Banking-as-a-Service Tipped to Reform Customer Experience in Finance and Beyond, Says Gartner

Gartner also sees chatbots and social messaging apps as disruptors to customer experience models in the banking industry and beyond

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Banking-as-a-Service Tipped to Reform Customer Experience in Finance and Beyond, Says Gartner
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Published: September 12, 2022

Zac Wang

Banking-as-a-Service (BaaS) will hit mainstream adoption within two years, according to a report from Gartner on the future of digital banking. 

Indeed, Gartner predicted that 30 percent of banks with greater than $1 billion in assets will launch BaaS in the search for new revenue by the end of 2024, and that non-banking entities will start to embrace BaaS offerings. 

BaaS is a set of financial services offered by chartered banks or regulated entities to power new business models for companies like fintechs, neobanks, and non-financial entities. This new model has deep implications for how organizations will build financial features into their customer-facing experiences and products. 

The benefits of BaaS are particularly clear for non-banking entities, which can leverage a regulated bank’s license to create innovative customer experiences rather than applying for their own charter. 

As Jeff Casey, Senior Director Analyst at Gartner, said: 

Technology innovations like these are driving bank and nonbank competitor activity, influencing customer demand for product and services, and shaping regulators’ actions globally.”  

Alongside BaaS, Gartner predicts that chatbots, public cloud for banking and payments via social messaging apps are innovations poised to disrupt the customer experience in the banking world and beyond. 

“Chatbots represent one of the primary use cases of artificial intelligence (AI) in banks and will impact all areas with communication between machines and humans,” said Gartner in the report. 

The company pointed out that chatbot uses are diverse, highlighting that the change from “the user learns the interface” to “the chatbot learns what the user wants” has implications for onboarding, training, productivity and efficiency among the company’s employees. 

Furthermore, for highly complex organizations like banks, the public cloud can provide substantial efficiencies, said Gartner. It allows banks to scale resources rapidly based on demand and meet regulatory requirements by delivering on temporary demands. 

Banks can then use the freed-up resources to take on new applications and platforms that enhance their operational capabilities. 

For example, the rise of payment via social messaging apps like Kakao Pay, WeChat Pay, and WhatsApp Pay have transformed how customers interact with their financial services providers

This was made possible thanks to the modernization of payment infrastructure and the ability to make use of open banking and payment APIs, said Gartner. 

Elsewhere, Gartner recently predicted that conversational AI will cut contact center agent labor costs by $80BN in 2026.  

 

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