Banking-as-a-service (BaaS) could revolutionize the financial landscape in Southeast Asia, bringing previously unimagined benefits to customers and businesses alike.

Oliver Wyman estimates BaaS technology can help financial institutions to reduce customer acquisition costs from between $100 to $200 to between $5 and $35. While recent Finastra research shows 85 percent of senior executives are already implementing BaaS solutions, or planning to within the next year to 18 months.

What is BaaS?

If you’re new to the idea of BaaS, here’s what it means.

• BaaS enables companies to embed financial services into their product suite and empowers companies to provide their own financial products.

• For example, non-banking businesses can harness BaaS to provide services like merchant acquiring, card issuing, and payment facilitation, without undertaking costly development work in-house.

• BaaS also takes care of any regulatory complexities so that companies can access new revenue streams through deepened customer relationships.

Which business models can benefit from BaaS?

Finastra’s research identified several growth opportunities for BaaS in the coming years, such as point-of-sale financing for merchants and consumers, embedded lending for small businesses, and treasury and foreign exchange services. Businesses looking to tap new customer segments or expand to new markets can all benefit from BaaS.

• Banks and finance companies: Financial institutions can use BaaS products to offer new services to their customers that create new revenue streams, while banks can use it to modernize their legacy infrastructure and quicken their digital transformation.

• Software vendors: Software-as-a-service (SaaS) companies can embed financial services into their software, helping them to reduce customer churn by providing a superior experience than competitors.

• Fintech startups: These companies can provide the infrastructure they need to offer banking, payments, or treasury services in new markets without the need for a bank charter or other license.

• Marketplaces and platforms: B2B and B2C marketplaces and platforms can quickly embed financial services, enabling their customers to access credit, purchase insurance policies, or finance their purchases with buy-now pay-later.
  
  

→ Talk to us today to start your BaaS journey

3 Examples of BaaS in Action Across Asia

A report from fintech consultancy 11:FS suggests BaaS can yield myriad benefits for both businesses and the consumers they serve. For example, companies can deliver financial services right at the point of need, instead of leaving their customers to figure it out for themselves.

More major brands in Europe, the US and Asia have begun to adopt BaaS products, to own more of the customer experience beyond their core product focus. For example:

1. When India’s ICICI Bank integrated banking services within WhatsApp, the service grew to one million clients in a single quarter.

2. Through a recent partnership with Accenture, Minna Bank launched rapidly and is integrating financial and non-financial data into a single service.

3. Superapp Grab has long harnessed BaaS as part of a broader financial services push. The company recently launched a joint digital banking venture with the country’s major telco, Singtel.

Now is the time for more of Asia’s brands to realize similar benefits too.

Opn’s Vision for Building Your BaaS Stack

Our vision for BaaS is one where software companies and marketplaces can offer seamless experiences to their customers and clients, while minimizing the burdens and costs of compliance and development.

We aim to shorten a path to new revenue streams and markets for banks, fintech startups, and independent software vendors, by helping companies embed solutions for payments, card issuing, and lending. At the same time, we recognize banks or software companies may not need to embed every acquiring, issuing, or lending service a BaaS provider enables.

For example, a non-bank lender may want to only embed underwriting-as-a-service. A global marketplace platform may want to instantly onboard new merchants across various geographies and utilize “compliance as a service” set of modules, to compliantly drive a greater share of transaction revenue. And that same marketplace may choose to embed lending as a service capabilities in the countries where working capital solutions would be most useful and profitable. We have recognized this at Opn, by providing customers with the flexibility to choose and configure only the services they need.

Is BaaS Right for Your Business?

BaaS may have remained nascent in Southeast Asia until quite recently. But there are several ways C-suite leaders, developers, and consultants can gauge whether it’s a good fit for their business’s challenges. Consider the following questions:

• Are you looking for innovative solutions to reduce costs and drive growth?

• Are you looking to drive further digital transformation, to provide personalized experiences to customers right at their point of need?

• Do you need to prepare for larger volumes of transactions and more complex workflows, while keeping up compliance requirements?

• Is the business looking to reduce costs and manual labor, by automating how you onboard, retain, and upsell your ideal customers?

If you answered yes to one or more of these questions, then it’s possible BaaS products may be a good fit.

Opn has been in the financial technology business for a decade. In that time, we have been building new payment features and capabilities, onboarding merchants, and providing them with the financial services they need. We have a deep understanding of the rules and regulations in each Southeast Asian market.

→ Talk to us today to start your BaaS journey