Insights

Banking-as-a-Service is a leadership choice

Written by Dr. Leda Glyptis | 19 August 2022

Banking-as-a-Service (BaaS) comes with a whole host of technical capabilities that allow services to be layered. That allows a bank to provide its licence and allows third parties to work on top of that licence. Technology is how to make BaaS work. That technology is out there, it exists, is tested and has been scaled. The difficulty is working out the economics, the business of where you as a participant will play in this will, where you're going to invest, which pieces of the puzzle will be the pieces that you bring, and where you believe you can make money.

Banking-as-a-Service creates different relationships between parties and services.

The way that banks have historically understood relationships and commercial exchanges is completely blown out of the water and reconfigured until you work out how you make money, how much money you stand to make, what the risk profile of what you're doing is - you don't know where to invest.

There are a lot of decisions that need to be made, and very few of them are technical, because once you've decided what your business plan is, choosing the right providers is a much smaller ask.

What we are seeing quite a lot of in the industry is that players are still approaching it as a technical conversation, looking at what is possible and letting that technology drive the decision making. This is not working because the technology is out there, mature and ready to be used, but what you want to achieve with this - where you as a business will play in this - cannot be driven by the technology. It's a leadership choice.