Genpact provides operations muscle to help banks scale BaaS

Banking as a Service (BaaS) is transforming how enterprises consume and deliver banking services. Born out of the open banking and API era, BaaS allows licensed banks to integrate their digital banking services directly into the products of other non-bank businesses.

Non-financial, customer-facing brands may be the “face” of BaaS, but banks still must fulfill the banking services and operational muscle to scale.

Genpact helps ecosystem players operating the BaaS model strike a balance between the excitement and potential for innovation emerging BaaS allows with the dull but necessary reality of business operations. Coupling its operational capabilities with banking “enablers” like networks, sponsor banks, and BaaS platforms, Genpact composes Banking Operations as a Service into a subscription-based offering for BaaS models to scale.

Balancing innovation aspiration with investing in the essential operations anchor

For traditional banks, BaaS is a land-grab opportunity; they get new customers by distributing their products. For non-bank organizations, BaaS allows bundling of financial services into their offering (such as white-label, co-branded point-of-sale, or buy-now-pay-later [BNPL] models), adding new revenue streams and customer stickiness. Customers benefit from access and ease of use. The rash of new ideas is great—the problem is operationalizing them.

Genpact has the ingredients for delivering operational muscle for BaaS

Genpact highlighted its capability enablement for the BaaS model to HFS as part of our research for The Best Service Providers for Retail Banks, 2023—Disruptors, Enterprise Innovators, and Market Leaders.

Operational objectives and challenges for banks and fintechs differ as banks constantly strive to improve cost efficiencies and customer experience. On the other hand, the target operating model for fintechs lacks the support and scale for back-end operations. While fintechs can scale the heck out of the technology, they aren’t as nimble with banking or financial operations. They don’t have the resources or experience.

Since Genpact has led its client engagements with a data and process approach, the service provider has gained significant expertise on the operational nuances associated with banking. Leveraging this expertise, the service provider has added the capabilities for its customers to look across financial service operations and identify areas for optimization. These insights can be applied to re-architect the functional workflows while quickly assembling consultants, people, processes, and technology to operate effectively and monitor progress in their chosen BaaS vertical.

With fintech and software platforms in the solution mix, sample use cases are in the rapidly growing financial core services of payments and lending

Partnering with a critical credit card processing software provider, Genpact offers back-end operations support and serves up the partner-integrated offering as a “credit card in a box” solution. A piece of the bigger operations optimization for credit cards entails the remediation of the contact centers’ traffic through a combination of human + digital channels with accelerators to sense customer sentiments and suggest the next best action. Other sample case studies are in operational support for KYC (know your customer) and optimizing originations operations for lending products—credit cards, loans, BNPL, etc.

The Bottom Line: Scaling BaaS models is hard work. Genpact’s Banking Operations as a Service can help de-risk the BaaS business models, but to realize tangible cost benefits, optimization efforts must be across operations, not in isolated pockets.

Genpact is packaging its best-of-breed operations capabilities as Banking Operations as a Service to unburden the operational challenges for scaling the BaaS model and to help all parties involved function in a lean operating model. Enterprises should note that to move the needle significantly on cost reduction, they must systematically apply optimization efforts across operations.