Moving from Baas to SaaS - What are the options? 🤔

The financial technology sector, also known as fintech, is experiencing strong growth. However, companies need to be licensed or rely on regulated partners to operate in this sector.  

For fintechs, the BaaS (banking as a service) model refers to the ability to integrate various banking services into their offerings without the need to hold their own banking license or develop a financial infrastructure by relying on a regulated partner.

Today, different BaaS models exist (centered around traditional banks, challenger banks, middleware platforms, and embedded finance) and allow specific needs to be addressed according to the products offered.

However, as they grow, some companies are questioning this model, which can hinder their profitability and autonomy. So, what are the possible scenarios for fintechs wanting to emancipate themselves? In the spotlight 💡

Fintechs: why consider the BaaS model?

Lower up-front costs, simplicity, fast time-to-market... There's no shortage of good reasons for fintechs to choose the Banking as a Service model.

However, once they reach a certain inflection point in their maturity, financial technology companies face several obstacles that can prevent them from growing in line with their ambitions.

Exponential costs

Although initially very attractive, the BaaS model becomes exponentially more expensive for fintechs as they accumulate a growing number of customers. With costs directly correlated to the number of active accounts or transactions, this model proves inadequate to support their growth and achieve an optimal growth/cost ratio.

Lack of autonomy

Companies often seek autonomy as they grow. Unfortunately, their ability to launch new products autonomously is often limited by the strict roadmap and processes imposed by the BaaS model. What's more, regulators are increasing their focus on compliance. Some companies may be blocked by their supplier if they can no longer respond effectively to new standards.

A low level of customization

Similarly, growing fintechs are looking for a superior customization framework to create differentiated offerings and support the launch of new products and services. BaaS offers standardized functionality but is unfortunately unable to create a truly differentiated offering to meet this need.

Post-BaaS transition: options for moving to SaaS       

Key issues are improving compliance management, gaining autonomy, developing innovative products, adding customer value, and better managing their margins. To meet these challenges, the new generation of core banking SaaS offers fintechs several options, allowing them to rely on a next-generation, scalable tool that can support them in their transition, up to and including obtaining their own license.

Read also: BaaS - SaaS: which approach is best?

Here are two interesting options for continuing to grow:

Rely on BaaS for the regulatory side and SaaS Core Banking for the technology side

At the same time, new-generation Core Banking meets the technological needs of fintechs to grow in the market, offering them flexibility and innovation to launch their differentiating offers.

Financial technology companies rely on these two players to retain control over their products and services while reducing compliance risks.    

This option also allows fintechs to anticipate the second stage of the licensing process. In fact, by choosing a SaaS core banking platform first and a BaaS for the regulatory aspect only, they will ensure that, since their technological infrastructure is already in place, they will find it easier to avoid a lengthy migration phase.

Get your license to be completely autonomous

With their own licenses and a new-generation Core Banking system, fintechs become entirely independent. In this way, they:

• Gain the highest degree of autonomy and flexibility to create new products and services and directly manage regulatory issues.
• Improve customer satisfaction by offering innovative services.
• Demonstrate greater transparency, security, and responsiveness to their customers by handling the entire value chain.
• Benefit from a "pay as you grow" cost model adapted to their growth.

While approval enables financial technology companies to gain independence, agility, and credibility, obtaining it can be long and tedious. So, it's important to anticipate the process and surround yourself with the right people to ensure that the various stages are as smooth as possible and that legal, financial, and technological imperatives are met. 

The Skaleet Core Banking Platform, your technological ally

Whether you want to move to BaaS for the regulatory part or get your own accreditation, Skaleet supports you.

Our next-generation, API-driven, cloud-native Core Banking platform is designed to integrate the best partners, giving you greater flexibility and autonomy.

The key? You benefit from a solid foundation on which to build your customized ecosystem, with the best technological building blocks to launch your products and services within a framework that meets the most stringent regulatory obligations (secure storage of documentation, integrated regulatory reporting, access rights management and data protection, risk scoring, KYC, etc.).

Skaleet Core Banking facilitates the process and provides fintechs with the technological power to constantly evolve and accelerate innovation in complete autonomy. Would you like to find out more? We'd be delighted to hear from you.