Already we have experienced manual bank branches. Banking is new computerised and digitalised. Let us call it Bank 2.0. Experts feel that we are moving to Bank 3.0, that is ‘banking as a service model.’

Banks will witness a change in product distribution and customer acquisition. Banks have commenced embedding products at the customer’s point of need. Banking as a service enables banks to embed their products such as accounts, payments, loans etc. in the customer’s buying journey in non-banking contexts. There are elements of self-service and automation.

While checking out from an e-commerce site, a customer is offered credit. An employee can access his wages early in a company. These are the examples of BaaS. It is contextual banking. BaaS will soon become mainstream. It will be an important revenue stream.

The customer acquisition costs can be lowered. New customer segments could be tapped. Merchant platforms can offer temporary overdrafts and working capital. Medium and small enterprises and micro enterprises can be tapped.

Customers can be encouraged to save for their health needs. There could be risk covers for life-style data. BaaS could best work in partnership with other organisations. That is an expensive processes. There are regulatory hurdles. These constraints must be appreciated.

There are BaaS platforms with no-code/low-code capability. These facilitate the partners. These make everything economical.

By 2026, India will have a mobile user base of 1 billion. The digital banking penetration would be 46 per cent by 2027. Embedded banking would receive a boost.