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BaaS hits the mainstream for US banks - CCG

BaaS hits the mainstream for US banks - CCG

CCG’s second annual US banking study titled ‘The Banking Battleground 2022: Finding the opportunities,’ has found that US bank executives are showing strong interest in pursuing and offering Banking-as-a-Service (BaaS) options.

Surveying 127 C-level banking executives across the US, the survey analysed progress across the three key areas of business trends and priorities, technology and innovation, and new frontiers.

The report states that the economics of BaaS are making it an extremely attractive proposition for banks across the US, especially for banks with under $10 billion in assets. These banks are exempt from interchange caps and are positioned to make money from customer swipes.

According the CCG’s data, while progressive institutions (defined as acquiring less than 50% of their technology from a single vendor, working with fintech companies as an integral part of their strategy, and making at least one fintech investment) are more like to already be offering BaaS solutions, 76% of respondents to the survey are at least somewhat interested in providing BaaS solutions if they don’t already, and over half stating that they’re very interested in doing so.

“This suggests that BaaS has officially hit the mainstream, and we will continue to see banks jumping in at an accelerated rate,” the report reads.

The survey also highlights a number of other findings in the US banking space, including:

  • The top retail priority for C-level US bank execs is around improving the customer journey, with 82% of progressive respondents citing it as a key focus area. This was closely followed by integrating with fintechs to provide new services, and the need to stay on top of regulatory changes.
  • Digital account opening is likely to remain a major focus for business bank executives for the time being. It topped the list for both traditionalists and progressives when respondents were asked to rank a number of areas based on how important they believe each will be to customers in the next five years.
  • Cannabis could be highly attractive to US banks, being a highly regulated industry that demands knowledgeable advisors and financial stewards, however bank executives express considerable reluctance when it comes to getting involved with the cannabis industry. Specifically, only about a quarter of progressives and traditionalists in thestudy alike think they will very likely offer banking services to cannabis companies in the next five years.

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