The demand recorded in the market will grow at a strong CAGR of 15.7% from 2021 to 2031, predicts Future Market Insights (FMI) in its analysis of the banking-as-a-service (BaaS) platform sector.
|Base year (2020) Market Value||US$ 2.5 Bn|
|Projected year (2031) Market Value||US$ 12.2 Bn|
By the end of 2021, the market is expected to be valued at more than US$ 2.8 billion, according to the analysis. According to FMI, the availability of application programming interfaces (APIs) and the rapid evolution of technology have opened up opportunities for platforms that offer banking as a service (BaaS). These technologies are now crucial for enhancing economic competitiveness, which fuels market expansion.
BaaS has arisen over the past few years as a fresh and inventive method for banks and third parties to work together to offer clients digital-only banking products and services as well as improved customer experiences. BaaS has significantly improved collaboration between banks and third parties and benefits both established participants in the financial services sector and newcomers.
Customers now have better digital experiences because of increasing innovation brought on by growing competition in the banking industry. In terms of the financial services and products they utilize, customers now have more options than ever before.
Key Takeaways: Banking-as-a-Service (BaaS) Platform Market
- By solution, the banking-as-a-service platform segment is anticipated to account for the leading share in the global demand for banking-as-a-service (BaaS) platforms during the forecast period. However, the banking as a service APIs segment is estimated to grow at a robust CAGR of 17.1% through 2031.
- By enterprise size, the integration of the BaaS platform in small & mid-sized organizations is anticipated to increase at a CAGR of 16.6% between 2021 & 2031, while large organizations are currently dominating the market share.
- The adoption of the banking-as-a-service (BaaS) platforms by fintech corporations is expected to rise at a maximum pace. As per FMI, demand in this segment will increase by a CAGR of 18.2% between 2021 and 2031.
- Europe is expected to lead the market followed by North America in 2021. South Asia & Pacific is anticipated to emerge as the fastest growing region between 2021 & 2031.
- The market in Japan is expected to progress at a CAGR of 17.9% through 2031.
- In the U.K., sales are expected to increase at a CAGR of close to 16% over the next ten years.
COVID-19 Impact Analysis on Banking-as-a-Service (BaaS) Platform Market
Due to distant working and social isolation, which have allowed digital banking to amass a sizable customer base, the COVID-19 outbreak has resulted in increased utilization of banking components. A turning point in digital transformation has been COVID-19 because financial institutions that made strategic and financial investments in the digitization process over the past ten years were better equipped to deal with these changes and the crisis.
The industry has previously experienced significant growth, but due to the unexpected COVID-19 outbreak and the increased demand for frictionless banking transactions, the market will experience even more growth in 2020. This expansion will be mostly fueled by shifting consumer behavior, as more individuals are turning to internet banking instead of visiting bank locations.
Due to several circumstances, including the increased use of electronic transactions during pandemic emergencies, and to enable stress-free banking activities, the deployment of a banking-as-a-service (BaaS) platform would be extremely helpful during the COVID-19 period.
Rapid Shift towards Embedded Finance
Nonbank organizations are increasingly providing financial services including bank accounts or digital wallets, payments, and lending. Today, businesses of all sizes and stages of development—including retailers, telecoms, major tech and software firms, automakers, insurance organizations, and logistics companies—are thinking about and getting ready to introduce embedded financial services to cater to business and consumer groups.