In today’s digital world, consumers are more connected than ever. Rather than visiting financial institutions like banks, a significant fraction of customers prefer to manage their finances online.
Fintech (financial technology) has made this happen by making financial services more accessible and inclusive. With the prevalence of smartphones and the Internet, we’re one step closer to seamless financial transactions.
SaaS: Where It All Began
Software as a Service (SaaS) started out by helping small businesses handle daily operations for a low cost. However, it also faced challenges such as high network latency and low transfer efficiency. Users found some cloud-based software (application service providers or ASPs) time-consuming when the new millennium began. In a nutshell, these solutions couldn’t meet growing user demands.
Over time, SaaS evolved and became large companies' go-to software delivery model. It allowed users to access data from any device and web browser with a stable Internet connection. In the 2020 edition of BetterCloud’s State of SaaSOps Report, companies estimate that 70% of the apps they use are SaaS-based.
A Snapshot of Cloud Service Delivery Models
SaaS has played a key role in fintech. With the industry’s growth, SaaS has given fintech companies more scalable solutions to meet consumer needs. It allows businesses to harness the power of cloud computing and use high-level software, making fintech and SaaS more interconnected.
Moreover, cloud computing has several delivery models, including:
- Infrastructure as a Service (IaaS)
- Platform as a Service (PaaS)
These frameworks are on the rise in fintech, indicating greater demand for specialization. Outside of fintech, firms have developed specific services based on the common cloud delivery models. Database as a Service, Security as a Service, and Process as a Service are some examples of these specialized services.
In fintech’s case, a bank using a cloud delivery model could offer certain products and services as “banking as a service.”
Specialization can greatly benefit traditional financial service providers and banks since their expertise can help build more robust fintech solutions.
SaaS: Accelerating Digital Transformation for Fintech
How exactly is SaaS shaping fintech? Let’s look at the advantages it offers to the industry.
SaaS Makes Cloud Computing More Accessible
Before, companies could only access data from computers and their hardware. SaaS breaks that barrier by allowing fintech businesses to manage everything online with only a stable Internet connection to log in and access SaaS solutions.
Companies Benefit From Cost-effective Incentives
Organizations allocate a bulk of their expenses to software and complimentary equipment. But with SaaS, fintech companies can save more when acquiring and maintaining these resources.
SaaS providers offer their products on a subscription basis, resulting in lower costs to free up cash spend on system upgrades. Furthermore, these companies manage the resources a client uses to help them reduce overall maintenance costs.
Leveraging SaaS Translates to Greater Cyber & Data Security
Keeping company data secure is vital in fintech. Without a strong layer of security, organizations risk losing or compromising sensitive information.
Many SaaS solutions transfer data with Secure Sockets Layer (SSL) encryption. SSL encompasses multi-level security protocols that encode and protect sensitive information.
For more secure transactions, cloud-based software offers features like:
- Multi-user logins - This feature gives select individuals access to sensitive business data.
- Encryption keys - These keys are random strings of bits that scramble and unscramble data. Their functions vary by software: some keys can encode or decode data, while others perform both functions.
- Two-way authentication - Some SaaS applications will allow users to verify their identities with two different credentials. It’s a process known as two-way or two-factor authentication. As the name suggests, it requires two-step authentication via a password and another verification method like a fingerprint scan or facial recognition.
Organizations can use these features to protect important data against breaches, leaks, and other potential security risks.
Fintech Businesses Can Become More Agile
As consumer behavior shifts, fintech businesses need to assess their needs and adapt to the current changes. After all, predictability and market agility are connected.
Through SaaS, organizations can work on key metrics while monitoring these changes and gaining actionable insights.
This means that fintech companies can be more agile by starting off with the resources they have and gradually increase usage to meet higher demand. This flexibility can also help companies maintain their current infrastructure and eliminate the need for reskilling.
Service Providers Drive Widespread Consumer Adoption
Competition is fierce in fintech, a dynamic and fast-changing industry where hundreds of startups enter the landscape every year.
Thanks to SaaS, service providers can drive widespread consumer adoption because it offers multiple resources for building specialized tools.
Ultimately, the speed offered by SaaS allows businesses to meet consumer demands and improve their internal processes.
SaaS Helps Businesses Maintain Compliance
Companies should stay compliant with different policies and rules overseen by corporate regulatory bodies, especially when they’re updated to reflect a new change.
SaaS helps fintech firms ensure compliance at all times. For example, cloud providers work with companies to safeguard sensitive data as current laws require. Businesses that collect and handle private information in the Philippines must follow the Data Privacy Act.
SaaS Streamlines Organizational Processes
Finally, SaaS helps organizations manage their workload better. It streamlines and manages customer service, hardware installation, maintenance, and other critical aspects of a business.
As a result, fintech firms can spend more time and effort on essential tasks and goals. For instance, a company utilizing SaaS can improve processes connected to specific frameworks and services.
The Road Ahead: Elevating the SaaS Experience
The SaaS industry hasn’t fully matured yet, and new industry players are driving a SaaS revolution thanks to innovation, deep specialization, and affordability. With SaaS applications, fintech companies can achieve financial inclusion.
In line with that, Sprout Solutions, the largest homegrown B2B SaaS company and HR tech provider in the Philippines, is leading the charge toward this goal with IMPACT ‘23: the first-ever B2B SaaS startup accelerator challenge.
The accelerator program is open to SaaS founders from local and international early-stage startups eager to share innovative, high-value solutions to accelerate the B2B SaaS community. One of the themes of IMPACT ‘23 is called The Future of SaaS: Enabling a Fintech-powered Landscape, our open category for solutions that automate access or remove barriers to different financial transactions.
If you’re a fintech startup with solutions that make financial services accessible to everyone, pitch your ideas at IMPACT ‘23! For more details, visit saaschallenge.ph or check out our homepage for related updates.