Today, New websites are created for businesses and they require handling various financial transactions which are usually the duties of banks and financial agencies.
These necessities have led to the creation of financial technology(FinTech) companies providing these services to customers to serve as an extension of their business and they are regarded as FinTech as a Service.
Fintech as a Service (FaaS) is a rapidly growing trend in the financial technology industry.
FaaS providers offer a suite of financial services, which developers can embed into their products through Application Programming Interfaces (APIs) to create innovative financial solutions.
FaaS providers allow product developers to focus on building their core business offerings, ensuring user experience, and handling business development, while the financial, regulatory, and core technological aspects are a matter of concern to the FaaS provider.
This can save time, reduce costs, and speed up time to market. Some of the services provided through FaaS include;
Payment processing involves receiving customers’ payments through credit cards, electronic funds transfers, and other payment methods. Companies can quickly and easily set up payment processing capabilities in their products through provisions by this FinTech as a Service company.
Companies are able to issue physical or virtual payment cards that can be used by customers to make purchases using FaaS providers, companies without having to develop the technology themselves.
Virtual Account Management
Businesses often offer digital wallets that allow their customers to deposit funds for recurring payments user-to-user transfers, and other uses. These digital wallets are usually provided through a FinTech as a Service provider and are integrated by the developers working for the said businesses.
Loan Origination and Servicing
Businesses can reduce the costs associated with setting up their own loan origination and servicing systems by using FaaS providers and they can offer services such as underwriting, loan management, and payment processing.
For small businesses that do not have the resources to set up their own systems, this is useful as FaaS providers can also help businesses to comply with regulatory requirements-related concerns.
Businesses that operate in multiple countries or have customers make international transactions are provided with this service as well as real-time currency exchange rates and tools to convert currencies.
KYC (Know Your Customer)
This is one of the core services provided through FaaS, as it is a mandatory regulatory requirement for institutions to verify the identity of their customers.
Companies are able to integrate KYC services into their products without having to develop the technology themselves or obtain regulatory approval.
Fraud Detection and Prevention
FaaS providers utilize advanced algorithms and machine learning models to analyze transaction data and are able to detect fraudulent activity. Businesses are able to access these tools such as two-factor authentication, device identification, and biometric authentication, and prevent fraudulent transactions.
This helps businesses reduce their losses due to fraudulent activity and improve the overall security of their products.
In Nigeria, There are several FaaS providers, which include Flutterwave, Paystack, Paga, and Interswitch.
These companies offer a range of financial services through APIs, allowing developers to integrate them into their products easily.
For example, Flutterwave is a Nigerian fintech company and its payment processing platform allows businesses to accept payments from customers using various payment methods, which include credit and debit cards, bank transfers, and mobile money. You can read more on FinTech API providers here.
For companies looking to innovate in the financial technology space, Fintech as a Service is a powerful tool. They are able to build innovative products and services while integrating a range of financial services that help handle transactions more seamlessly and reach business goals.
Small businesses are able to thrive, grow and reduce transactional limitations through these provisions, bringing new changes to the course of history and how businesses are handled on the Internet.