“Banking as a service, and embedded finance, taken together — they just represent where the world is going.”
As Sherri Haymond, executive vice president, Global Digital Partnerships at Mastercard, told PYMNTS’ Karen Webster, BaaS is slated to become big business — at scale — in a short timeframe.
To put some dollar signs on it: As estimated by Finastra, BaaS will represent a $7 trillion opportunity by 2030.
Haymond said that projection, among others, illustrates an evolution that has its roots in the pandemic and now has the tailwinds in place to turn all companies into finance companies.
All manner of providers (FinTechs and others) across verticals are partnering with banks to help give client firms greater access to financial services.
There’s a happy confluence of events that will help BaaS and embedded finance reach their full potentials, said Haymond. FinTechs have the solutions that are spurring enterprises to want to bring those offerings into their own businesses — and businesses themselves see an opportunity to engage customers through a richer experience.
The Start of Banking-as-a-Service
No surprise, the seeds were sown during the pandemic, where despite the gradual emergence nowadays of in-person commerce and banking, consumers have permanently altered their expectations of how to conduct their financial lives.
In short, we want financial services at our fingertips, firmly entrenched in the digital channels and ecosystems in which we spend a lot of time. Living our lives financially, on platforms and through apps means more than just opening accounts and juggling checking and savings activities. For the forward-thinking firm that wishes to offer banking everywhere, options extend well beyond the confines of simply offering a debit card or pre-paid solution.
Now, embedded finance can help enterprises leverage customer-level data in real time to offer personalized credit and payment options to individuals and enterprises in context.
Many Different Banking-as-a-Service Paths