The most successful fintechs are undoubtedly those offering Banking as a Service (BaaS). By putting their innovative skills at the service of numerous players, they are shaking up the traditional banking landscape and gradually becoming indispensable.
Fintech, APIs and data distribution
Offered by numerous fintechs, the leader of which is Treezor, founded in 2016, Banking as a Service consists of providing banking services to unlicensed players. To achieve this, fintechs offer their technological expertise via APIs ("application programming interfaces"), the programming interfaces that enable access to services or information within companies. In particular, they offer the possibility of distributing financial data.
While APIs have been around for a long time, the possibility of commercializing them on an industrial scale is more recent. Traditional banks rely on cumbersome and costly IT systems, whereas fintech enables various players to benefit from more fluid technology at lower cost.
Treezor, a platform acquired by Société Générale
The Treezor fintech dominates the Banking as a Service market. It took 18 months to build its platform, during which time it obtained approval as an electronic money institution with payment services.
Treezor's first customer was Lydia, a mobile payment application initially aimed at teenagers and young adults. Treezor sees itself as the fintech of fintechs, using its platform to offer all possible payment services to various players, fintech or otherwise.
It sells its services to neobanks, e-merchants and collaborative platforms alike, and has even developed an API-based check cashing service. It has been acquired by Société Générale, an operation that enables the traditional bank to round out its offerings and the fintech to strengthen its investment capabilities.
Credit-related Banking as a Service offers
Until now dominated by Younited Credit, the market for BaaS-based credit offers is about to gain momentum. With a French banking license, Ditto, which belongs to the British Travelex group, has just launched its credit service aimed at fintech companies and SMEs. Its first offering will be dedicated to 100% digital short-term credit.
However, there are still many challenges ahead when it comes to Banking as a Service. More and more players are seeking technological independence, such as Xaalys, the neobank for teenagers, which is considering leaving Treezor. In 2020, we must also take into account the very likely arrival of the GAFAs on the market. A number of partnerships have already been formed, such as that between Goldman Sachs and Apple, or Citigroup and Google.