Tech moves at a rapid pace; we can see it day to day. From innovations on your smartphone through to the car you drive. From the dawn of AI through to pioneering space travel. The tech world is one that never sleeps.ac
Perhaps one area in which it moves at but goes largely unheard of is banking. We all, whether business owners or not, rely on banking, and whiaaalst we’ve seen the evolution of banking apps, the demise of cheques and instant global money movement, we don’t often hear of other ways banks are finessing their offering.
SaaS is one such element that the banking sector has embraced, and it stands to benefit the everyday customer as well as the bank itself. In this blog, we look at SaaS banking, what it is, and what benefits it brings.
What is SaaS?
SaaS simply stands for Software as a Service. Many businesses can implement it, but a significant number within the banking sector have embraced it. SaaS allows for cloud-based software to help manage payment processing, customer management and fulfil regulatory obligations much faster. Through streamlining a host of processes, banks can deliver enhanced customer services without vast expense.
SaaS is unlike the more traditional software often adopted by banks. Where a huge one-off cost may be required when new systems are installed, and then regular maintenance costs get added to keep the system running, SaaS works differently. Provided on a subscription-only basis, those using SaaS can alter the service as needed, only paying for what is required. Gone are the days of expensive alterations to infrastructure, and instead, a flexible, pay-for-what-you-use, when you use it, option comes into play.
Where are SaaS systems used within banking?
The versatility of SaaS systems means that various aspects of a bank’s function can benefit. From how cash is moved to customer interactions, multiple aspects of daily processes can be refined through the adoption of SaaS in banking. Let’s take a look:
Core banking systems
A bank isn’t a bank without the accounts it looks after! Adopting SaaS allows account management to be bought into the present day with cloud-based systems to manage accounts, store customer data and process transactions. SaaS core banking enables all this to be provided within one system rather than multiple tools or hardware. With its flexibility and scalability, its requirements can be changed to match the needs of the bank and its customers as and when needed.
Compliance
As many of us know, finance is a world filled with specific rules and regulations. Failure to comply can see banks hit with heavy penalties. Incorporating SaaS enables regulations to be met and strict compliance rules to be followed at all times. With automated tools as part of the SaaS subscription, compliance can be monitored and managed ensuring that the latest industry guidelines are always met. Furthermore, through its ability to look at data in real-]
time, it can assess risk accurately and allows banks to manage and control both operational and financial risk much more thoroughly.
Customer service
We said earlier that a bank isn’t a bank without any accounts, and those accounts have to come from customers! Without appropriate customer service, it is very easy for a bank to lose its customers to a competitor. The addition of SaaS to a bank’s offering allows for an enhanced CRM that understands customer behaviour, a customer’s needs and what their preferences are. Through this understanding, a bank can refine its customer relations by only targeting customers with what they need rather than what is assumed they need. With a more personalised service, the relationship between the bank and the customer can be greatly enhanced, and therefore gain more longevity.
Lending
Whilst we’ve already touched upon how SaaS helps with banking transactions; it also goes a little deeper. Should it be required, many SaaS tools can incorporate lending. When incorporated by a lending platform, SaaS can help with loan origination, underwriting and management of the finance being issued. This further adds to the streamlined capabilities.
Of course, thanks to the nature of SaaS, these features, or others can be added, removed or altered as and when the bank requires. Where in the past there was upheaval if changes were needed, now it can be a simple turn on/turn off approach to ensure the bank matches what is required of it.
The benefits of SaaS in banking
The benefits of SaaS in banking are wide-ranging and they allow both business customers and non-business customers to receive an improved, reliable, safe banking service. Whilst the services may not see the interest rates on your loans change or stop any late payment fees from arising, they deliver a fresh, refined way of banking that could see financial benefits passed on to customers over time.
Benefits of SaaS include:
Cost efficiency
Perhaps the biggest requirement of any business is to keep its costs down yet remain successful. With SaaS banking solutions, the need to invest in expensive hardware, potentially more than once, is removed. Added costs of IT support and changes to infrastructure can also be removed. Operating on a subscription model, upfront costs are reduced allowing Capex to be considerably less than it would have been otherwise. With less upfront costs and smaller operational costs, banks can put more focus on the customer and potentially push some of this cost-saving onto them too.
Scalable
The competitive landscape of banks can change fast. Where one may have one offering, another may have something else. SaaS allows a bank to add or remove resources based on their specific needs. This allows for a quick adaptation to industry trends, changing markets or business growth.
Rapid integration
Speed can be of the essence when you want to remain competitive, and SaaS enables this. Where changes to software and infrastructure can take long periods typically, SaaS bypasses this. In many cases, systems can be implemented in extremely short timescales ensuring the bank remains ahead of the competition and compliant should there be any drastic regulatory changes.
Security
Banks are meant to be, by their very nature, secure. However, breaches of security remain a concern. Should a bank take advantage of SaaS, the heightened nature of its defence against theft allows it to not only comply with regulations but assure customers that their money and personal data are incredibly secure. Encryption, 2FA, backup systems and more, mean that any attempted breach can be thwarted before it’s been able to steal any valuable information.
Compliance
Where in the past, compliance may have to be manually checked and configured by a specialist team, SaaS delivers frequent software updates to ensure regulatory compliance.
New product offerings
SaaS platforms are commonly quite simple to integrate with other tech within the bank. As a result, the bank can enhance its offering to customers. This could see the addition of wealth management tools, lending platforms or mobile payment facilities. Without having to start from scratch, the crossover of new and existing tech enables for a wider range of services from the bank.
Customer service
We’ve covered this already when we spoke about where SaaS is incorporated in banking, and whilst that covered many of the benefits, we can dive a little deeper! SaaS platforms can offer AI-driven analytics, real-time transaction processing and more streamlined user interfaces. When combined, this delivers a refined, simpler and more beneficial experience to the customer. With SaaS able to distinguish a customer’s preferences too, targeted marketing will be much more advantageous.
SaaS is an evolving way for banks to offer enhanced services. With the option to scale up or down as necessary, this cloud-based platform allows banks to mould their services to customers’ needs and remain fully compliant. Cost-effective, quickly implemented and adaptable, it seems likely SaaS will be the future of banking.
