It’s that time of the year again for the European Merchant Payments Ecosystems conference in Berlin, and Redbridge is delighted to announce that our payments expert, Gabriel Lucas, will be actively participating in two compelling sessions. We are excited to showcase his expertise and contribute to this significant event. 

FIRST SESSION – March 12th, 2024

Optimization Strategies To Improve Approval Rates

On March 12th, 2024, at 16:45, please make your way to Room Potsdam 3, where we will address the merchants’ primary quest in payment solutions: how to provide shoppers with the best customer experience, maximize revenues, and enhance customer retention while adhering to stringent anti-fraud requirements? Join us as we explore innovative strategies to tackle these challenges.

  • Understand your payment flow, whether it involves a customer-initiated transaction (CIT) or a merchant-initiated transaction (MIT).
  • Select the right Key Performance Indicators (KPIs) to monitor your acceptance rate.
  • Discover approaches to optimize your process.

SECOND SESSION – March 14th, 2024

Facilitating Value-added Services for Modern Ecommerce

On Thursday, March 14th, just before the conference concludes, Gabriel Lucas will host a roundtable titled ‘Value-added Services for Modern E-commerce’ at 10:45 am. This session promises a dynamic exchange of ideas and will feature panelists from leading industry players.

Joining Gabriel on stage are distinguished speakers, including Julian Martin from Miravia (Alibaba Group), Samuel Flynn from Hands In, Jana Maleckova representing Everifin, and Yves Ruland from Datatim. Together, they will explore new forms of value-added services as important sources of revenue and market advantage for payment players. The panel will also discuss innovative strategies and emerging trends in value-added services tailored to meet the evolving demands of contemporary e-commerce.

To stay updated on the latest developments and join the conversation, follow the hashtags #mpe2024, #MPEAwards, #mpecosystem, and #ILOVEMPE across social media channels.

Redbridge is looking forward to engaging with you at MPE 2024!

Link to register: https://www.merchantpaymentsecosystem.com/get-ticket

 

Several companies involved in the energy transition or tech have recently shown how it’s possible to secure bank financing at an early stage of their development, disrupting conventional credit analysis frameworks. How have they been able to secure their initial bank loan early on? By effectively communicating on their credit story. Their success is also down to their in-depth understanding of how banks work and their ability to garner support within these institutions, as Sébastien Loison and Harald Aschehoug, finance consultants at Redbridge, discuss in this article.

If there’s to be a shift towards a more sustainable and environmentally friendly economy there needs to be massive investment: it’s been calculated that implementing the European Green Deal will require around €520 billion of investment per year between 2021 and 2030. While public authorities are providing support to hasten the transformation of key sectors of the economy, start-ups and innovative small- and medium-sized companies are still facing challenges in accessing private finance. The stakes are high, as they may need this funding – often within a tight timeframe – to execute their development plans.

And the way start-up growth companies can secure initial bank loan early is evolving. Traditionally, lenders have tended to provide support based on established activities – which are often limited for such companies – which means shareholders have generally been responsible for funding development. But at a time when investment in crucial social and environmental projects needs to accelerate, equity fundraising is slowing down. According to a report by Atomico in November 2023, total capital investment in the European tech ecosystem in 2023 looked set to reach $45 billion – far below its peak level in 2021, when it surpassed $100 billion.

Given the fluctuating nature of the equity fundraising, bank debt plays a crucial role in ensuring that growing companies can obtain the funding they need to carry on expanding.

How to persuade lenders to lend

Securing bank finance is generally challenging for companies that are still to prove that they can be profitable. Lenders often turn away such firms when they need substantial investment, even if their business model is transparent and their technology proven. Failures to raise debt in this way are typically kept private, but credit committees generally raise concerns like: “not convinced about the company’s ability to make a profit in the near future,” “too early in the company’s development,” or “isn’t this more the role of equity?”

Nevertheless, companies at the early stages of their development may approach a bank successfully before asset financing is in place if the projects they are involved in have attained a certain level of maturity and the primary development and profitability risks they are exposed to have been mitigated. Recently, a number of companies involved in the energy transition and tech have managed to secure funding by showcasing their ambition, methodology, and transparency. They have done this by making clear the key elements of their credit story. It is also thanks to their in-depth understanding of how banks work and their ability to garner support within these institutions.

Much like a compelling equity narrative is vital when raising equity capital, a company looking for bank financing needs to develop a credit story that is realistic, well-argued and impactful. It must also set out how it will be able to repay the money it wants to borrow based on the company’s capacity to grow and settle or refinance the loan in the medium term. Banks are rarely willing to provide borrowers with a window of longer than two years to generate a positive profit.

All this means that a company’s underlying technology needs to be operational and have entered the commercial and industrial deployment phase. Biotech companies, which predominantly use the money they raise in product development, are for this reason excluded

Bankers also generally stipulate that the company’s initial liquidity needs must be covered by the equity they have already raised, with bank debt seen as a complement to equity. As such, a well-planned timetable for raising both equity and debt is vital.

To ensure the business plan is credible, the application must provide evidence that the company is moving towards sustainable profitability by including detailed information on the company’s projects, with a focus on their maturities and execution risks. This kind of detail enables banks to assess the company’s capacity to repay its debts.

The importance of optionality and assertiveness

Another crucial aspect of a business model – and one that is often overlooked in credit analysis – is the value of optionality; specifically, a management team’s capacity to adjust its strategy. This optionality might involve slowing some investments to preserve liquidity or welcoming new investors to finance assets under development and meet cash requirements. Although they are not always easy to quantify, such options strengthen a company’s credit profile by providing a safety net to banks in the event of a company’s business performance deteriorating.

While the most mature projects may secure growth through non-recourse asset financing, while the various layers of future financing and their legal security structures becomes imperative. When it comes to the financing of holding companies, it’s important to explore other mechanisms to reassure lenders, such as providing enhanced visibility over flows returning to the holding company, partial early repayment mechanisms, and control of the portfolio of projects under development.

It’s also important to be creative when it comes to the credit framework. For growing companies with negative or low EBITDA, conventional covenants such as leverage are likely to be either ineffective or excessively restrictive. To help banks track the pledge while preserving operational flexibility, it is better to use indicators like recurring annual revenues, sales volumes or the physical deployment of infrastructure.

Even though borrowers may not be in a strong negotiating position with banks, it is nonetheless crucial to be assertive about the structure of the loan taking into account factors like its term, maturity schedule, covenants and undertakings to perform and not to perform. This is especially pertinent in the case of an inaugural loan as it will serve as a benchmark for subsequent loans. The financing margin must be assessed against other, potentially more costly financing options.

Mixing lender profiles

Lenders’ appetite to provide funding is linked to the potential to do business with a company in the future. Activities such as cash management, cash flow, sureties and guarantees, asset financing, interest rates, foreign exchange hedging, equity financing, or, in some cases, wealth management for the company’s founders – all these commercial levers can effectively engage competition amongst potential lenders.

It is evident from Redbridge’s recent advisory deals that the most successful outcomes for companies seeking funding are achieved by combining regional banking networks, which are responsive to the opportunity to bolster development in their territories, with global investment banks that are more interested in ancillary business opportunities.

For early-stage companies seeking bank financing, advisors have an important role to play in reassuring lenders, crafting the credit story negotiating the best possible terms and conditions, and helping the company understand the way that banks think and work. Meticulous preparation of the application before entering any discussions with lenders maximizes a company’s chances of obtaining the financing it needs to secure its growth momentum.

 

In a comprehensive exploration of digital transformation of legacy payments systems, Chaira Mekkaoui and Gabriel Lucas delve into critical considerations, covering security, risk management, compliance, architecture, organizational challenges, provider dynamics, and cost implications. Elevate your approach by incorporating their strategic recommendations, paving the way for a successful payment transformation.

The following article was originally published in the Cross-Border Payments and Ecommerce Report 2023–2024 by The Paypers. To access the full report, you can download it here.

 

In today’s fast-evolving digital environment, businesses face a significant challenge in addressing the gap between legacy technology and digital transformation. Owners are compelled to reassess their business models and respond promptly to meet their customers’ needs.

On the one hand, companies must maintain the reliability and functionality of their existing legacy systems, often the backbone of their operations. However, legacy payment systems are progressively losing their effectiveness in fulfilling their original purposes while they become expensive to maintain. On the other hand, companies must harness the transformative potential of digital technology to remain competitive and responsive to the evolving demands and expectations of modern consumers. Transformation can be very expensive, both from a system and an organisational standpoint.

Bridging the gap between legacy technology and digital transformation is a critical endeavour for merchants and service providers seeking to uphold their competitiveness and relevance in today’s changing business landscape. For payment providers, escaping from legacy systems is usually necessary to remain competitive and gain new customers. For merchants, making the switch will highly depend on how central innovation and payments are to their value proposition.

As there is no ‘one-size fits all solution’, companies must align their payment strategy with short, medium, and long-term objectives, and carefully assess the return on investment (ROI) of each type of project.

Assessment – acceptance and customer experience

In the ever-changing environment of the payment sector, the top priority is delivering an optimised, user-centric experience. As new payment methods and technologies emerge, customers engage in online transactions and mobile payments – and expect to have a seamless, effective, and user-friendly payment process. Legacy systems might struggle to adapt to these requirements causing friction and confusion for users. The aim is to make payments as streamlined as possible – and offer the most relevant payment options to maximise revenues.

Security, risk management, and compliance

Outdated technology systems present a significant security dilemma. These systems often lack the advanced security features that are standard in modern technology. They may no longer receive vital security patches or vendor support, rendering them susceptible to known vulnerabilities and potential exploits. Additionally, these obsolete systems might not align with the compliance prerequisites and standards dictated by the industry regulations and data protection laws – especially in sectors such as the Payment Card Industry Data Security Standard (PCI DSS) and the General Data Protection Regulation (GDPR). Non-compliance can result in severe violations and lead to legal and financial repercussions. At the same time, working with very innovative and young companies may be a risk per se, as they may not be as solid and robust – both from a technical and financial standpoint.

Architecture and internal organisation

The process of integrating older legacy systems with modern digital tools, platforms, or third-party services poses a substantial challenge. Legacy systems frequently lack the compatibility necessary to integrate with modern APIs and data formats. This mismatch not only complicates the technical aspects of integration but also heightens the risk of operational disruptions, complexities in data transformation, and potential security vulnerabilities.

To address these obstacles, a strategic approach is needed, which may involve the use of middleware, data transformation procedures, and security measures to bridge the divide between legacy and contemporary technology. For such transformation, it is imperative to have a team well-acquainted with both legacy system intricacies and modern technologies to formulate effective integration strategies. Moreover, promoting collaboration, offering training, and highlighting the long-term advantages of integration can create an environment in which employees are more willing to embrace and actively participate in the transformation process.

Providers and outsourcing technology

When it comes to providers in such a fast-paced environment, they can be both a challenge and the solution. While providers that struggle to keep innovating can very quickly become a burden for companies where innovation and go-to-market is at the core of their value proposition, established providers, although usually more legacy, can be the best fit for companies mature enough to manage most of their payment complexities internally. Moreover, internal legacy challenges can also be tackled by outsourcing certain activities to specialised providers.

Cost and opportunity loss – ROI

As already mentioned, maintaining a legacy system can be quite expensive. One the one hand, sometimes fixing minor issues will not solve the root cause – and worse, it may lead to an accumulation of bigger problems and risks. At the same time, legacy systems usually suffer from manual processes to deal with the lack of features and automation and drastically reduce the time to market with subsequent opportunity loss. On the other hand, upgrading your system will result in an efficiency gain, contrary to legacy accounts that reduce your operational efficiency – but it can also represent a very significant investment. Therefore, an ROI approach with a clear roadmap is required to define the right strategy and facilitate the decision-making process.

Recommendations

As payments tend to have more central roles across all organisations, staying ahead of the game has become a strategic objective for most companies and verticals. However, while new companies can rely on the newest technologies straight away despite a potentially higher cost, more established companies must embrace a more thorough and tactical approach to adopt such types of transformation projects.

While short-term initiatives may help find part of the necessary resources and arguments to obtain the necessary buy-in to move towards transformation, companies must prepare for the future and set medium and long-term objectives with a structured and agile roadmap.

Digital payments have started to disrupt the B2B space, starting with those sectors where clients are relatively small and transaction value is low, and therefore, the customer journey is relatively close to B2C. Gabriel Lucas, Associate Director at Redbridge, examines the frontiers of innovation in B2B payments.

The following article was originally published in the Cross-Border Payments and Ecommerce Report 2023–2024 by The Paypers. To access the full report, you can download it here.

 

What is the current context in B2B payments?

The current context in B2B payments is shaped by the aim to align more closely with the B2C payment experience.

Indeed, merchant cards and digital payments have been historically focused on B2C – this is particularly true in Europe, while other countries like the US are very used to paying by card even for high-value B2B transactions. The main reason is that B2B payments have been traditionally more complex, involving more extensive onboarding requirements, and usually offering a payment term of several weeks after the invoice is issued.

However, digital payments have started to disrupt the B2B space as well, starting with those sectors where clients are relatively small and transaction value is low, and therefore, the customer journey is relatively close to B2C. Many B2B companies are also launching a direct B2C channel via ecommerce, and they must deal with this new field of expertise that they didn’t use to have.

What are the main payment-related challenges that B2B merchants are facing, and what are their main objectives? 

The main objective that most of our clients share is the acceleration of the order-to-cash and pay-out processes. This requires exploring innovative payment solutions to facilitate faster money transfers, as well as implementing automation across various processes, from onboarding and billing to dunning and reconciliation.

Another typical concern for merchants when talking about payments is the cost, which is particularly high when it comes to commercial cards and cross-border payments. Merchants may try to mitigate this challenge by negotiating transaction fees with their payment providers and exploring alternative payment methods and solutions.

In this pursuit of automation and cost reduction, streamlining risk management, including credit and foreign exchange (FX) management, has also become essential to ensure efficient and successful collection and disbursement processes. Lastly, enriching data analytics and prioritising data security have become a must-have to understand the market and adapt rapidly to remain competitive.

What innovative solutions are currently proposed? What trends may we expect to see soon?

As B2B payments are part of a much longer process than B2C transactions, streamlining payments as one of the key components of the order-to-cash process is extremely important, and there are a few solutions that are quite a hot topic at the moment:

  • Open Banking (applicable to the European Economic Area – EEA) – leveraging account data and payment initiation through Open Banking provides a smoother and more secure payment experience while improving operational efficiency versus traditional SEPA Credit Transfers (SCT). Coupled with pay-by-link, we expect its adoption to increase significantly once electronic invoices become mandatory in Europe (expected by mid-2024 for companies subject to VAT).
  • Instant Payment (SEPA Credit Transfer Inst in the EEA) – instant payment solutions, enabling transactions in as little as ten seconds, are gaining traction as they have been proactively pushed by European institutions.
  • Buy Now, Pay Later (BNPL) – this payment option is the combination of payments with credit scoring and insurance services, and it allows merchants to further automate and outsource the risk inherent to offering a payment term.

Pay-out is also an area where we have seen a lot of innovation recently for B2B:

  • Virtual cards and purchasing card (P-Card) programmes – these products streamline expense control and transaction analysis, while generating revenues for the merchant out of the interchange.
  • Visa B2B Connect and Mastercard Send – partnerships like Visa’s collaboration with Swift aim to enhance international B2B payments, offering more options and end-to-end transaction visibility. Similarly, Mastercard’s partnership with B2B Pay aims to improve the efficiency and cost-effectiveness of international transactions.
  • Pay-out platforms – these platforms focus on streamlining processes and managing FX, making cross-border transactions more efficient, both from an operational and a cost standpoint, by aggregating money transfers and therefore reducing the number of transactions – and by limiting or even removing the intermediaries (i.e., correspondent banks).

Another type of solution that has spread significantly in the B2B space is expense management. Easy access to detailed transactions associated with their respective receipts or invoices simplifies expense reporting, replacing slow and inefficient processes like spreadsheets and receipt-filled envelopes.

What do you think are key success factors for B2B merchants implementing new payment solutions?

B2B merchants seeking to implement new payment solutions must consider a few critical success factors. First, integrating these solutions with legacy systems is paramount, ensuring a seamless transition within broader digital transformation initiatives. Second, effective integration with ERPs like SAP or AX and CMS platforms like Magento 2 is crucial in creating an integrated and harmonised system architecture. Lastly, understanding budget constraints and adhering to a well-defined roadmap is essential to ensure its success.

What is your advice for B2B merchants who are still hesitant about embracing payment innovation? 

My advice for B2B merchants who are still hesitant about embracing payment innovation is to take a pragmatic and ROI-based approach to assess their payment architecture.

Merchants can start to evaluate their current needs, keeping in mind that sometimes small changes (quick wins) can bring significant benefits. This process should involve all relevant departments in the decision-making process, as payment transformation is usually a transversal topic, while keeping their workload to the minimum required. This collaborative approach ensures that diverse perspectives are considered without overwhelming teams, and without leaving out any potential impact.

The prospect of monetary easing across the Atlantic in the coming months makes the adoption of an indexed, transparent mechanism for remunerating dollar deposits look like an attractive option. More generally, it’s a good opportunity for local treasurers to rethink their cash management strategies and how they manage their banking relationships. Take a look at our advice for 2024.

US interest rates are set to fall this year, and that’s undeniably good news for businesses. The Federal Reserve’s willingness to relax monetary policy implies inflation is gradually coming under control, and it will lead to reduced financing costs. It currently anticipates three 25 basis point rate cuts in 2024, which would bring the Federal funds rate down from 5.25%-5.50% today to 4.50%-4.75% by the end of the year.

Nevertheless, US treasurers need to monitor the effects of interest rate cuts on cash deposit yields, and particularly on earnings credits. These earning credits offset some of the cash management fees charged by banks.

Over the past two years, only a tiny fraction of US corporate treasury departments have reaped the benefits of interest rates shooting up. Banks have either refrained from raising their customers’ earning credit rates (ECR), or have done so to a limited extent and with a considerable delay in response to rates rising. But as interest rates start to fall, it’s unlikely that the banks will be so slow to pass on the downwards movements.

A few well-informed treasurers took the opportunity to link the interest rate on their cash deposits to a benchmark rate. This approach enabled them to benefit from all the rate increases without unnecessary delay. Their negotiations with their banks extended beyond merely fixing a spread with a benchmark rate.

Meanwhile, some treasurers established a hybrid yield structure. This meant that if the earning credits were in excess of cash management costs, the bank would reimburse the surplus in the form of financial interest. Others successfully negotiated the extension of the earning credits system to cover additional types of bank charges, accounts held abroad, or even those in another currency.

Given the considerable disparity in earnings credit rates that different banks provide, negotiating with banks to secure a more favourable earnings credit rate could be an excellent way for treasurers to counter the impending decline in US short-term rates. The objective should be to negotiate the highest spread possible and the broadest possible application of the earnings credits mechanism.

The impending fall in interest rates serves as a reminder for all US treasurers to review their cash management strategy and make the most of the banking services available to them. With that in mind, here are our four top tips for 2024.

  • Analyze the cash management fees you pay to each bank and ensure your invoices always align with the prices you’ve negotiated and the services you’ve used.
  • Stop paying for services you don’t use and close any dormant accounts to cut your costs.
  • Focus on the most efficient payment methods and services based on criteria such as speed of execution, security, cost and integration with the company’s other information systems.
  • Consider renegotiating how much you pay for these services to substantially reduce the cost of cash management.
  • Aim to foster a dynamic banking relationship that goes beyond mere negotiations and look to engage in genuine dialogue with your partners on how they help you grow your business.

In short, your goal for 2024 should be to incorporate the decline in interest rates in your US cash management strategy and do everything you can to turn it into an advantage for your company!

Calling all European treasurers! Is your company operating in the US? This webinar is a must-see to ensure you gain a comprehensive understanding of the American banking environment.

Register now to secure a robust US cash management strategy!

 

Explore the top strategies for navigating US banking with ease:

• Reinforce Strategic Partnerships with U.S. Banks (secure financial assistance and maintain financial stability).
• Optimize Collections and Payments (maximize liquidity, improve financial health, and ensure sustained business growth).
• Receive Support for Yield & Fee Renegotiation (leveraging Redbridge’s exclusive database for the best deals).

Gain firsthand insights from industry experts:
Discover insider advice from Mr. Menad Bouali, Head of Corporate Finance & Treasury at AXA Partners, on successfully renegotiating U.S. cash management fees.

Register now: https://zoom.us/webinar/register/WN_MBymnnDISAe0HVO3NtMvgQ#/registration 

Gabriel Lucas and Chaira Mekkaoui, Associate Directors at Redbridge Debt and Treasury Advisory, delve into the strategies that empower businesses to thrive in this fast-evolving ecosystem, from B2B and B2C to direct-to-customer.

The payment industry and its systems have undergone a transformative shift driven by the remarkable growth of global ecommerce, which has reached a substantial value of USD 5.4 trillion in sales in 2022. Among the various ecommerce models, several marketplaces have emerged as dominant players in this landscape, leading to the consolidation of a significant portion of online sales.

With highly decentralised business structures serving as models of inspiration for business entities, businesses are now seeking to extend payment systems beyond transactions and explore the order-to-cash value chain. Additionally, innovative financial services such as those provided by licenced third-party entities like PayFacs:

  • register a CAGR of 35.1% in the forecast period spanning from 2021 to 2026;
  • offer new avenues for businesses to deliver value-added services to existing customers;
  • create diverse revenue streams.

In this article, we delve into the strategies that empower businesses to thrive in this fast-evolving ecosystem, from B2B to B2C, and their platforms, as well as financial services (B2B2C) to direct-to-customer.

Direct-to-customer merchants are continuously striving to improve the consumer shopping experience, by implementing value-added services, which allow them to generate additional revenues.

 

On the one hand, some of those services indirectly bring additional revenues by improving customer experience:

  • payment facilities – offering alternatives to pay such as Buy Now, Pay Later (BNPL);
  • omnichannel experience – which enriches customer shopping journey by switching between online and offline channels and thus, boosting sales opportunities;
  • automated billing and reconciliation processes – providing efficiency and accuracy in financial operations, particularly suited for subscriptions and SMB transactions;
  • the ability to offer an embedded customer portal, especially for B2B customers, to provide the option of easily following the payment status.

 

On the other hand, certain services can still bring value to consumers while directly generating additional revenues to the merchant:

Dynamic Currency Conversion (DCC) stands out as a powerful financial tool that benefits both customers and businesses by providing transparency, convenience, and clarity in currency conversions while generating additional revenue for the merchant at every transaction.

Tax-free shopping can be an attractive proposition for international customers by automating the time-consuming process of getting the tax refunded, leading to additional revenue for the merchant at every transaction.

Card issuing enables merchants to deliver value-added services to existing customers and generate additional revenues by providing branded payment cards, loyalty programmes, exclusive promotions, and enhanced customer experiences. On the one hand, direct additional revenue is generated through interchange fees; on the other hand, it offers access to customer data which allows for personalised marketing, cross-selling, and upselling opportunities.

Marketplace/platform model

A marketplace is an online platform that connects buyers and sellers, facilitating the exchange of goods and services. It acts as an intermediary, allowing multiple sellers to showcase their products or services to a wide audience of potential customers. In addition to its key advantages and core services (billing, pay-in, tax collection, account management, and pay-out), the marketplace can propose enhanced and additional value-added services as well as its core services, which can be monetised as part of the package:

All direct-to-customer value-added services can also be proposed. Card issuing appears to be an innovative topic in this type of business.

Enhanced billing and tax management, although a core service, may be a key differentiator to attract more end-users and vendors to the platform.

Faster payouts may bring vendors more control over their cash flow by allowing a quicker receipt of funds (even instantly in certain regions).

Financing options can be proposed to vendors. This is the case for Amazon which proposes ‘Amazon Lending’, a service where loans range from USD 1,000 to USD 750,000 – and are capped at 12-month repayment terms for retailers after they’ve completed a short online application form. Loans are automatically deducted from the seller account disbursement at a fixed percentage each month.

Cash management facilities – by proposing financial account creation to sellers – offer several benefits like fund retainment, payment of invoices, receipt of funds (even from external bank accounts), interest charges, and control of cash-management flows. Those financial accounts may also be associated with cards issued by the marketplace.

ESG (Environmental, Social & Governance) finance attracts a growing segment of socially conscious consumers, creating tailored investment products and differentiating businesses in the competitive landscape. By aligning financial services with ESG principles, companies can foster customer loyalty, tap into new markets, and strengthen their position as responsible and sustainable players in the financial industry.

Financial services

 Banking-as-a-Service (BaaS) companies allow non-licenced companies to propose financial services without any regulatory burden and as part of the technical effort. In other words, any company can build financial services as if it were a bank without holding such licences. Multiple fintechs start their operations without any licence so that they can test and improve financial products as early as possible and then licence the project, which is considered a second step to becoming mature and reducing marginal costs.

In this context, the future role of banks stands at a crossroads as BaaS companies disrupt the financial landscape. This type of service enables businesses to swiftly develop and test innovative financial products, provide value-added services to existing customers, and create revenue streams with agility and efficiency. As a result, banks must reevaluate their position in the market, capitalising on their established reputations, customer bases, and expertise. Embracing partnerships with BaaS providers can help banks extend their reach, diversify offerings, and leverage their strengths, while embracing the flexibility and rapid innovation inherent in the BaaS model. The future role of banks will revolve around strategic collaborations and maintaining customer trust, to ensure that they remain central players in the ever-evolving landscape of financial services.

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