# Are we headed towards a Banking as a Service revolution?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2020-03-04
Category: BANKING
Category URL: https://financedigest.com/category/banking
Meta Title: The Future of Banking: Collaborating with Tech Giants for
Meta Description: Discover how banks are adapting to customer expectations and collaborating with fintechs and Big Tech to offer truly personalized banking services through BaaS.
URL: https://financedigest.com/are-we-headed-towards-a-banking-as-a-service-revolutionhtml

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_By **Madhur Kumar Jain,** Senior Vice President and Global Head of Solution Consulting,_ [_SunTec Group_](https://www.suntecgroup.com/)

Customers today expect the same experience and convenience that they can get online from any marketplace to be delivered from their bank too. They want to plan, compare, assess and then only purchase what is a hyper-personalised offering for them, rather than take up any standardised product or service from the bank. With Open Banking and an API driven ecosystem, this is slowly becoming feasible and the banks are increasingly collaborating with fintechs, independent developers and non-financial lifestyle institutions like restaurants, retail outlets, etc. to make the [move towards](https://www.financedigest.com/the-biopesticides-market-to-move-towards-constructive-advancements.html "The Biopesticides Market To Move Towards Constructive Advancements") making Banking as a Service (BaaS) a reality, sooner than later.

Since the entry into the financial services industry of Big Tech companies, such as Google, Amazon, Facebook and Apple, the focus on revolutionising the [customer experience has never been so great for banks](https://www.financedigest.com/the-next-generation-of-customer-experience-in-banking.html "The next generation of customer experience in banking"). But to truly compete with Big Tech companies/non-traditional competitors, banks must be able make the transition from providing a banking [service to truly owning the customer value](https://www.financedigest.com/becoming-more-than-a-bank-adding-value-through-financial-solutions-as-a-service.html "Becoming more than a bank: adding value through financial solutions as-a-service") chain experience – including, offering Empathic banking and humanising the banking experience.

Banking, as it was traditionally envisaged, was supposed to be a service. However, over time, banks have become more internally focused, looking out for their own [needs and pushing their own products to their customers](https://www.financedigest.com/3-reasons-your-business-needs-customer-reviews.html "3 reasons your business needs customer reviews"), regardless of whether that product meets the needs of the customer or not. By focusing on their profits first, [banks have forgotten that each customer has unique and individual requirements](https://www.financedigest.com/building-a-relationship-led-bank-requires-a-more-human-touch.html "Building a relationship led bank requires a more human touch"). As we enter a new decade, and beyond, [banks must](https://www.financedigest.com/lost-in-translation-why-banks-must-learn-the-language-of-their-customers.html "Lost in Translation: Why Banks Must Learn the Language of their Customers") consider the needs of the customer more deeply and look outside of its own products in order to offer BaaS and put the customer first.

**[Collaboration in banking](https://www.financedigest.com/why-open-banking-heralds-a-new-era-of-ecommerce-merchant-and-bank-collaboration.html "Why Open Banking Heralds a New Era of eCommerce Merchant and Bank Collaboration") equals choice**

Banking has become a commodity marketplace and as a result, banks are restricted by the products that they manufacture, [leaving the customer with little choice but the products on offer from their own bank](https://www.financedigest.com/societe-generale-says-two-senior-executives-to-leave-bank.html "Societe Generale says two senior executives to leave bank"). But if banking was really a [service then banks should be able to work with other providers to give the customer](https://www.financedigest.com/how-customer-services-has-changed-during-covid.html "How Customer Services Has Changed During Covid") what they desire. If banks can work with two or three other service providers as a BaaS provider, the choice to customers is greater, and the [customer is more likely to be provided](https://www.financedigest.com/verasity-joins-the-brightcove-marketplace-to-provide-customers-with-proprietary-ad-tech-technology.html "Verasity Joins the Brightcove Marketplace to Provide Customers With Proprietary Ad-Tech Technology") with the right solution for them.

Over the last few years, we have seen non-traditional players, like Amazon, entering the [banking space and trying to build customer ownership by working with different banking providers](https://www.financedigest.com/digital-banking-traditional-banks-vs-fintech-providers.html "Digital banking: Traditional banks vs. fintech providers"). There is an opportunity to work together and collaborate to take advantage of each other’s strengths rather than just compete. The fact that consumers’ trust the [banks to handle their financial data](https://www.financedigest.com/banks-struggle-to-harness-big-data.html "BANKS STRUGGLE TO HARNESS BIG DATA"), their ubiquitous presence and industry expertise provides banks a good opportunity to collaborate with Big Techs which have expertise in handling big data, AI, analytics and building customer centricity.

Although this creates additional layers, [bringing in an extra layer of technology](https://www.financedigest.com/adverty-wins-third-us-patent-for-brainimpression-bringing-ad-viewability-technology-to-gaming-on-mobile-tv-screens-and-the-wider-metaverse.html "Adverty wins third US patent for BrainImpression™, bringing ad viewability technology to gaming on mobile, TV screens and the wider metaverse"), would not dramatically increase the cost. If a bank becomes a BaaS provider, there is no significant [additional complexity but its portfolio gets larger with products](https://www.financedigest.com/animal-feed-additives-market-regional-industry-segmentation-analysis-by-production-consumption-revenue-and-growth-rate-by-2031.html "Animal Feed Additives Market Regional Industry Segmentation, Analysis by Production, Consumption, Revenue and Growth Rate by 2031") from traditional and non-traditional providers. Plus, if you are an independent BaaS provider, you will also have your own [products being sold](https://www.financedigest.com/worldwide-12000000-tons-of-phosphoric-acid-and-citric-acid-products-are-expected-to-be-sold-in-the-global-ph-control-salt-market-by-2026.html "Worldwide 12,000,000 Tons of Phosphoric Acid and Citric Acid Products are Expected to be Sold in the Global pH Control/Salt Market by 2026") to other parties; in effect, you are not shifting far from today’s existing model but that model becomes ubiquitous. In fact, bringing this together provides a holistic solution to the customer, which will reduce the cost of [service to customers](https://www.financedigest.com/how-can-financial-firms-improve-customer-service-after-the-pandemic.html "How Can Financial Firms Improve Customer Service after the Pandemic?").

**Delivering an optimal enhanced** [customer experience](https://www.financedigest.com/why-transforming-the-back-office-is-key-to-customer-experience-success-in-financial-services.html "Why Transforming the Back-Office is Key to Customer Experience Success in Financial Services")

BaaS has another important component – empathic banking. The bank manager of yesteryear need not be a thing of the past; imagine a [digital bank](https://www.financedigest.com/can-ai-supercharge-your-banks-digital-transformation-strategy.html "Can AI supercharge your bank’s digital transformation strategy?") manager being able to give a customer exactly what they want. For example, customers are never looking for a mortgage, they are looking to [buy a house](https://www.financedigest.com/buying-a-house-for-the-first-time.html "Buying a house for the first time"). Empathic banking takes this to the [next level by allowing the bank to slip in under the radar to make sure the customer gets both the product and service they need to make these life choices – the bank is simply there to assist the customer to buy](https://www.financedigest.com/britains-next-buys-failed-furniture-retailer-made-com-400-jobs-axed.html "Britain’s Next buys failed furniture retailer Made.com, 400 jobs axed") the house.

The question remains, are customers getting what they [need from their bank](https://www.financedigest.com/traditional-banks-need-an-overhaul.html "Traditional banks need an overhaul")?

Undoubtedly, companies and consumers are the ones who will decide the future of BaaS. As the new decade begins, [banks will need to accelerate their digital transformation and deliver the optimal enhanced](https://www.financedigest.com/how-to-enhance-banking-services-with-digital-performance-intelligence.html "HOW TO ENHANCE BANKING SERVICES WITH DIGITAL PERFORMANCE INTELLIGENCE") customer experience – without the need to replace costly legacy systems.

Ultimately, [banks need to show more empathic understanding of their customers](https://www.financedigest.com/change-is-inevitable-how-banks-need-to-adapt-to-customers-new-banking-habits.html "Change is inevitable – how banks need to adapt to customers’ new banking habits") and their real needs. As organisations, they have spent money, time and effort to make [customer interaction more efficient and seamless](https://www.financedigest.com/how-to-navigate-a-seamless-journey-from-cio-to-chief-customer-officer.html "How to navigate a seamless journey from CIO to Chief Customer Officer") across different channels. Now is the [time for these banks](https://www.financedigest.com/why-now-is-the-time-for-banks-to-use-their-data-to-support-customers.html "Why now is the time for banks to use their data to support customers") to look at investing in how they can work with their customer to ensure that the customer’s personal choice is being met. They have the intelligence on the customer; the means of interacting with the customer and the capability to put it all together. Working with [third party](https://www.financedigest.com/why-a-replacement-to-third-party-cookies-is-key-to-post-pandemic-recovery.html "Why a replacement to third party cookies is key to post-pandemic recovery") providers will allow banks to become a truly open organisation and offer very specific customised solutions to the customer as well as the benefit of having a dynamic portfolio that can be offered to the customer and the market – a win/win situation for both the parties.


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