Banking As A Service — Bring Corporates Into The Digital Age
Banking as a Service (BaaS) is poised to change the end user experience of corporates as they navigate the daily challenges of cash flow management, supply chain activity and the need to become digital-first.
In just one of the most recent announcements, Stripe said it is partnering with several large banks to offer financial services via Stripe Treasury to offer debit cards and bank accounts to online merchants and other enterprises. The banks signing on to the new offering include marquee names such as Goldman Sachs, Barclays and Citigroup.
The enterprises that are able to tap the new financial services offerings include the merchants and vendors who use Stripe’s payment processing platform. And here, we contend, is evidence that platforms offer a technically agile way to extend the range of services that can be deployed to meet the evolving needs of corporates as they continue to grapple with, and transform as a result of, the great digital shift. Stripe has already announced that Shopify is a customer for the new banking services, and will offer balance accounts to its own merchant base. The accounts are to be held by Evolve Bank & Trust.
As for the services, the merchants have what is being termed “near instant” access to revenue earned through Stripe, and the cash flow can be spent across dedicated cards, spanning bill payments and other activities.
The interconnection of those daily financial events, and the technology underpinning it, gives the nod to the need for corporate banking to become more streamlined, and in some cases, proactive in serving the daily needs of enterprise clients.
Of course, banks, scrambling to meet those evolving needs would be burdened by doing so if they weren’t able to build on top of existing tech infrastructure. That’s one of the key advantages of BaaS, which, as part of the evolving open banking landscape, brings third-party innovation together with banks’ account holder data (accessible through APIs — and, as noted in the Banking as a Service Playbook, an important framework for banks as they endeavor to create value-added services). Through that connectivity, as noted in a recent Smarter Payments Tracker, “financial service providers can create one-stop platforms.”
And in an interview with PYMNTS, Frank Dux, managing director of CoCoNet, said corporates are getting the opportunity to move beyond the constraints of using outdated technology to address critical operational needs.
“When you look at retail banking, there have been a couple of newcomers in the market in recent years who come in with shiny, new apps,” he said. “So far, corporate banking users are always left out in the cold.” But corporate end users are demanding the same types of banking experiences they are now offered in their personal lives, he noted, spurring partnerships to take shape amid the traditional “build vs. buy” debate. “Looking into the future, everything is about connection, which is available thanks to APIs,” said Dux. “They’re out there; they just have to be used.”
Money has been coming into the sector, as investors fund the tech innovators that are also seeking to broaden the digital reach of corporate banking — on an international stage. As profiled in this space in recent weeks, several small and medium-sized business (SMB) BaaS companies secured new funding, where Brazil’s BizCapita, which offers banks and other financial institutions (FIs) a range of solutions they can provide to their own SMB customers, said it raised $3 million in funding. Elsewhere, StreetShares raised $10 million to expand small business lending technology for banks and credit unions. And Radius Bank said it is expanding its Banking-as-a-Service offering for its commercial customers with the launch of its Commercial API Banking Platform.