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The future role of banks

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The future of banking is digital, and this demands agile, instant and intelligent IT infrastructure. New models like open banking and real-time payments incentivize banks to collaborate with partners, new start-ups and established players within and beyond the financial services industry. 

But this future path also poses risks, as any potential collaborator could also be a competitor. Established banks will have to think more like fintechs and challenger banks, while continuing to ensure security, compliance and a full suite of services for consumers and businesses alike.

Highlights

  • New revenue streams – Banks that launch their own BaaS platforms hope to see new revenue streams by selling access to core banking products and services.
  • Higher customer acquisition and retention – BaaS helps banks keep up with changing customer expectations by ensuring their services are accessible via front-end interfaces and by developing new services that meet customer needs.
  • Silo reduction and core banking enablement – Through open APIs, the BaaS model aspires to transform the silo culture into something much more transparent and collaborative.
  • Quicker time to market at a lower cost – BaaS removes the need for banks to develop new products exclusively in-house, resulting in lower development costs.
  • Operational resiliency – The use of BaaS solutions via micro-services and APIs can allow banks to retain operational resilience while migrating to more modern core systems over time.
As banks seek to meet customer expectations while competing and collaborating with new players, they need to take into account the entire ecosystem of participants. Technology is the easy part—the real winners will be guided by a strategy and culture that puts the customer at the center.
Banking-as-a-Service, The future role of banks
Equinix Whitepaper, March 2022
Hybrid Multicloud Finance Payments Retail Banking Digital Transformation