XaaS In Finance: The Dawn Of A Revolutionary Technology

Imagine a world where all banking services are at your fingertips. A world where every banking service, like lending, insurance, payments, etc., is accessible to you at any time of the day and as flexible as you want it to be. Too hard to believe? What if we tell you that this is not the technology of the future but the present technology? Xaas, or Everything as a Service, is a new emerging technology that is said to reshape the banking and finance sector today. In this blog, we will share everything you need to know about this revolutionary technology and how it has the potential to change the banking sector forever. 

What Is XaaS?

As mentioned above, XaaS stands for Everything as a Service. Using cloud computing, the XaaS model allows Infrastructure, platforms, software, and even business processes to be delivered to you over the Internet on a pay-as-you-go basis. This means you only have to pay for the service you want to use. This technology is gaining traction all around the world, and more and more banking and finance institutions are incorporating this into their existing processes. As per reports, the global market of XaaS reached around $281 billion in 2018 and is expected to grow at a CAGR(compound annual Growth Rate) of 19.2% to reach around $1.6 trillion in 2028. This shows just how revolutionary XaaS really is. However, we still haven’t discussed this technology’s evolution and implications in fintech. So, let’s get right into it.  

Unfolding Of XaaS In Fintech

In the old times, banking and finance revolved around the closed quarters of banks and financial institutions. At the dawn of the 21st century, banking and finance institutions started leveraging technology to make their operations more efficient and profitable. This started a revolution of its own and paved the way for a new type of financial institution, Fintech startups. These newcomers quickly started building off, leveraging the technology available to them. 

The next technology that changed the game was cloud computing, which paved the way for XaaS-based software. The first XaaS-based software included cloud-based SaaS or Software as a Service models like accounting and CRM(Customer Relationship Management). This software offered a seamless internet experience, allowing fintech to reduce operating costs and improve productivity and customer feedback. 

As advancements were made in cloud computing technology, new XaaS applications emerged, taking the technology to the next level. Today, XaaS is capable of doing much more than that, and the BFSI ( Banking, Finance Services, and Insurance) sector is extensively using this technology to make their operations seamless and efficient. With that being said, the next thing to discuss is the implementation of XaaS in the BFSI sector. 

Applications Of XaaS Models In BFSI

Since the advent of XaaS, the BFSI sector has been using it extensively to streamline its processes. Some of the XaaS models being used in the BFSI sector include BaaS, PaaS, IaaS, and LaaS. 

BaaS Or Banking As A Service

BaaS, Or Banking as a Service, is one of the most important models of XaaS, and it has revolutionized the banking sector by enabling businesses to offer banking services. Businesses not associated with banks could also integrate financial products into their services using APIs. However, for banks, it presented a whole different opportunity, as banks were able to reach new potential customers as well as existing customers and generate new revenue streams without having the need to invest massive capital. XaaS also enables fintech to launch new services and offer these services to a wide range of audiences without making any substantial capital investment. 

One of the biggest examples of BaaS can be seen in the UK, where Raisin, an online savings marketplace, leveraged the BaaS services of British Challenger Bank or Starling to streamline its account opening process using Starling Bank’s APIs. This allowed Raisin’s customers to easily open new accounts, make deposits, and withdraw their money. 

PaaS Or Payments As A Service

The next thing to talk about is PaaS or Payments as a Service. This model enables businesses to integrate payment processing services into their existing platforms. This reduces the time and complications associated with payments and streamlines the whole process, which allows businesses to enhance their customer experience. Moreover, this allowed businesses to focus more on their core services rather than being stressed out about backend payment processes. 

The best example is integrating Braintree’s PaaS solution with Uber’s payment processing services. This allowed Uber to make payment processing much less time-consuming and also enhanced its customer experience. 

LaaS Or Lending As A Service

LaaS applications, such as lending and loan approval platforms, have allowed new businesses to emerge. These platforms use the LaaS platform of existing banking institutions’ application processing, credit evaluation, loan servicing, and collection. These platforms started leveraging AI to enhance their processes further, allowing for autonomous risk assessment. 

Among the most prominent examples is the integration of Kabbage’s LaaS platform into ING’s lending and credit evaluation processes, which allowed customers to apply for loans through ING. 

IaaS Or Insurance As A Service

This is another game changer in the field of finance. It allowed businesses to provide insurance to their employees and customers over the Internet. It also benefited banking businesses by allowing them to grow into a market they weren’t previously available in, giving them a chance to enhance their customer experience. 

For instance, many transportation companies, like Uber, integrate bank IaaS solutions to provide insurance for their riders and customers. 

A New Age Of Banking Is Here

XaaS is one of the fastest-growing tech trends in the world. As mentioned above, the industry is already growing at a marvelous CAGR of over 19%. This ensures that more and more businesses will start using XaaS to streamline their business processes. For banking and financing institutions, this opens up an opportunity to keep up with the rapidly increasing customer demands. Although there are a few challenges that need to be sorted before the widescale integration of XaaS services, it is safe to say that this is the beginning of a new age in the banking and finance sector. 

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