What Is Fintech as a Service (FaaS)?

by Pedro Ferreira
  • How can fintechs make themselves accessible on every platform out there?
fintech as a service, FAAS
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Fintech as a service (FaaS) is not a new designation or trend. Fintech is an umbrella term for financial technology which in essence refers to any software app tailored to:

  • Help automate and enhance user experience in financial services.
  • Make administrating financial operations easier for managers and business owners.

Accordingly, FaaS can be described as a service which provides financial technology and whose provider develops, updates, and does maintenance according to security and compliance requirements.

What Is Fintech-as-a-Service (FaaS)?

Within the last few years, the fintech industry heard the cry of the relentless consumer demand worldwide for innovative and seamless payment solutions.

As adoption rates grow for newfound techs, companies don’t want to be left out, so the question remains: how can fintechs make themselves accessible on every platform out there?

This is where fintech-as-a-service comes in as an elegant way of democratizing the adoption of such concepts.

fintech as a service, FAAS

In what concerns the user end, who is usually a service provider as well, they resort to an API (application programming interface) to embed whichever fintech feature they subscribe to into their own platform.

Users thus pay a subscription fee for said API without needing to invest in the infrastructure itself.

APIs are an incredibly handy piece of software which makes it possible for many apps and computer programs to be able to interact with one another.

A fairly easy example of this interaction is how payment facilitators (PayFacs), like Square or PayPal, provide many companies with FaaS tech as a way of improving their in-app payment capabilities and overall user experience.

Benefits of Fintech-as-a-Service?

The main benefits of integrating FaaS into a business are simple as FaaS leads to:

  • Achieving and delivering a better customer experience
  • Providing customers with more options (ex: access to loans)
  • Compliance and fraud prevention (KYC, AML screening)
  • Boosting security
  • Attaining higher adaptability while reducing processing fees
  • Achieving greater customer happiness
  • Attaining higher retention rates
  • Digitalizing financial services and activities
  • Freeing employee time (ex: Robotic Process Automation)

Examples of Fintech As A Service (FaaS)

Fintech as a service (FaaS) allows organizations access to a wide range of financial technologies that they can use without any trouble. This method lets companies improve their services without having to do a lot of work on their own. Here are some specific ways that finance as a service (FaaS) can be used:

  • Mobile Banking: Fintech companies offer application programming interfaces (APIs) that let businesses offer mobile banking benefits like account access, checking balances, and transferring money through mobile apps.
  • Mobile Payment: APIs from fintech companies let businesses add mobile payment options, so customers can use their phones to buy things or send money to other people.
  • Blockchain: Fintech-as-a-service platforms offer APIs for integrating blockchain, which lets businesses make safe and clear digital ledgers for things like tracking the supply chain and managing assets.
  • Crowdfunding platforms: APIs from fintech services allow businesses to make crowdfunding platforms, which make it easier to get money from a lot of people for different projects.
  • Insurtech: Fintech APIs help companies streamline insurance processes like underwriting, processing claims, managing policies, and interacting with customers.
  • Regtech: Regulatory technology application programming interfaces (APIs) help businesses follow financial rules by giving them tools for tracking compliance, reporting on compliance, and assessing risk.
  • Stock Trading: Fintech platforms offer APIs that let businesses add stock trading features, so users can buy, sell, and manage stocks straight from their apps.
  • Portfolio Management Platform: Fintech-as-a-service APIs offer tools for building and handling investment portfolios, such as asset allocation, rebalancing, and performance tracking.
  • Digital Lending and Credit: Fintech services provide APIs that make digital lending and credit services possible. This lets businesses offer loans, check credit scores, and handle loans online.
  • Automated Advisors: APIs in this area let businesses offer robo-advisory services, which automate investment advice and portfolio management based on user preferences and risk profiles.
Fintech as a Service Image

What Contributes to FaaS growth?

Fintech-as-a-service can base its success on 3 key elements:

Heightened reach through interoperability and unification

Fintechs have a global reach in terms of payments, and FaaS has made the payments scene expand into previously unexplored locations.

FaaS integration is seamless, meaning user experiences can now reach new heights in terms of quality whether that’s in domestic terms or in international commerce.

In fact, expansion has never been easier as FaaS providers boast global networks which have perfect compatibility with local payment methods.

Moreover, with the help of scalable and universal APIs, financial planning has never been easier.

Leveraging disruptive technology

Fintechs-as-a-service can leverage highly innovative technology faster than any traditional company can.

Whether it’s a cryptocurrency, artificial intelligence, cloud-based software, or big data analytics, fintechs seem to be a cut above their traditional counterparts.

These innovations help bolster FaaS’ status in the financial industry.

Simplicity in global payments

While having reach is great, digital payments have been made incredibly simple due to FaaS.

They were a key driver for FaaS to scale their operations, and coincidently are a key driver to making other companies scale as well.

With fintech-as-a-service, companies can leverage a unique global network composed of local payment methods, meaning expansion plans can meet the reliability of local payment networks.

Is Fintech-as-a-Service Regulated?

Fintech-as-a-Service (FaaS) operates under regulations.. Regulation differs by country and financial service type. FaaS providers must meet AML and KYC requirements, obtain licenses, and follow financial rules regarding payment processing, loans, investments, and data privacy. Both FaaS providers and businesses looking for FaaS options need to do their research carefully.

Where Is the FaaS Market Heading?

FaaS market forecasts hint at a 24.8% growth from 2021 to 2026, with a projected market size of US$3.847 billion.

The numbers make it clearer for those who still might have doubts, fintech is a dominant force within the tech sector.

And, given how easily these entities can connect companies and transform shopping experiences around the world, it is fairly safe to say that FaaS will become even more prevalent going forward.

Last Words

Leveraging financial services to deliver a better-quality end product to users has become a reality for companies whether they want to expand, retain, or simply push for greater margins.

Accordingly, partnering with a FaaS provider who can deliver global reach and a plethora of payment methods has become crucial.

Luckily, there has never been a better time than now to achieve global reach with seemingly limitless scaling capabilities and none of the infrastructure requirements.

Fintech as a service (FaaS) is not a new designation or trend. Fintech is an umbrella term for financial technology which in essence refers to any software app tailored to:

  • Help automate and enhance user experience in financial services.
  • Make administrating financial operations easier for managers and business owners.

Accordingly, FaaS can be described as a service which provides financial technology and whose provider develops, updates, and does maintenance according to security and compliance requirements.

What Is Fintech-as-a-Service (FaaS)?

Within the last few years, the fintech industry heard the cry of the relentless consumer demand worldwide for innovative and seamless payment solutions.

As adoption rates grow for newfound techs, companies don’t want to be left out, so the question remains: how can fintechs make themselves accessible on every platform out there?

This is where fintech-as-a-service comes in as an elegant way of democratizing the adoption of such concepts.

fintech as a service, FAAS

In what concerns the user end, who is usually a service provider as well, they resort to an API (application programming interface) to embed whichever fintech feature they subscribe to into their own platform.

Users thus pay a subscription fee for said API without needing to invest in the infrastructure itself.

APIs are an incredibly handy piece of software which makes it possible for many apps and computer programs to be able to interact with one another.

A fairly easy example of this interaction is how payment facilitators (PayFacs), like Square or PayPal, provide many companies with FaaS tech as a way of improving their in-app payment capabilities and overall user experience.

Benefits of Fintech-as-a-Service?

The main benefits of integrating FaaS into a business are simple as FaaS leads to:

  • Achieving and delivering a better customer experience
  • Providing customers with more options (ex: access to loans)
  • Compliance and fraud prevention (KYC, AML screening)
  • Boosting security
  • Attaining higher adaptability while reducing processing fees
  • Achieving greater customer happiness
  • Attaining higher retention rates
  • Digitalizing financial services and activities
  • Freeing employee time (ex: Robotic Process Automation)

Examples of Fintech As A Service (FaaS)

Fintech as a service (FaaS) allows organizations access to a wide range of financial technologies that they can use without any trouble. This method lets companies improve their services without having to do a lot of work on their own. Here are some specific ways that finance as a service (FaaS) can be used:

  • Mobile Banking: Fintech companies offer application programming interfaces (APIs) that let businesses offer mobile banking benefits like account access, checking balances, and transferring money through mobile apps.
  • Mobile Payment: APIs from fintech companies let businesses add mobile payment options, so customers can use their phones to buy things or send money to other people.
  • Blockchain: Fintech-as-a-service platforms offer APIs for integrating blockchain, which lets businesses make safe and clear digital ledgers for things like tracking the supply chain and managing assets.
  • Crowdfunding platforms: APIs from fintech services allow businesses to make crowdfunding platforms, which make it easier to get money from a lot of people for different projects.
  • Insurtech: Fintech APIs help companies streamline insurance processes like underwriting, processing claims, managing policies, and interacting with customers.
  • Regtech: Regulatory technology application programming interfaces (APIs) help businesses follow financial rules by giving them tools for tracking compliance, reporting on compliance, and assessing risk.
  • Stock Trading: Fintech platforms offer APIs that let businesses add stock trading features, so users can buy, sell, and manage stocks straight from their apps.
  • Portfolio Management Platform: Fintech-as-a-service APIs offer tools for building and handling investment portfolios, such as asset allocation, rebalancing, and performance tracking.
  • Digital Lending and Credit: Fintech services provide APIs that make digital lending and credit services possible. This lets businesses offer loans, check credit scores, and handle loans online.
  • Automated Advisors: APIs in this area let businesses offer robo-advisory services, which automate investment advice and portfolio management based on user preferences and risk profiles.
Fintech as a Service Image

What Contributes to FaaS growth?

Fintech-as-a-service can base its success on 3 key elements:

Heightened reach through interoperability and unification

Fintechs have a global reach in terms of payments, and FaaS has made the payments scene expand into previously unexplored locations.

FaaS integration is seamless, meaning user experiences can now reach new heights in terms of quality whether that’s in domestic terms or in international commerce.

In fact, expansion has never been easier as FaaS providers boast global networks which have perfect compatibility with local payment methods.

Moreover, with the help of scalable and universal APIs, financial planning has never been easier.

Leveraging disruptive technology

Fintechs-as-a-service can leverage highly innovative technology faster than any traditional company can.

Whether it’s a cryptocurrency, artificial intelligence, cloud-based software, or big data analytics, fintechs seem to be a cut above their traditional counterparts.

These innovations help bolster FaaS’ status in the financial industry.

Simplicity in global payments

While having reach is great, digital payments have been made incredibly simple due to FaaS.

They were a key driver for FaaS to scale their operations, and coincidently are a key driver to making other companies scale as well.

With fintech-as-a-service, companies can leverage a unique global network composed of local payment methods, meaning expansion plans can meet the reliability of local payment networks.

Is Fintech-as-a-Service Regulated?

Fintech-as-a-Service (FaaS) operates under regulations.. Regulation differs by country and financial service type. FaaS providers must meet AML and KYC requirements, obtain licenses, and follow financial rules regarding payment processing, loans, investments, and data privacy. Both FaaS providers and businesses looking for FaaS options need to do their research carefully.

Where Is the FaaS Market Heading?

FaaS market forecasts hint at a 24.8% growth from 2021 to 2026, with a projected market size of US$3.847 billion.

The numbers make it clearer for those who still might have doubts, fintech is a dominant force within the tech sector.

And, given how easily these entities can connect companies and transform shopping experiences around the world, it is fairly safe to say that FaaS will become even more prevalent going forward.

Last Words

Leveraging financial services to deliver a better-quality end product to users has become a reality for companies whether they want to expand, retain, or simply push for greater margins.

Accordingly, partnering with a FaaS provider who can deliver global reach and a plethora of payment methods has become crucial.

Luckily, there has never been a better time than now to achieve global reach with seemingly limitless scaling capabilities and none of the infrastructure requirements.

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