NetSuite’s Banking-as-a-Service (BaaS) is a cloud-based open banking solution that allows NetSuite customers to streamline their banking operations by integrating core banking processes within their ERP. It also strengthens bank-customer relationships enabling banks to service their customers better and increase revenue flows.
What is Open Banking?
Open banking came about in 2018 when the Competition and Markets Authority (CMA) called for reforms for how banks handle customers’ financial information. The reforms meant that banks now had to let you share your financial information with third parties if you wanted to.
These banking reforms also encouraged innovation and competition in the financial services industry. An excellent example of open banking is when you allow a third-party app access to your bank account. The app would then track your spending habits and recommend various financial services and products.
With the advent of open banking, large numbers of financial technology (FinTech) companies sprang up, offering customers new ways to interact with their money and further raise their expectations. This disenfranchised banks from their customers.
NetSuite wasn’t slow to spot the opportunity open banking posed, and by the end of 2018, they had released Business-as-Service to their customers.
How Does NetSuite Business-as-a-Service Work?
NetSuite has long been a market leader in providing businesses with cloud-based ERP systems that bring all its customer’s essential business functionality together. What it hadn’t been able to do historically is do the same for a business’s banking functions. Open banking reforms changed this, and NetSuite produced BaaS.
The core function of BaaS is to integrate a business’s banking processes within its existing ERP system. By integrating banking into the ERP system where the physical transactions are, there are time and cost savings. There are industry estimates that businesses could save up to 70% in accounts payable operating expenses.
Banks themselves can develop valuable digital services for their customers via NetSuite’s SuiteCloud Development Platform and a set of Baas Development Tools, allowing banks to become FinTech companies in themselves, allowing them to re-engage with their customers.
NetSuite allows banks and their customers to connect using two sets of APIs. The first is the Financial Institution (FI) APIs which facilitate account reconciliation and embedded payments. Embedded payments mean businesses can quickly pay suppliers and service providers without the hassle of turning to other systems and software.
The second set of APIs is the SuiteCloud (SC) APIs. These facilitate receivables, remittance, FX management, bank transfers, working capital and cash reporting. Because all of these banking functions take place securely in the cloud, they can be carried out on any device, anywhere at any time.
Top 5 Benefits Of NetSuite Business-as-a-Service?
- Direct real-time access to financial services.
- Increased operational efficiency.
- Reduction in costs.
- Strengthened relationship with financial institutions.
- Increased accuracy and visibility.
It’s safe to say that open banking and services like NetSuite’s BaaS have revolutionized the way banks and customers interact. For the customer, banking pain has been taken away by integrating banking within their ERPs. Operationally they are more efficient, meaning savings in time and costs.
The banks can now engage their customers and offer digital financial services that add value, meaning they can rebuild the relationship with their customers that FinTech startups had taken away.
As a NetSuite Partner, we can advise what NetSuite could do for your business. From designing the right solution and deployment through ongoing support, our expert Managed IT Services support team can help.
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