Banking-as-a-Service, or BaaS, has been growing exponentially. It allows new, convenient, and innovative financial solutions for companies to keep up with the changing customer behavior. From embedded finance to new payment technologies, a selection of the best use cases of BaaS will be covered in this article to inform the reader of the benefits of BaaS.

What is Banking-as-a-Service?

Banking-as-a-Service is a growing sector within the FinTech industry, and it’s transforming bank operations across the world. BaaS places the virtual equivalent of a middle man in between banks and companies within the FinTech ecosystem.

BaaS enables individuals to take advantage of banking flexibly and conveniently. Various potentials are possible in the Banking-as-a-Service, but the core element is based on a partnership between a bank and a company.

One example is a partnership between Uber and India’s state bank, where the bank provides Uber drivers with vehicle financing. This is a situation where BaaS proved invaluable. In such a situation, the bank needs to make its private data available to a third party in order to evaluate the terms of finance. And this is located at the heart of Banking-as-a-Service.

Companies like Uber also offer financial services and payment technologies without going through the complex and expensive process of getting a banking license. That’s why it’s proving so popular for companies to switch to a BaaS provider. There’s none of the hassle associated with traditional banking, and it makes transactions easier and faster to do via BaaS.

Best Banking as a Service Use Cases

Five use cases are worth focusing on. These are:

• Lending
• Card payments
• Online banking
• Identity verification
• Enhanced customer experience

Lending

E-commerce websites are fighting to capture a larger slice of the market than their rivals, and this intense competition has given BaaS a significant advantage. Offering lending facilities is one of the ways an e-commerce platform can provide a more comprehensive service than its rivals. Also, instant lending options such as Buy Now Pay Later have been becoming a very viable option for customers.

Card Payments

Taking payments via an app or online platform has become very popular these days, and companies use Banking-as-a-Service to facilitate these newer payment methods. Conventionally, such payments require a set of complex and cumbersome regulatory compliances. Thanks to BaaS providers, companies have lower overheads because they don’t need to operate their payment infrastructure.

Online Banking

Providing a bespoke online banking experience is another use case for BaaS. Some companies offer banking services in an innovative and disruptive way which sets them apart from traditional banking. Nowadays, businesses and customers do not need to visit a physical place even for their complex banking needs. Online-only banks are an example of this.

Identity Verification

Protecting the transfer of money is vital in the financial world, especially given how money moves. With identity theft and fraud on the rise, regulations are getting tighter. Thus, KYC and AML processes are more important than ever. Using a BaaS provider takes the risks away by helping with such processes with regulatory compliance workflows and enables a business to focus on other priorities, which can prove invaluable when time is of the essence.

Enhanced Customer Experience 

Another trend in our globalized world is integrating multiple services into a single app. From SuperApps to digital wallet applications, customers are getting accustomed to convenient options for all their financial needs. FinTech companies can expand their customer base by offering a more comprehensive experience than their rivals. banking as a service providers, such as  EMBank (European Merchant Bank), have focused on delivering a top-quality experience for any businesses seeking to leverage their services.