An Overview of Fintech as a Service (FaaS)

Posted on May 20th, 2022

Fintech, short for financial technology, is that stream of business that challenges long-established ways of banking and finance by using innovation and technology to spearhead a financial revolution. We have come a long way from traditional banking, where the protagonist’s role was played by cash and other physical commodities, to the present where a majority of our financial activities have transcended into the virtual space of the internet.

And that is precisely how Fintech has taken the world for a spin by providing options like easy money tracking and management, global payment options, quick loans, excellent customer service, and much more. The limitless world of Fintech has surpassed the older notions of only engaging with financial institutions and has branched out into several sectors, including cryptocurrencies.  

I think it is safe to say that the world of finance has witnessed an evolution almost as remarkable as mankind itself!

Fintech as a Service (FaaS), as the phrase suggests, means- when a company develops financial technology to sell it as a service to other companies. This allows companies that don’t originally have technological leverage, to equip their systems with Fintech that could either be used in-house or externally or in both ways.

How Does This Work?

FaaS has emerged as the prodigy that everyone either wants to parent or employ. Owing to the wave of competitive creativity in this field, we have been able to establish a broad spectrum of FaaS applications.

To enable these innovative capabilities in FaaS, Fintech servers mainly develop and employ APIs (Application Programming Interface) that bridge the technological gaps, allowing the delivery of these services. The Fintech server embeds its APIs in the client’s existing applications, which enables the client to fuse their products and services with the Fintech server’s technology, making way for new methods of serving customers.

These services range from e-wallets, KYC (Know Your Customer), new account openings, managing remittances, transaction tracking, identity verifications, card issuances, and global payments for the management of the client companies’ financial operations. With a reinforced focus on customers, the company can also provide more customer-oriented services to its customers like customized transaction reports, flexible standing instructions, and 24*7 customer service.

With FaaS in place, it has become possible for companies to function without investing in any infrastructure, focus on consumers, and most importantly, they are able to integrate and curate existing dissembled financial services in a much more systematic and easier fashion.

What Benefits Does FaaS offer?

Apart from empowering companies to gain traction as Fintech, there’s a lot more that FaaS offers:

Opportunity for Low Investment: A company’s investment is substantially lowered when it opts for FaaS from a third party. It can evade setting up a dedicated infrastructure, acquiring licenses, hiring developers, conducting trials, and even maintenance of the system, as all of this would be taken care of by the third party. What’s even more lucrative is that the companies can reduce their operational cost by choosing providers that suit their budgets.

Incredible Flexibility:

The scope of agility in FaaS is enormous, which is also the underlying reason behind its success. With FaaS, the range and timeliness of services offered at traditional banks can be propelled to a different dimension altogether. Easy identity verification, one-click loans, and payments, frictionless customer service, and effortless international payments, are some of the many services that can be offered by a company that is fueled by FaaS.

Secure Setups: Instead of going through the trouble of acquiring licenses, to set up independent gateways, the company can opt for a FaaS supplier with these prerequisites, which would give them a thick layer of security. With secure APIs in place, not only would the company be secured, it would also make the network much safer in comparison to every company developing its own Fintech.

Timely Results: With the third party taking the helm on the technological front, the time taken for a company to launch their Fintech services is considerably reduced as they don’t have to start the entire process from square one. Once they are technologically equipped, they can start off immediately, without conducting market trials, saving a lot of time and resources. Since the third party is also going to look into the maintenance sector, the company doesn’t need to allocate any resources there as well.

Customized Services: FaaS platforms allow incredible space for customization. They allow the company to keep its voice and look, by only taking charge in the backend. This way, even if the company is remodeled, the changes in the backend will only have a more pronounced reflection of the company in the front.

Fintech Trends

The origin of Fintech has witnessed marvelous step-ups, and it is only recently that the world has started realizing the tremendous scope that this possesses; the path to future-proofing.

According to the Financial Express, the Fintech market is all set to reach an estimate of $310 billion in terms of investments. This colossal valuation has been estimated to be almost double what it was in 2018. The other new shoots like cloud computing, neo-banking, blockchains, and e-commerce in this industry, which share a taut relationship with Fintech are also going to witness an insane jump.

I think we could all agree that equipping companies Fintech-ly is the new black.

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