Technology
Unlocking the Value of Banking-as-a-Service: Three Essential Components
Published by Jessica Weisman-Pitts
Posted on October 18, 2023
8 min readLast updated: January 31, 2026
Global Banking and Finance Review
Company
Published by Jessica Weisman-Pitts
Posted on October 18, 2023
8 min readLast updated: January 31, 2026
October 18th 2023
In today’s dynamic intersection of finance and technology, Banking-as-a-Service (BaaS) stands as a transformative force, akin to Software-as-a-Service (SaaS) in the world of banking. A study finds that the cost to acquire a customer that is typically in the range of $100 to $200 can be $5 to $35 with BaaS. BaaS has redefined the landscape by enabling platforms to effortlessly incorporate financial services into their offerings, streamlining transactions, and presenting customers with an all-encompassing solution for their financial requirements. In this exploration, we will uncover the critical components of BaaS that underpin this revolutionary shift.
In the realm of Banking-as-a-Service (BaaS), one of its most remarkable aspects is the simplification of financial services integration. This component revolutionizes the way platforms seamlessly incorporate banking services, traditionally confined to the domain of traditional banks, into their ecosystems. BaaS providers, acting as intermediaries between platforms and banks, play a pivotal role in facilitating this integration, allowing platforms to harness BaaS APIs and streamline financial transactions. To illustrate the transformative impact of simplified integration, let’s delve into a real-world scenario:
Imagine a software platform that specializes in providing appointment scheduling services for salons and barbershops, a vital lifeline for these businesses to efficiently manage their appointments, customer relationships, and overall operations. In the traditional landscape, these businesses faced a myriad of financial challenges, each requiring a separate interaction with different financial institutions.
However, with the advent of BaaS, this scenario undergoes a remarkable transformation:
BaaS empowers the platform to consolidate all these financial services within its ecosystem, thereby offering a seamless and comprehensive solution to salon and barbershop owners. Customers using this platform can effortlessly navigate through a range of financial services, all accessible in one unified environment:
BaaS doesn’t just simplify financial services; it enhances customer lifetime value (LTV). By offering a comprehensive ecosystem of services, platforms encourage customers to use their products more frequently and for longer durations. This reduction in churn and increased stickiness can be seen through various real-world examples:
In each of these examples, the integration of BaaS not only simplifies financial transactions but also fosters a deeper relationship between customers and the platform. By providing a broader spectrum of services, platforms become integral to customers’ daily lives, making them less likely to switch to competitors. This, in turn, translates to enhanced customer lifetime value and long-term sustainability for the businesses that embrace BaaS.
Embedded finance is not just about simplifying existing financial services; it’s also a gateway to creating entirely new revenue streams for platforms. It’s estimated that SaaS companies can significantly boost their revenue, potentially doubling or even quintupling their earnings, by adding financial services into their offerings. This transformative shift in business models opens up various avenues for generating income:
Banking-as-a-Service (BaaS) is the game-changer of today’s financial landscape, much like Software-as-a-Service (SaaS) revolutionized technology. Exploring its three vital components, we’ve witnessed how BaaS simplifies financial services integration, enhances customer value, and opens doors to new revenue streams. It erases the complexities of traditional banking processes, fosters lasting customer loyalty, and offers platforms new avenues for income. In this era of financial innovation, BaaS stands as a powerhouse, shaping industries and ushering in a new era of possibilities. The future of banking is here—more accessible, dynamic, and lucrative than ever before.
About the Author:
Mayur Shetty has been a key leader in the transformation of Duck Creek, a leading provider of P&C insurance software, in his role as a Software as a Service (SaaS) evangelist. From its early stages, Shetty played a crucial part in shaping Duck Creek’s evolution from a software/product-focused organization to a prominent provider of P&C insurance SaaS solutions, culminating in a successful IPO. During this transformative journey, Shetty led the modernization of Duck Creek’s software into a cloud-native application hosted on Microsoft Azure. This involved implementing robust governance measures that encompassed security, scalability, and financial operations (Fin-Ops) practices. Under Shetty’s guidance, the SaaS business experienced exponential growth. Recently, Shetty has joined Curinos as VP of SaaS-Ops , a renowned player in the analytics and artificial intelligence (AI) domain, where he is responsible for maturing their SaaS practices for data and AI models.
Customer Lifetime Value (LTV) is a metric that estimates the total revenue a business can expect from a single customer account throughout the business relationship, helping to assess customer profitability.
Revenue streams refer to the various sources from which a business earns money from its customers, including sales, subscriptions, and service fees, which are essential for financial sustainability.
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