Increased regulation has made it challenging for players in the financial industry to expand into new jurisdictions. At the same time there is a strong demand for improved technological solutions in the financial sector by clients. Proof of Asset (POA) protocol BANKEX has a solution to this challenge called Bank-as-a-Service (BaaS). Here we’ll look at why BaaS is needed and how it works.
What is Bank-as-a-Service?
Bank-as-a-Service (Baas) is a model which enables the creation of financial products that are integrated with existing technological solutions and jurisdictions..
There are two sides to these platforms. On one side of the platform ar the originators with a range of technologies, on the other side are fintech companies which to launch new products or to expands into new markets. Fintech companies are able to to this quickly and efficielntly with needed to work out how to accommodate the legislation of each new country they expand to.
This is possible because the platform itself already had technological and legal integration in that jurisdiction. This means that it is able to provide access for new fintech players int those markets both faster and cheaper.
Who Is The Originator?
The Originator in this model is the storefront. This storefront provides direct access to the end client. That end client could be a fintech company, internet platform, insurer, or bank. When build ing a BaaS platform it is critical that the originator is able to keep access to this client under their control.
At the same time their clients want access to the best technology that is currently available. This enables the originator to remain competitive. With the BaaS model the originator is able to offer this technology remaining competitive and ensuring that the relationship is fully monetised.
Integration into the platform can take a number of forms. In its most primitive form an employee at the originator will re-enter data that they have obtained into the new technological system provided by the platform. In other cases there will be full automation between the originator and the technological solution.
What Problem BaaS Solves
One of the problems facing the financial industry tis the cost of financial regulation. Increased financial regulation is leading to costs that can make it prohibitive for players to enter new markets. BaaS offers a second alternative where financial players are able to adapt to new jurisdictions and regulations simply by plugging into tan existing platform. This solution is both faster and less expensive.
As the fintech industry first developed banks and fntech companies stood apart. Banks interest is new technological solutions tended to be on a piece meal basis selecting specific IT products or features. Fintech companies often saw themselves as replacements to traditional banks.
That situation has changed in the modern market where banks are working more closely with fintech companies to deliver new solutions for their customers. Fintech companies are also recognising the importance that banks continue to play within this system.
The physical infrastructure that banks offer provides a level of comfort for clients, that is unlikely to disappear. If even from a purely technological perspective it is possible to operate financial services without this infrastructure, its existence does form an important role in the credibility of the system. Banks therefore are likely to continue in their existing form for the foreseeable future.
Currently its estimated that only 10% of the market is currently occupied by either blockchain or finch companies. In order to expand their reach fintech and blockchain companies need to work with existing banks in order to gain access to clients.
Clients are more likely to purchase innovative technological financial products if they are being offered under the rubric of an existing bank.
If you want to read more about how BANKEX is delivering bank-as-a-service and tokenisation non-fungible assets visit:
BANKEX Website: https://bankex.com
BANKEX Whitepaper: https://bankex.com/en/whitepaper