A new study from Juniper Research, the foremost experts in fintech, has found global revenue from BaaP (Banking-as-a-Platform) services will increase to $49 billion globally in 2028, from $4 billion in 2023.
The study argued BaaP can help traditional banks regain their competitive edge against neobanks. Through collaboration with innovative vendors, banks can offer new services from partners, including embedded insurance, lifestyle offers with leading brands, or access to HR services for small businesses.
Juniper Research defines Banking-as-a-Platform as: “A business model that enables third-party partners to build products and services for bank customers, most commonly a technology company that can provide APIs while the bank manages data exchange, oversees authentication and ensures compliance.”
The study argues banks can utilise partnerships with industry leaders to build upon their core banking model; helping them compete with fintechs by offering more user-friendly services. Compared with traditional acquisitions, BaaP partnerships are highly flexible and can be easier to integrate, as banks transition to API-focused models. By offering a wide range of services via BaaP, banks can gain a competitive edge without having to stray from their core business.
According to the report, banking marketplaces are the most effective way for banks to adapt to the digital age; helping them create financial services ecosystems that offer personalised customer experiences, without developing services themselves. For example, Revolut has extensively expanded its lifestyle offerings in-app; creating its own ecosystem of services, without taking on the costs traditional banks have faced in expanding services. In turn, customers benefit from innovative solutions that are tailored to their needs; increasing satisfaction and improving the stickiness of their banking relationships.