Product Manager Jake Figg discusses the rise in ‘as-a-service’ products and the commercial benefits of whitelabelling and embedding products.
If you’re a regular reader of our blogs, you’ll know that as-a-service is a hot topic. The shift to delivering microservices on an out-of-the-box basis has exploded in popularity, with providers servicing a suite of offering across the financial taxonomy. For context, subject to the correct regulations and fees, I could access the building blocks required to build my own digital bank entirely based in the cloud. The coverage of different functions is seriously impressive, with everything across payments, transactions, accounts, KYC and of course, Open Banking capabilities.
Growing Nuances to the As-a-service Model
The model outlined above is the most common form of microservices architecture available, which can largely be described under the umbrella of core banking services; that is, the foundations for what we understand to be a banking institution that looks after our money. However, new fintech companies are delivering innovative products which are designed to take the provision of microservices a step further, moving into the ancillary microservices. In short, these services are designed to interact with the core functionality to enhance an aspect of the user experience.
This area is essentially where the transition from Open Banking to Open Finance is being made; where data is collected at the core, transformed and treated, and then used to facilitate the ancillary service. A great example of this process is embodied by our friends at Credibble, a service which uses open banking data to improve a user’s credit outlook. Optimising one’s credit score, while extremely important to secure a loan or credit card, is not considered a core service traditionally provided by a bank, and therefore falls into the ancillary bucket.
The Rise of Everything-as-a-service
Given the proliferation of APIs, it is possible to serve up almost any digital experience that relies on data transfer on a synchronous basis. Some of our favourite APIs could theoretically allow you to build an experience around the following themes:
- Space X (rocket and launch data)
- Pokemon (allows you to get the information for each character in JSON format)
- Kanye West / Kanye REST (requests return a random quote from one of Kanye’s chart-toppers)
While you are unlikely to be accessing Kanye-as-a-Service through your digital bank any time soon, it goes to show that with the right API, the user experience can be infinitely improved if deployed in the right way.
Whitelabelling and the As-a-service Model
For institutions with a strong brand, well-known to their customers, it is sometimes seen as optimal to whitelabel an ancillary service to optimise buy-in from their users. This works well if there is a company with a particularly good product, yet does not have a particularly strong brand or a limited capacity for customer service. If the bank then brands this service with their own logo and essentially takes ownership of its performance with customers, it is thought users will trust the service more and are therefore more likely to use it. As research from consultancy additiv suggests, “with a high level of trust, customers feel confident that their interests are well served by the bank.. [providing] a buffer against negative experiences which can arise amongst customers”. As a result, banks are able to leverage this trust in the whitelabel solution, thereby attempting to maximise appeal and uptake.
The Power of the Upstart Brand
While whitelabelling supporting financial services might be popular, it is clear that the power of the third-party brand embedded in the interface of a more established counterpart such as a bank can drive even further popularity with users. For example, mmob partner PensionBee recently reached the milestone of 100k users, a 75% year-on-year jump, hot off the back of their April IPO. PensionBee is a brand with an excellent and wide-ranging marketing campaign, and readers based in London will have likely seen their brand plastered across the side of a bus or tube platform. This visibility can be crucial in ensuring buy-in from consumers, giving the impression of a sophisticated partnership, designed to meet user needs and capitalising on the innovation of a company experiencing explosive growth. As a result, there is the possibility that leveraging the brand might actually improve the performance of a given partnership when it comes to user uptake.
mmob and Ancillary Microservices
From where we’re sitting at mmob, we have a very broad view of the as-a-service wave. Our vision for ancillary services is one of maximum exposure and minimum headache. Through our no-code platform, we are able to embed almost any third party financial service, and offer up our tools to manage the optimisation and administration of your integrations. We have designed the process of opening up new third party services to be as easy as toggling on a switch*, transforming digital partnerships into a profit centre, rather than a loss-leader. Get in touch with us today to find out how easy it is to deploy embedded journeys from financial brands users know and love.
*subject to regulatory and commercial approval