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BaaS is not for Everybody

Embedded Finance or Banking as a Service (Baas) is an emerging focus for many organizations. There are hundreds of companies with large customer bases who are looking to monetize their relationships. And FinTechs, Processors and banks are lining up to provide payment solutions to satisfy that need. Whether it’s providing a loan during a real estate transaction or pushing an insurance refund directly to a customer’s bank account, they are plenty of opportunities to make payments seamless for the end user. The math seems to be customers + payments = revenue. How can it be simpler than that?

Well, there is an old adage that “The Customer is King”. To that end companies strive to increase their customer satisfaction and monitor metrics like NPS (net promoter score). The most customer centric companies live and breathe on customer feedback and are laser-focused on providing amazing experiences. Studies show they bring in 5.7 times more revenue than their competitors. And they often have vast and growing customer counts. They have gained the customers trust and have earned the right to expand market share and offer new services/products.

However, there are companies with millions of customers that have not earned that trust. Often they have a monopoly that leaves customer few alternatives. Comcast has over 50 million customers, but cable companies’ treatment of customers are still compared to a DMV visit. Regardless of the customer count or dominance of a market/vertical, if a company has not earned the customers trust then they probably won’t be successful adding complementary products.

Therefore, all companies are not created equal. For a successful BaaS / embedded finance deployment, providers should evaluate and target customer centric companies.

So a customer centric company is key, but are there certain industries that are better suited for BaaS? I believe all industries can benefit of offering convenient, simple payments during the customer lifecycle. But, there are a few that have a greater need for embedded finance.

Gig Based Industries

The rise of 1099 workers grew rapidly prior to COVID19 and they often were unbanked or underbanked. The pandemic turbocharged digital adoption across products and demographic segments. Uber is now reporting that 70% of its driver payouts through Instant Pay provided by Green Dot. And the largest Direct Selling Organizations push commission payments using Visa Direct or MasterCard Send.


While HAS cards have been around for many years, there is a lot of room for embedded finance in the healthcare industry. Most medical treatments are elective and not covered by insurance. So integrating loans or other banking services into the transaction could expand access to medical services.


Margins for Travel companies are notoriously low, so the industry needs to offer complementary services for additional revenue. A BaaS implementation can make the process more efficient and increase adoption. Whether it is selling travel insurance, financing a vacation or providing FX services, travel is uniquely suited to offer payment services.

Regardless of the industry, a thoughtful BaaS strategy can add value to the company and customer alike. However, before you tie down resources, make sure you ask some basic qualification questions.

  • Are they customer centric?

  • Do they have a right to win against competitors with a banking, lending, or payments offering?

  • Will your BaaS offering ultimately reach the volume necessary to justify the time and resources required for implementation?

If the answer to these questions is YES, then you may have the beginning to a great partnership. Feel free to schedule an appointment for a no-cost evaluation of your BaaS strategy.


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