Innovation in the financial sector has always pushed boundaries, with major leaps of advancements in the integration of technology and services. Some of such notable innovations that have vastly improved financial efficiencies include internet banking displaced paper statements and servicing at bank branches, and in most recent years, tokenised payments through mobile phones that displaced the need for physical cards.
One of the most significant shifts in the past decade has been the rise of ‘Open Banking’, where banks and financial firms share consumer data with third parties through APIs. This proliferation of Open Banking across major financial cities began with the European Union (EU) introducing the world’s first Open Banking regulations in 2015, followed closely by a ruling for the nine biggest UK banks to allow licensed start-ups direct access to their data in 2016.
Since then, other major financial hubs including Hong Kong, Japan, Australia and Singapore successively introduced similar regulations, resulting in a global boom of fintech activities that dramatically disrupted traditional financial systems, benefiting consumers and businesses alike.
Today, fintechs are set to continue displacing traditional banks. In 2021, 41 per cent of retail consumers surveyed by McKinsey said they planned to increase their fintech product exposure. In 2022, 35 per cent of the small and medium-sized enterprises (SMEs) in the United States considered using fintechs for lending, better pricing, and integration with their existing platforms while in Asia, 20 per cent of SMEs leveraged fintechs for payments and lending.
According to McKinsey’s analysis, fintechs accounted for five per cent (or US$150 billion to US$205 billion) of the global banking sector’s net revenue in 2022. They estimate this share could increase to more than US$400 billion by 2028, representing a 15 per cent annual growth rate of fintech revenue between 2022 and 2028, three times the overall banking industry’s growth rate of roughly six per cent.
To capitalise on this demand, fintechs will need to rapidly launch relevant products and services to stay ahead of competition. However, ensuring that such products remain compliant and efficient operationally requires acute expertise and significant resources.
The details: The future of fintech with ‘as-a-service’ models
This marks the start of an accelerated adoption of ‘as-a-service’ models – an approach that allows businesses to integrate solutions without the complexity of building from the ground up. By tapping into established financial infrastructures, fintechs can create and launch customer-first products and services faster and at a fraction of the time and cost, democratising access to regulatory controls, technology and applications.
Also Read: The future of payments in SEA: Regional cooperation remains critical in pushing for progress
The initiation of ‘as-a-service’ models in the financial industry started with BaaS (or Banking-as-a-Service). Following the growth of Open Banking, fintechs were able to tap into APIs to access foundational banking products such as virtual bank accounts and local networks for collections and payments. Soon, other new constructs started getting into the market including Cards-as-a-Service, Payments-as-a-Service etc to facilitate quicker access to myriad payment platforms.
DCS Innov is set to revolutionise this space with InstaWally, one of the world’s first ‘Wallet-as-a-Service’ (WaaS) solutions that offers access to an instant mobile wallet app with embedded financial services. As a start-up spun out from a 50-year-old financial institution that issued the first charge cards in Singapore, it leverages a set of strong core advantages that optimises fintech enablement.
InstaWally provides a mobile-first customer engagement platform, intersecting brand loyalty with payments. Besides saving on development time and resources, it further removes the burden on regulatory licences, end user onboarding and operations and maintenance of payment systems. It delivers a mobile app designed with a user interface that is constantly optimised against industry benchmarks in terms of payments experience and services.
As such, fintechs and businesses can channel limited resources towards scaling their core services and improving customer engagement while generating new revenue streams from payment solutions and increased loyalty.
Without the prerequisite of payments expertise and yet be able to incorporate related products and services into their customer platforms, businesses across industries, from retail and travel to tech and web3, will be able to easily adopt such ‘as-a-service’ models making the future of payments more inclusive, flexible, and accessible across the globe.
Also Read: How local payments are unlocking digital commerce’s potential in Latin America, Africa, and India
A future-ready, global payment ecosystem
As digital payments become the norm, businesses must be equipped to meet changing consumer preferences and expectations. More importantly, payments must also be connected globally as businesses scale and expand beyond their own shores.
Payments-as-a-service is the key to empowering fintechs and non-financial companies to access such services to complement or complete their overall customer journeys. By leveraging this model, companies can innovate faster, offer more customised payment services, and unlock the full potential of the digital economy.
The future of payments is not just about providing access—it’s about empowerment. With the right infrastructure, businesses can meet the demands of the digital-first consumer while fuelling their own growth. The message is clear: any brand is now empowered to build the next super app with financial services. Be ready to ‘bank’ with your favourite brand, very soon.
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