11:FS report demystifies Banking as a Service

11:FS, the challenger consultancy defining and building truly digital financial services, today released a new report “Banking as a Service: reimagining financial services with modular banking”.

The report takes an in-depth look at Banking as a Service (BaaS) to not only demystify the concept but also to identify industry trends and highlight the opportunities it creates.

Authored by 11:FS Venture Lead Simon Taylor and Director of Research Benjamin Ensor, it looks at how BaaS is changing the competitive landscape and operating model in financial services.

The report examines how:

  • A complex ecosystem of BaaS partnerships is already evolving which allows almost any brand to embed financial services into their customer experience, without having to integrate all their tech with only one bank, allowing them to deliver better customer outcomes faster
  • This modular approach creates the ability to pick and choose capabilities, making it a game changer

The report further looks at the opportunities BaaS presents to brands, service providers and licence holders, and finds:

  • Platform and ecosystem businesses tend to have half the employees and 2x the revenue of other businesses, with some of the most successful fintechs also having embraced BaaS
  • Embedded finance is a massive platform business opportunity, with estimates of a $3.6trn opportunity by 2030
    “Traditionally banks have built, owned and run all elements of their offering. BaaS facilitates a move towards a more modular approach, where other players can specialise in certain elements, allowing for better, faster, cheaper financial services,” commented Taylor.

“We’ve seen banking move from a set menu to an a la carte menu. To date BaaS has mostly facilitated basic card products, but there’s a massive opportunity for new products to be delivered as a service.”

The full research can be viewed here.

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11FS Benjamin Ensor Simon Taylor

Author: Lauren Towner

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