• Kim Van Esbroeck, Chief Revenue Officer at Vodeno


• 15.12.2023 11:45 am
#BaaS #banking

Banking-as-a-Service (BaaS) is transforming the financial landscape for Millennials and Gen Z by blurring the lines between brands and banks. This trend is driven by the convenience and accessibility offered by embedded banking solutions. 

According to a survey commissioned by Vodeno/Aion Bank, (52%) of 25-34-year-olds prefer using financial products and services from their favourite brands over traditional banks. The same survey revealed that 51% of respondents in this age group believe that brands make banking more accessible, while 52% think brands are better at offering tailored financial products. This adoption of embedded banking is projected to drive the global BaaS market value from $4.2 billion in 2023 to $11.6 billion by 2028.

A faster and more convenient customer journey

Convenience is a key factor in attracting consumers to brands for financial products. Vodeno/Aion’s survey found that 25% of respondents aged 25-34 cited convenience as the primary reason for choosing their favourite brands for banking. This percentage increases to 45% among those aged 35-44. Additionally, 35% of European consumers aged 25-34 have engaged with embedded banking products due to the more attractive rates offered by brands. 

This is particularly significant considering the higher cost of living experienced worldwide.

Buy Now, Pay Later (BNPL) services exemplify the benefits of embedded finance enabled by BaaS. BNPL has seen a surge in user engagement, with shoppers in the US spending over $7.3 billion during Black Friday using this form of credit, a 17% increase from the previous year. BNPL offers greater flexibility and convenience, making it a preferred option for 37% of European consumers, according to Vodeno/Aion’s survey. This preference is even higher among those aged 18-24 (44%) and 25-34 (44%).

The Brand/BaaS revolution

The growing trend of Millennials and Gen Z using financial products from their favourite brands is driven by the convenience, accessibility and better rates offered by embedded banking solutions. 

To capitalise on this opportunity, brands must be strategic in how they integrate BaaS solutions into their customer journeys to fully embrace this opportunity and provide a seamless experience. Picking the right BaaS partner is crucial for success in the embedded banking race. In addition to developing and deploying BaaS products, the right BaaS provider needs to help clients understand customer needs, prioritise the appropriate products, and devise strategic plans for communication and engagement. 

This is why at Vodeno/Aion, we offer full end-to-end BaaS with a consultative approach, bringing together the necessary tech, with a full ECB banking licence that underpins a comprehensive range of embedded solutions, the regulatory and compliance expertise of a fully licenced European bank, as well as guidance to go-to-market strategy and end-user engagement.

The global BaaS market value is expected to double by 2028, and it is already changing the way consumers choose and engage with their favourite brands. 

The businesses that are doing embedded banking best are strategically integrating BaaS solutions into their customer journeys as a way to not only surprise and delight, butalso entice loyal customers to come back.