8.6 C
New York
Monday, February 6, 2023
Home Challanger banks New survey: over half of European business leaders expect Banking-as-a-Service to make...

New survey: over half of European business leaders expect Banking-as-a-Service to make traditional banking obsolete

Banking-as-a-Service (BaaS) is rapidly emerging as the future of banking.

A new independent survey of more than 1,000 European business leaders based in the UK, Belgium, and the Netherlands by Vodeno/Aion Bank has found that a majority of these business leaders expect BaaS to make traditional banking obsolete.

The survey highlights the growing importance of BaaS and its potential to revolutionize the banking industry.

The end is near

The BaaS provider commissioned an independent study among more than 1,000 senior decision-makers within businesses based in the UK, Belgium, and Netherlands. Its report – Banking-as-a-Service 2.0: Why Embedded Finance will make its mark in 2023 – reveals that 51% of the participants believe that BaaS will spell the end of traditional banking.

Vodeno/Aion’s survey found that having the necessary license and compliance expertise is set to play a more prominent role in BaaS adoption. Almost three in five (58%) of the participants believe that BaaS providers that offer to use its license alongside a tech solution are the ones that will shape the BaaS market in the years to come.

At present, 39% of the participants have already implemented BaaS services and products, with an additional 38% considering using BaaS in the new year. When surveyed about which BaaS products were planned for implementation, foreign exchange (48%), buy now, pay later (48%), SME lending (47%), and loyalty schemes (46%) were among the most popular.

Of the participants who have not implemented BaaS solutions to date, 32% said they do not know enough about BaaS, 29% said there is a lack of understanding about the products available, and 27% cited compliance and security concerns as key barriers to adoption.

Unpacking the research

Vodeno/Aion’s research also underscored the importance of seamlessly embedding financial services into the customer experience.

The survey also highlighted the motivations behind businesses implementing embedded financial products. Previous Vodeno/Aion research highlighted that businesses motivated by new revenue streams (41%), growth in customer basket (40%), and enhanced customer loyalty (40%) implemented embedded financial products.

Business leaders offered several predictions for the growth of the BaaS market. Most (59%) expect the lines between eCommerce platforms and traditional banking services to blur this year as a result of increased BaaS adoption.

Even more (65%) expect to see more consumers using banking services via non-financial brands enabled by BaaS, rather than traditional banking. A further 60% predict a decline in traditional branch-based banking.

Looking to the future, almost two-thirds (65%) of those surveyed about industry trends predict that more Big Tech firms will move to deliver financial services, and over half (56%) believe the cost-of-living crisis will act as a catalyst for increased adoption.

In conclusion

The survey highlights the potential of BaaS to disrupt the traditional banking industry.

The results indicate that business leaders see BaaS as the future of banking and expect it to replace traditional banking services in the coming years.

With increasing adoption and innovation in the field, it is likely that we will see a significant shift towards BaaS in the near future.

Recent posts

Fintech Funding Decline: The State of Fintech in 2022

Despite the decline, the fintech industry's performance in 2022 still beats its performance from two years ago, with funding increasing by 52% compared to 2020.

Partnership between Credits and Unlimint

Credits is a digital neobank that combines many financial services into one application, focusing on providing financial services for the cryptocurrency space.

UK Neobank Zopa Raises £75 Million in All-Equity Investment

The company has 850,000 customers across its different businesses and is on track to be profitable for the full year in 2023, the first time since its founding 17 years ago.

UK SMEs Lean on Business Finance and Credit for Growth and Sustainability

As interest rates remain high, borrowing will continue to play a significant role in helping these businesses achieve their goals.