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 automating and enhancing 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.
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.
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 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)