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The right technology matters for successful banking as a service

The right technology matters for successful banking as a service

By Q2

17 Jan, 2020

The time for banking as a service (BaaS) has never been better. New core technology is coming into place to provide financial products to the digital marketplace and to help FIs and other financial services providers to future proof as digital continues to become the preferred way to bank for most people. Q2, recognizing the potential opportunities for our clients, created a Banking as a Service division, Q2 Open, in 2017. Since then, we’ve been able to work with companies like Qapital, which offers savings, spending, and investing solutions through BaaS, making it easier for users to reach their financial goals faster. SallieMae Bank also uses Q2 Open to provide high-yield savings accounts to save for specific goals. Its SmartyPig savings product helps users save for short- and long-term goals, and as they save more, the more interest they earn. Q2 Open is powered by CorePro, a purposefully built light weight core API that allows banks, credit unions, and fintechs to deliver new financial services like high-yield and goal-based savings, branded cards, and other deposit products. It’s also a secure system of record built to support a wide range of strategies. CorePro users can also benefit from add-ons like Socure, a Q2 partner delivering best-in-class digital identity verification and fraud protection capabilities. Q2 Open offerings include:

Banking as a Service for Fintechs

For fintechs with a big idea for a banking product but don’t want to become a bank, this full-stack BaaS toolkit gives a fintech everything needed to build and support bank products at scale and includes:
  1. CorePro, the lightweight core API
  2. Strategic bank partners
  3. A deposit network of 800+ community banks via our partnership with StoneCastle.

Banking as a Service for FIs

  1. For development-capable organizations in need of a developer-friendly ledgering system, CorePro will answer their need. The cost-effective processing system allows FIs and Alternative Finance companies to build their own digital-only banking products—and, like US Midwest bank nbkc has found, opens the way for growth partnerships.
  2. For a bank or credit union looking to grow deposits outside of its core business, Q2 Open offers an end-to-end bank in a box with no development required. CorePro provides the processing at the fraction of a traditional core, and an FI can choose Q2’s award-winning digital banking platform to supply the front end.

BaaS takeaways

Find a technology stack that cost-effectively delivers results In much of the media attention given to BaaS and other new banking technologies, cost is not often discussed in detail. However, any FI or fintech wanting to deliver on the promise of BaaS should look at the cost of technology options. If your BaaS effort requires the use of traditional back-end banking systems, inefficiency followed by increasing cost should be expected. To avoid this, look for an API-based BaaS platform, one that can host fintechs and their solutions while allowing seamless integration with an FI’s backend. Combine the right technology with the right assistance Navigating BaaS options can be hard, especially if the expertise isn’t in place to help facilitate the right technology with the right partners. No matter if you’re a start-up fintech or an established community bank or credit union, moving to the BaaS model can be fraught with setbacks if not approached correctly. At Q2, every attempt has been made to ensure easy, quick achievability by focusing on aligning a core dedicated to API; FI and fintech partner relationships; and a resourceful internal team to help with digital strategy and solutions. If interested in learning more about banking as a service, contact openinfo@q2ebanking.com. Look for more blog posts soon about Q2 Open’s BaaS for Fintechs and FIs. We’ll also share use case studies to give you an idea of what Q2 Open can deliver.  
Q2

Written by Q2