The pandemic has fuelled the banking sector's drive towards offering wider-scale banking as-a-service (BaaS), according to research undertaken among bankers by cloud service and data centre firm Equinix.

The report - The Future of Banking-as-a-Service - was produced by Equinix and the Open Banking Expo based on the views of staff from 100 incumbent banks, neo banks, FinTechs, technology providers and consultancies across Europe.

“Business leaders have been talking about disruptive technology for many years, but few could have imagined the catalyst for disruption that 2020 had in store for them when the pandemic hit,” said Equinix.

It added: “As the digital economy continues to evolve, merchants, consumers and businesses are changing the way they interact. This has resulted in a rising demand for personalised experiences which offer an opportunity to leverage an ecosystem-based value chain that supports a frictionless user experience.”

To take full advantage of this opportunity, the research confirms increasing numbers of non-finance digital brands are embracing BaaS. “At the same time, this allows banks to attract new customers and offer a greater range of services to existing clients,” says the report. “BaaS is increasingly seen as a way to complement banks’ core businesses,” it adds.

The report found that 76 per cent of businesses are now “more likely” to use BaaS as a route to market since the pandemic hit.

In addition, 91 per cent of respondents view BaaS as a “faster way” to bring products to market.

And 80 per cent now see BaaS as a way to “extend their reach” into new geographical markets.

Adrian Mountstephens, senior manager for business development for banking and payments at Equinix, said: “It’s clear that the global pandemic has brought into focus what businesses really need to do to go digital. As BaaS promises a fast and effective route to market for financial services products embedded in digital channels, we expect to see adoption increase through 2021.

“However, there are significant macroeconomic headwinds across the globe, making conditions challenging for everyone.”

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