How BaaS Is Transforming Emerging Markets?

Want to open a new bank account? Terrified, imagining the long queues, endless form fillings, and waiting months for approval? Here's some good news for you that may help reduce your anxiety. 

BaaS! 

No, no, we are not saying enough! We are talking about BaaS, or Banking as a Service. BaaS provides innovative solutions to customers in an era where technology has significantly impacted the banking industry in India, bringing about numerous positive changes.

A Detailed Explanation

Now, you may be curious to know about BaaS. Here is an explanation.

Suppose BaaS is a kitchen where the traditional banks are the chefs. They provide all the ingredients and cooking tools. Various fintech companies, e-commerce platforms, and others act as the restaurants that access these materials and prepare unique dishes. Instead of developing their infrastructure, they can seek assistance from traditional banks to provide financial services to their customers.

For example, if you are accessing PhonePe or Google Pay to make payments, you are using BaaS. These apps process your transactions by using the infrastructure of their partner banks.

Benefits of BaaS:

So, how does BaaS benefit consumers? Here’s how:

No Barriers Anymore:

Initially, it was difficult for banks to reach remote Indian villages due to high infrastructure costs. BaaS has completely changed this notion. They have made the process so easy that through these platforms, a rural farmer from a remote corner of the country can now book insurance from their smartphone.

Another example is WhatsApp Pay. Millions of Indians are already comfortable with this messaging app. So, when they included BaaS, people found it much easier to access banking services. They did not have to learn new interfaces or download other banking apps.

Practical Usages:

This system is influencing various businesses across the country. Different well-known e-commerce platforms are now offering immediate credit to customers during checkout. Alongside, food delivery apps are also emerging with digital wallets and loan services. 

With the help of this banking system, ed-tech companies are now offering flexible payment options, student loans, scholarships, and other facilities. Naturally, the learners are benefiting from it.

Cost Effectiveness: 

It is not easy to build a bank from scratch. With the introduction of this banking system, new entrepreneurs interested in starting companies can enter the financial market without bearing heavy costs. Naturally, this gives rise to competition, which results in innovations and the market gets better products at lower prices.

What Are The Challenges?

Not everything is good about a new product. There are some glitches. 

• The exposure of users' data. So, there must be adequate ways to protect privacy and secure data.

• Not every corner of the country has access to the Internet or smartphones. So, India needs to work on their digitalization process.

• Technology is rapidly changing, and accordingly, there must be continuous upgrades as well.

However, despite all these problems, the future of the financial industry looks bright. With this new system, banks, the government, and startups can work together.

Are you still skeptical about accessing financial services? Do not worry so much. Just plunge into the system. BaaS is incredibly promising in our country. With the continuous improvement of Internet connectivity and growing interest in digital literacy, more people will embrace this service. It will revolutionize our lives by being embedded everywhere—from vegetable markets to mutual funds. So, it is just the beginning of a positive transformation of our living styles, working patterns, and dreams.