I see a lot of people writing that Banking-as-a-Service (BaaS) is dead. That saddens me a little, as I created the term twenty years ago – have I mentioned this before? – but I agree. It is now past its prime. It was replaced by open banking. Then there was embedded finance and today it is all about agentic AI. And then … what’s next?
Well, things just evolve constantly. The only constant is change. As I blogged the other day, the Quantum Financial System is next, but that begs the question: what comes after that?
Who knows? But the key thing is that things change. The only constant is change.
This then challenges every bank decision maker and fintech founder to wonder how they can adapt and evolve strategically. Take Monzo or Revolut and we’ve seen them grow from prepaid cards to full service financial firms, but you can never stagnate or wait. It is constant evolution, adding more service, data, information and knowledge to every transaction.
This is the trick!
And right now, the trick is to focus upon two things: the customer (first) and the experience (second). Customer experience is what it's all about. This is why the fragmented and difficult processes of checking out is so frustrating. You would think this would have been solved by the likes of Stripe and Adyen, but it is getting worse, which brings us back to BaaS.
The BaaS of twenty years ago, where we were talking about integrating apps and APIs, is still are relevant today as it was then. It’s just a different thing. It has evolved and adapted. It’s not open banking or embedded finance. It is now integrated finance.
Integrated finance – whether it is quantum, open or embedded – is where we no longer need to think about the payment, the bank or the provider. We just get it done. Funnily enough, ten years ago, I called it sentient banking …
… sentient banking is where you don’t think about banking, payments and finance. It’s just all done for you – embedded and open – and you only need to think about it when you have to, for example, when you are about to break out of the limits set by the bank or the limits set by you.
We are pretty close to sentient banking thanks to AI, as I outlined in my last book, which has the tagline when money thinks for you. We need to get to the stage where BaaS, open, embedded finance and payments creates a world where people no longer have to think about their money because their money thinks for them.
This vision may be too ambitious, but it has to be the end goal of all our systems developments of the past decades, with quantum qubits added for the next decade. After all, the only constant is change.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...
