At its Finastra Forum flagship industry event in Dubai, Finastra today unveiled a market assessment report: ‘Banking as a Service: Outlook 2022 | Paving the way for Embedded Finance’. The research canvassed the opinions of 1,600 senior industry executives globally, exploring the opportunities presented by Banking as a Service (BaaS) – to provide retail or wholesale banking products and services to customers in context, as a service, using an existing licensed institution’s secure, regulated infrastructure with modern API-driven platforms.

The Finastra research reveals the true extent of the appetite for BaaS, with almost 85% of respondents already implementing or planning to implement BaaS over the next 12-18 months. Key findings include:

• More than 80% of regulated financial services providers expect the overall BaaS market to grow. Of these, 30% expect it to grow by more than 50% per year over the next five years

• BaaS represents a $7 trillion opportunity – distributors, including retailers, e-commerce firms and other consumer brands, are migrating towards BaaS solutions and expect overall growth to exceed 70% per year over the next three years; 60-70% of distributors want to increase their spending on financial partnerships (including BaaS)

• SME lending, corporate lending and corporate treasury/FX services are poised to gain the highest traction. Simplifying SME lending through BaaS is expected to drive growth of 30% by 2024

• The majority of enablers, including bigtechs and fintechs, expect the overall BaaS market to grow by more than 50% over the next five years. Some 40-50% of enablers want to increase their partnerships with distributors and financial services providers by more than 50% in the next five years

• In EMEA, the majority of senior executives are looking to increase their BaaS expenditure by up to 49% over the coming year – more than their counterparts across the Americas and APAC

Nour Sabri, Lead Client Partner, BaaS at Finastra said, “Financial services in MEA has undergone a major digital transformation in recent years. Institutions have embraced new technologies and partnerships to improve how they serve their customers. The rise of BaaS is the next step in this evolution – providing services to customers where and how they want to receive them. While early adopters in MEA – in the UAE in particular – are leading the way, it can take time to develop partnerships and strong use cases, as well as to assess profitability and scalability. As BaaS reshapes the future of financial services, institutions cannot afford to delay acting on the enormous opportunity it brings.”