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Banking-as-a-Platform (BaaP) Market to Witness 1,125% Revenue Increase by 2028.

Global revenue from Banking-as-a-Platform (BaaP) services is projected to increase to $49 billion worldwide by 2028, up from $4 billion in 2023. This forecast is based on the latest study about the potential of BaaP conducted by the market research firm Juniper Research.

The study, ‘Banking-as-a-Platform: Market Forecasts, Trends and Strategies 2023-2028′ details how BaaP could change the face of banking across a number of different areas. The report provides in-depth analysis and evaluation of how financial institutions are reimagining their business operating model by creating a BaaP ecosystem alongside third-party providers. 

But what does Banking-as-a-Platform mean? Juniper defines it 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.”

As Juniper Research predicts that the BaaP market revenue is set to grow by over 1,125 per cent by 2028, it explained that much of this growth will be driven by traditional banks. Banks could partner with industry leaders to expand their core banking models. This approach could help them compete with more flexible fintechs by offering more user-friendly services.

“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.” According to the report. “By offering a wide range of services via BaaP, banks can gain a competitive edge without having to stray from their core business.”

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“Banks must evaluate which services are core, and which services can be replaced by working with innovative third parties; enabling banks to improve services being offered, while reducing costs in a difficult economic climate” reads the report.

The research delivers critical insights on how BaaP will grow over the forecast period, by conducting three in-depth case studies that reflect the perspective of different stakeholders in BaaP such as incumbent banks, digital banks and API distributors alongside their future prospects.

The study also contains a segment analysis which identifies the current status and influence of various verticals within the BaaP market, such as SMEs, large enterprises, traditional banks, neobanks and consumers.

The research includes an assessment on the breadth of offerings from various segments which have demonstrated to be successful.  This includes payments, wealth management and trading, embedded insurance, lifestyle, cryptocurrency, foreign exchange and more.

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.

Banking platform marketplaces have a wide range of offerings. Banks using a marketplace can also enable customers to view a variety of savings and wealth management providers and compare interest rates that are better suited to customers’ saving goals.

“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.” reads the report.

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According to Juniper, banks can outshine their rivals by offering various services using BaaP. They don’t need to change their main banking focus.

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