Yesterday, when you made a run through the app and made a payment for the service, you probably didn’t even remember that this is already done automatically. Or you didn’t even realize when ordering a snack from home on your cell phone that everything was done without you even worrying about the payment step. Having a financial service already integrated with the application you use on a daily basis is already part of our daily lives.
Likewise, today it is possible to have a delivery application that also offers a digital account, a retailer that offers a credit card, a fintech focused on loans that now offers new financial services, such as installment payments.
Many people have no idea, but the ease and simplicity provided to the end consumer in these digital experiences are the result of the viability provided by BaaS.
Banking as a Service (Boss) or bank as a service is a model that has been gaining more and more strength in Brazil and in the world. It allows financial services to be offered by different sectors based on the concept of embedded finance, “embedded finance” in its original term. In this sector, the company interested in offering a certain product or service can “rent” the infrastructure already developed by another company.
One of the great advantages of this model is the regulatory issue, which is also assumed by the technology owner, who has a financial institution authorized by the central bank to operate or provide it through partnerships.
Numbers show how much this market, which was considered a trend, has been establishing itself as a reality. According to Future Market Insights, the market for Boss In 2020, it earned more than US$ 2.5 billion and the expectation is that in 2031 it will reach no less than US$ 12.2 billion, growing at an average rate of 15.7% per year until then.
The European market is perhaps the one that has advanced the most in this segment, largely due to the better regulatory structuring with the GDPR (General Data Protection Regulation) and the pioneering spirit with Open Banking. But Brazil owes nothing to Europe, also with the advance of LGPD (General Data Protection Law) and Open Finance as a very strong regulatory agenda.
With all this progress, the consumer is the biggest beneficiary. In an environment where companies seek to offer more availability of financial products and services, offered with greater ease and capillarity, the financial inclusion of the population is made possible and the list of options is expanded. The consumer will naturally select that service provider that brings the frictionless, effortless, easiest, simplest and fastest experience.
Services that were previously only available in banking environments are now present where customers are. Using advanced technologies, such as the APIs that integrate the services, it is possible to ship an electricity bill payment or a payment via Pix on any website or application that is being used to provide various services.
In the same way that a person gets out of the taxi without even remembering that the payment for the ride was made, it is possible to have some service integrated in the preferred digital wallet, in the brokerage or even in an e-commerce site with the same look and experience without having to leave to another environment or site. The possibilities go beyond banks and are now present in wallets, fintechs, startups and meet the heterogeneity of customer needs.
The supplier bank becomes an enabler in this new digital ecosystem and the user does not even know about the process, as he is absolutely sure that the financial institution follows the foreseen banking regulation and this is a partner of the platform that the consumer uses. This evolution in customer experience makes a difference in people’s lives, making it viable and expanding access to financial solutions for any Brazilian.
With this purpose of serving even without being seen, we can say that there is a real impact and an effective contribution to increasing the quality of digital services of several other companies, including other banks that do not need to develop the products offered by a BaaS platform. In this approach, it is necessary to achieve high performance in financial transactions, data quality and accuracy, and agility in offering the services that every company needs to thrive in the digital age.
Customer loyalty gains strength with BaaS as the experience becomes much more valued and fluid. By integrating financial services into diverse applications, you create opportunities and undermine friction and experimentation for other competitors. In this context, discussions about customer at the center and user experience are fully in line with the value proposition of Banking as a Service.
And in a context of advancing PIX and Open Finance, the offer of APIs grows and makes it possible to create new by-products from these solutions. Access to information previously granted by consumers, together with the democratization of credit, will also bring solutions that are more suited to customer needs, generating benefits and advantages in any preferred digital ecosystem.
The future is promising, but the present is already a revolution. Taking the bank’s products to any other company to better serve its customers, with an open, collaborative, efficient approach and without fear of serving even that person who is not a customer, is disruptive. This would have been unthinkable a few years ago. It is a way of delivering value to the market as a driving force that enables and accelerates all types of business with embedded banking.
Marcos Ferrari is executive president of Conexis Brasil Digital