Has Fintech Captured Banking Sector? Pros And Cons Of BaaS Model

Fintech, short for Financial Technology, is a term used to describe the intersection of financial services and technology. It involves the use of technology to provide innovative financial products and services, such as online banking, digital wallets, peer-to-peer lending, robo-advisors, and blockchain technology, to name a few.

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Consumers are always looking for simple and efficient ways to gain access to financial services. After Covid-19, online banking has become a necessity because it helps people meet their financial needs quickly and conveniently.

Fintech experts have developed a Sunday Marketplace for financial services and customers. Small businesses can find suitable lending companies with a strong track record that can help to fulfill their financial needs conveniently and quickly.

Has Fintech taken over the banking sector?

Financial technology (FinTech) has certainly had a significant impact on the finance and banking industry in recent years, but it has not completely taken over.

FinTech has disrupted the traditional banking and finance industry by introducing innovative solutions and new business models that are changing the way financial services are delivered and consumed.

While FinTech has disrupted the banking and finance industry, traditional banks and financial institutions have also responded by adopting FinTech solutions themselves or partnering with FinTech companies to enhance their offerings.

This has led to the emergence of a new model called “banking-as-a-service” (BaaS), where banks offer their infrastructure and services to third-party FinTech companies to create new products and services.

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Pros & cons of the BaaS model


  1. Increased accessibility: BaaS enables companies to offer banking services to their customers, even if they do not have a banking license. This can increase accessibility to financial services for consumers who may not have had access to them before.
  2. Customization: BaaS enables companies to customize banking services to meet the specific needs of their customers. This can lead to more personalized financial solutions that better meet the needs of individual consumers.
  3. Cost savings: BaaS can be a cost-effective way for companies to offer banking services without having to build and maintain their banking infrastructure.
  4. Flexibility: BaaS can offer flexibility in terms of the types of services that can be offered and the channels through which they can be accessed.

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  1. Dependence on banks: BaaS companies are dependent on banks and financial institutions for the underlying banking services. This can create a potential risk for the BaaS provider if the bank is unable to provide the necessary services.
  2. Regulation: BaaS companies must comply with financial regulations, which can be complex and time-consuming. Ignoring compliance can damage brand reputation and even result in high penalties.
  3. Security: BaaS providers must ensure the security of their customer’s financial information, which can be a challenge given the increasing prevalence of cyber-attacks.
  4. Limited revenue streams: BaaS providers may have limited revenue streams compared to traditional banks. They may be reliant on transaction fees, which can be lower than traditional banking fees.

BaaS can be a viable business model for companies looking to offer banking services to their customers. In conclusion, FinTech has certainly had a significant impact on the finance and banking industry, but it has not taken over completely.

The traditional banking and finance industry is still alive and well, but it has been forced to adapt to the changing landscape and embrace new technologies to remain competitive.