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Banking-as-a-Service: A Game Changer in Payments and Customer Experience

Banking-as-a-Service (BaaS) is currently experiencing rapid growth, heralding new opportunities in payments and customer experience. Jean Guillaume, founder and CEO of Xpollens, a French BaaS platform, offers insights into this sector and elaborates on his fintech’s positioning. Let’s delve deeper into the conversation.

What is Xpollens?

Xpollens operates as a Banking-as-a-Service platform. BaaS platforms, while relatively new, are undergoing substantial growth, empowering companies lacking banking licenses to seamlessly integrate financial functionalities directly into their processes, workflows, or offerings via APIs. This is also known as embedded finance.

In practical terms, Xpollens holds both banking and e-money licenses. This enables us to provide our clients with essential financial services such as accounts with IBANs, user creation with KYC management, and adherence to anti-money laundering regulations. Through this, our clients can embrace various payment methods (transfers, direct debits, cards) and execute any type of outgoing payments (consumer and business physical or virtual cards, instant transfers, direct debits). We furnish them with a comprehensive banking toolkit comprised of modules that can be tailored to their specific needs. With our API offering extensive integration capabilities, clients can intricately manage their business rules, capitalizing on these versatile components.

What Does Banking-as-a-Service Enable?

Our platform primarily serves two key use cases.

Firstly, we empower non-banking entities to provide financial services to end customers seamlessly. For instance, we collaborate with a company seeking to enhance its loyalty program by converting loyalty points into spendable euros via a virtual card at partner stores. Our solution seamlessly integrates this virtual card into the mobile app, delivering a seamless and transparent payment experience for the end user, who remains unaware of any third-party involvement beyond their chosen brand.

We also support neobanks, fintechs, and brands aiming to launch financial services or payment offerings while retaining focus on their core operations. In this context, we manage all banking complexities, enabling them to deliver genuine value to customers and ensure a seamless user experience.

The second use case involves corporates leveraging our financial services for their internal needs, particularly to automate, orchestrate, and manage their financial flows. Beyond payroll and supplier payments, many companies handle daily incoming and outgoing flows, necessitating real-time tracking and management. This is especially pertinent for insurance companies collecting premiums and disbursing claims, online betting firms requiring instant payment solutions for winnings, and sectors like franchising, toll collection, asset management, and cash transport. Our aim is not to supplant banks but to offer configurable financial services alongside banking, facilitating large-scale, real-time money transfers with robust traceability. A highly sought-after feature is the virtual IBAN, enabling the creation of infinite virtual IBANs in real-time for specific transactions, streamlining accounting reconciliation and technical traceability.

How Does Xpollens Position Itself?

Xpollens operates as a pivotal player in the digital transformation of the economy, aiming to revolutionize banking in Europe, specifically the manner in which businesses utilize and “consume” banking services. We primarily assist companies with strategic modernization or transformation projects for their internal processes or customer experiences or those seeking to introduce new business models.

We have opted to develop a SaaS solution in the form of a highly granular and modular API, effectively a “toolkit” enabling clients to customize and configure services according to their specific requirements and industries. We typically engage with companies early on, translating their ideas, projects, business challenges, or objectives into high-value payment projects. Our offering combines sophisticated API technology with tailored consulting support.

At Xpollens, we strongly believe that the growth of the BaaS market will be driven by corporates and their transformation projects. This sets us apart from the first generation of European BaaS providers, who primarily served fintechs, although we welcome them too. Our solutions are best suited for high-volume projects with significant contextualization or modularity requirements.

Presently, Xpollens boasts nearly 150 employees and reports almost 350% growth in recurring revenue. We already collaborate with over twenty clients, offering advice and support for their projects.

What is the Maturity Level of Companies Regarding BaaS?

The Banking-as-a-Service market is still in its nascent stages. Many sectors have yet to fully grasp the benefits of this solution. Raising awareness and educating the market is a significant undertaking, and in this endeavor, we collaborate with consulting firms and payment specialists who engage with potential prospects embarking on transformation or modernization projects.

We anticipate it will take another 4 to 5 years before Banking-as-a-Service becomes commonplace. For entities like Xpollens, the challenge lies in solidifying our positioning now to stand out and be recognized as a key player once the market matures.

What are the Challenges and Future of Payments?

We align with a trend that began in the early 2010s: offering increasingly seamless and frictionless payment experiences for businesses, retailers, and consumers alike. To achieve this, we provide clients with our banking license and cutting-edge payment technologies to materialize their projects. In this sense, we are active players in open banking, not just in the PSD2 sense, but by presenting new opportunities for businesses to complement their traditional banking services. We also contribute to demystifying and making financial and payment services more accessible. Like strict open banking actors (aggregators and initiators), BaaS enables the consumption of financial services outside one’s primary bank context.

How Do You Envision Your Future in This Market?

We are currently in a scale-up phase, focusing on sustaining our commercial growth and optimizing our operational model (banking operations, risk management, process automation). Concurrently, we aim to expand beyond France, with existing clients abroad and interest from neighboring markets. Expansion requires meticulous planning, considering local technological, regulatory, and consumer habit differences within the European Union.

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