More than a trend, Fintech as a Service is conquering the market with the revolutionary use of technology. It is also proving that the financial sector can be innovative, transparent, and focused on the customer experience.
Published on 11/23/2021. Translated by Reinaldo Zaruvni.
Convenience, and innovation seemed to be off the financial sector's table, but nowadays the world shows us something entirely different. For example, Fintech as a Service (FaaS) came to change the game, and it brought transparency, reliability, and attractiveness through unprecedented technologies application, as well as it improved user experience.
FaaS is an inevitable response to market demands, since startups from this segment offer personalized financial services and digital products to companies which need to enhance their business models (or to those which desire to implement the most advanced payment, credit, investment, and management solutions).
Their customers do not need to worry about such tools' development and compliance. After all, these startups take care of everything. That is why Fintech as a Service' players are in big companies' sights and driving the emergence of new opportunities. Digital Transformation acceleration enlightened the need for support like this.
Technology use in the financial sector is nothing new. However, companies' Digital Transformation constant growth also comes with information exchange new demands, as well as with transactions costs reduction new needs.
That is why Fintech as a Service startups have been multiplying over the last years - and an IndustryARC report estimates that they will reach $161 billion in the worldwide market by 2026. Such a heat may be explained by the way digital technologies are remodeling payment, management, credit, insurance, and financial methods.
Their ability to work with several services and products and to adapt their offers to different sectors is another reason which justifies the high search for them. According to research of Distrito innovation hub, there are 742 fintechs in Brazil; 16.4% of them are FaaS.
Fintech as a Service is a booming market, so it is filled with many business opportunities. However, if a company decides to invest on its own platform, FaaS sector's trends must be considered.
For example, to traditional financial institutions, fintechs may offer integrated software through Application Programing Interfaces (APIs) which directly connect themselves with banking operations. On the other hand, companies which do not belong to banking sector may benefit themselves from digital products and services (such as safe payment platforms) that may solve regular operational issues.
Take a look at the FaaS sector's main trends:
Instant payments: payment through QR Code technology is one of the biggest fintech sector's promises. That is because any mobile device with a camera nowadays becomes a truly banking device. According to a Newzoo study, there are more than 109 million smartphones in Brazil, which makes it one of the five countries of the planet with the most users.
Open Banking: this is the FaaS sector's major bet. With it, customers allow banks and third-party financial service providers secure access to their banking and other financial data. In turn, these companies may offer them personalized products, and services, meeting their clients' needs - who can count on improved control of their information. Businesses which rely on Open Banking also see as an advantage their database growth. After all, they receive information that their competitors have gathered before.
Blockchain: a system based on quick, safe, and clear information tracking and sharing, Blockchain technology allowed the emergence of digital currency, but it may help with other disruptive digital products creation, like those related to financial transactions, payment processing, and fraud prevention. In other words, Blockchain comes with great innovation opportunities.
Invisible Bank: going to a bank, standing in queues, and facing a lot of bureaucracy belong to the past. Invisible Bank provides smart connection between customers and institutions thanks to artificial intelligence, APIs linked to voice assistants, and cloud computing. Effortless online transactions provided by it also reduce costs for all parties.
It may seem that those Fintech as a Service universe trends have emerged from Sci-Fi movies, but they are already a concrete reality. Furthermore, such business possibilities are not restricted to payment methods, and digital accounts.
For example, there are some fintech companies which offer package tracking systems, some focused on rural producer's credit granting improvement, in corporate benefits concession, and even in comparison of values of insurances offered by several companies aiming personalized experiences to their clients.
Besides, FaaS are burying old business models and revolutionizing the financial sector with their unprecedented initiatives, like peer-to-peer lending, digital currency, crowdfunding, and artificial intelligences which assume the role of finance assistants.
Then, when a company decides to develop a Fintech as a Service product, it must first consider which economic sector its solution will attend to. Companies from different ones have increasingly been betting on hiring FaaS to incorporate innovation into their business models.
Retail sector is one of those which are facing a revolution driven by digital payment adoption, whereas the industrial sector is well on the way to establishing digital bank accounts to its entire production ecosystem (employees, partners, and providers).
Fintech as a Service shows us the future is now. That said, the number of fintech companies has been exponentially growing in Brazil over the last few years. From 2019 to 2021, it has increased 34%. Therefore, staying out of this scenario may not be a good choice.
Thinking about joining Fintech as a Service market? Count on ateliware to create your own tailored FaaS platform. After all, the history of Trio - and of its API which helps other innovative business to access their client's banking information in a simple and in a safe way - started here. Guided by design, and by technology, this is the perfect place to financial digital products development.
Trio is an ateliware's spinoff born to lead the financial ecosystem's digital transformation through Open Banking. Focusing on data security and technology, its processes start from secure banking information access consent given by its clients (access to all financial data they desire to share) in order to provide them the chance of creating unique financial experiences. With such a "bridge" between data and client, it is possible to deliver a plug & play API for bank reconciliation, fraud reduction, smarter credit scoring, and more - making any business more digital than ever.
According to a SmarterHQ report, 90% of consumers say they're willing to share their behavioral data in exchange of benefits that make shopping cheaper or easier. Therefore, Trio has looked to strategically act on Open Banking evolution (Open Finance), by which not only bank institutions, but any company can develop innovative banking experiences. It translates the FaaS concept.
Peterson F. dos Santos, ateliware's former CTO, is Trio's founder and its CEO. Trio counts on investor angels Maria Teresa Fornea (VP of Home Equity at Creditas), and Fabiano Rochaloures (Head of BizDev at Mambu).