and B2B payment solutions. They recognize how fintech companies successfully offer fast, real-time payments, electronic money, digital wallets, and ACH transactions.

Businesses need to issue payments in a simple, efficient, and cost-effective way to run their business better. Fast, innovative payment solutions that involve real-time processing will meet customer expectations of immediacy and convenience. When organizations adopt these payment solutions, they can expect to experience better growth opportunities and higher customer retention rates.


Solid and Reliable Infrastructure

BaaS platforms allow financial institutions to have a way to connect with Application Programming Interfaces (APIs) to build financial services applications. In addition, some fintech companies offer their own white-labeled BaaS platforms that provide core banking services. Yet, these fintech companies must have the right BaaS platform that matches the business needs of their clients.

There are several things financial institutions must look for in a BaaS platform. Some of these include:

  • Deep Integration – Legacy applications combined with modern BaaS platforms enhance connectivity to gain easy access to data.
  • Open APIs – Fintech institutions can use open API systems to connect with BaaS platforms to develop core banking applications to enhance customer experiences.
  • Configurability – A modern BaaS platform must be able to integrate with legacy applications to provide customers with a multichannel experience.
  • Account Flexibility – The BaaS platform must be capable of handling multiple banking and business accounts, funds, and expense cards from a single account.

The competition among fintech institutions is substantial. Therefore, each fintech institution must have the right BaaS platform to compete in the marketplace and provide customers with a better experience.


Evaluating BaaS Platforms

Advancements in technology, fintech creativity, and changes in customer behaviour are revolutionizing how EMIs, PIs, and PSPs operate. Financial institutions are welcoming the benefits and new opportunities that BaaS platforms provide for businesses and consumers. Yet, choosing the wrong BaaS partner can have a detrimental effect on a financial institution’s profitability and customer retention. Here are a few items that financial institutions should consider when finding a BaaS partner and platform:

  • Is the API easy to use? – An open API should make developing and customizing financial applications on a BaaS platform easy.
  • Does it have a secure infrastructure? – The BaaS platform should help a financial institution avoid regulatory and legal challenges. It should also routinely pass regulatory examinations.
  • Does it provide a high-quality service with no downtime? – Once integrated, the BaaS platform becomes a vital fraction of an institution’s financial activities. Any hiccup on the service may have critical consequences. Therefore, the service quality should meet any request with uninterrupted access at all times.
  • Does it provide optimized digital payment solutions? – A BaaS platform with an open API should provide a business with optimal digital payment solutions.
  • Can a BaaS platform adapt to customer needs? – The BaaS platform should have digital workflows with multiple capabilities for bank accounts, sub-general ledger systems.
  • Does the BaaS platform offer layered services? – A BaaS platform partner could provide additional services such as fraud management, onboarding, and regulatory compliance.
  • Does the BaaS platform offer multiple systems on a single platform? – The partner should be able to provide a single BaaS platform capable of handling multiple financial operations.


Banking Operation Capabilities

When EMIs, PIs, and PSPs find the right BaaS platform partner, they can focus on their primary business while gaining access to their core banking capabilities. These core banking capabilities include:

  • Real-Time Payments – Fintech institutions that partner with a BaaS platform that provides global RTP can take advantage of what customers seek. RTP must include ACH transactions, cross-border digital payments, and instant payments.
  • Account Flexibility – Fintech institutions should partner with a BaaS platform provider who can manage multiple financial accounts and cards from a single platform.
  • Push and Pull Payments – The BaaS platform should allow customers to determine how to make ACH payments for recurring bills and where to withdraw the funds.


How Can EMBank Help?

Fintech companies must continue to innovate and be relevant as customers take advantage of the new technology that is changing the financial services industry. They need to partner with BaaS platform providers who are committed to ongoing research and development into these platforms to stand out and attract new customers. EMIs, PIs, and PSPs who work with a financial institution like EMBank can make this process easier to move forward.

Established in Lithuania and licensed by the European Central Bank, EMBank provides a Banking as a Service offering, combined with Safeguarding Account, Business Account, and Accumulative Account types as well as payment options through SEPA, Swift, and Target2.

Please keep in mind that the above information has been prepared or assembled by the EMBank and is intended for informational purposes only. Some of the information may be dated and may not reflect the most current legal developments.

Please send an email to [email protected] to arrange a telephone call.

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