Half of the businesses say that BaaS will replace traditional banking

More than half of European businesses believe that banking-as-a-service (BaaS) will make traditional banking obsolete, according to the findings of joint research by BaaS provider Vodeno and digital bank Aion.

The two organizations surveyed more than 1,000 business executives in three major banking markets – the UK, Belgium and the Netherlands – and found that 51% of executives believe BaaS will spell the end of traditional banking. Another 56% believe that the current cost of living crisis will be a catalyst for BaaS adoption.

Currently, 39% of respondents have already implemented BaaS services and products, with another 38% considering using BaaS this year. Foreign exchange, buy-now-pay-later (BNPL), SME loans and loyalty schemes were all cited as the most popular use cases for BaaS.

“Platform banking is the future,” says Vodeno

But attitudes were not entirely positive: almost a third of respondents (29%) said there is a lack of understanding of the products available, while 27% cited compliance and security concerns as a key barrier to adoption.

Almost a quarter of respondents (24%) would like to see their BaaS provider demonstrate a better understanding of their customer journey, with further innovation in the checkout experience also listed as a key desire among respondents. Previous research from Vodeno and Aion Bank showed that businesses implementing embedded financial products were motivated by generating new revenue streams (41%), growth in the customer basket (40%) and increased customer loyalty (40%).

Wojciech Sobieraj, CEO of Vodeno, says: “Platform banking – where financial products are embedded in the customer journeys of brands people use every day – is the future. We know that companies looking to implement BaaS also want worry-free products and services, with the technology, necessary license and regulatory controls offered in one combined solution At Vodeno, we are a leader in the European BaaS sector [from] front, with a comprehensive range of BaaS products together with access to a full ECB license and the compliance expertise that comes with a European bank.”

In an interview with FinTech Magazine back in April 2022, Sobieraj predicted that major brands – from retailers and airlines to sports teams – would offer banking products in collaboration with a BaaS partner. Following the rise in popularity of BNPL, “businesses no longer need to rely on a third-party vendor to provide these solutions,” Sobieraj said; “they can build them themselves through BaaS solutions.”