Skip to content
CCG Insights

Research Snapshot

  • Research Snapshot

Is BaaS Headed for the Back-Burner?

Is BaaS Headed for the Back-Burner?

Is BaaS Headed for the Back-Burner?

January 19, 2023

By: Kate Drew

Subscribe

Request for Proposal

By: Kate Drew

Subscribe | Request

BaaS and Investment

Banking-as-a-Service (BaaS) — the novel model by which a chartered institution provides the regulatory umbrella necessary for a nonchartered company to offer financial services, and once the innovation darling of the financial services industry — took a hard fall in 2022. Or, rather, it took a series of stumbles that added up to a ton of scrutiny and reined in aspirations on all sides of the table. As a result, banks are being forced to reconsider their plans for and approaches to BaaS. And, unfortunately, recent data isn’t very promising — in fact, according to Finastra’s Financial Services State of the Nation Survey 2022, when respondents were asked which areas they felt were seeing constrained investment across a range of options, BaaS came out on top.

Such data could suggest that BaaS is headed for the back-burner as executives shy away from regulatory scrutiny and look to avoid potential risk of client failures in a tightening environment. More likely than not, though, traditional banks are still interested in the concept and are instead shifting to a “wait-and-see” approach. These institutions may be hitting pause on investment until they can figure out exactly how the market will be regulated and where they can place bets safely. The problem with this strategy is that the winners on a new frontier aren’t usually the ones waiting on the sidelines. Those players often end up getting in the game too late once the stars are already minted. This points to a critical point many fail to understand, which is that making the most of any innovative field, including BaaS, requires gumption and foresight.

Recent pressures are undoubtedly creating challenges, but they’re also creating opportunity for those with the right view and approach. Those that are able to separate the winners from the losers, who can distinguish between perceived risk and actual risk, and who can make themselves attractive enough to win clients with proven business models will still have a ton of room to run in this arena. However, that arena is also getting narrower — bets have to be sharper, and banks are going to be competing for a smaller pool of clients as greater diligence comes into play. As such, looking forward and developing a strategy for how to compete today is likely wise. It’s those institutions that use this time proactively, rather than watching from afar, that will reap the most. That’s true in terms of business, but also when it comes to the learnings and experience that will be required to capitalize on the evolution of this space.

You Might Like These, Too

Digital Account Opening in Business Banking - Getting It Right

Digital Account Opening in Business Banking: Getting It Right

Money Isn't Everything

Money Isn’t Everything

Are Your Core Deposits at Risk

Are Your Core Deposits at Risk?

Fiserv Completes First Data Integration and FIS Completes Worldpay Acquisition

Fiserv Completes First Data Integration and FIS Completes Worldpay Acquisition

Leaders in Bank Consulting

About CCG Catalyst
Latest Insights
CCG

PHOENIX • NEW YORK • LONDON • SINGAPORE

Phone: +1-480-744-2240  • Contact Us

© 2023 CCG CATALYST CONSULTING. Privacy Policy & Terms of Service.
Request a Call Back
Linkedin Twitter
Subscribe
to our Insights
Subscribe
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent.
Cookie SettingsAccept All
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT
BANK
FINTECH
FUSION
  • About
  • Services
  • Insights
  • Fintech
  • Research
  • Team
  • Contact
  • Press
  • Careers
  • Events
  • RFI / RFP
  • Terms
  • Privacy
Linkedin Twitter Search
Subscribe for Insights

CCG INSIGHTS FOR BANKS, FINTECHS, AND CREDIT UNIONS

The Fed, Real-Time Payments, Alexa and Apple P2P, Part of Payment Revolution
  • Weekly digest of what's new
  • New research snapshots
  • Exclusive access to banking and fintech research
  • Industry news
  • Invitations to webinars and webcasts