Banking As a service or BaaS allows non-banks to offer core financial services to their customers by integrating with banks via APIs. Non-banks (like fintech and even non-fintech businesses) build products on top of the traditional banking infrastructure.
Let us say you own an online ticketing platform like BookMyShow.
Naturally, you want to increase sales and boost customer loyalty. So, here’s what you decide to do:
Offer customized cards to your customers.
Loyalty points for each purchase
One-click loans for upcoming shows.
Cash backs
We might think it is easy to achieve the above.
Offering banking services to customers comes with a lot of strings attached. In fact, We need to have a banking license or other related licenses for offering banking services like depositing and lending assets.
For Example, you need:
PPI (pre-paid instrument license) for issuing pre-paid cards.
NBFC license for offering loans for upcoming shows.
Above licenses are hard to obtain from government.
For more info: https://skolaparthi.com/introduction-to-banking-as-a-service
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