Software as a service (SaaS) has sparked a paradigm shift in the corporate domain in the past five years, revolutionising pivotal industries like finance, transactions, and insurance.
This transformation, while subtle in its approach, has fundamentally reshaped the daily operations of individuals and enterprises alike. Projections suggest that by 2025, more than 50% of all data will be stored in the cloud, with over two-thirds of global software spending will be on SaaS solutions.
In 2021, the European Cloud Uptake Consortium was established to strengthen the public cloud ecosystem within the EU financial industry. In just a few years, according to Statista, the DACH region has emerged as the second largest market by SaaS revenue and growth, following closely behind the US and will reach over €18 billion revenue in 2024. The overall market volume is projected to exceed €60 billion in total by the end of the following year.
The inherent agility of the SaaS model is proving to be a game-changer for European businesses. This flexibility enables swift adaptation to market demands, eliminating the traditional obstacles associated with software development and maintenance.
This model not only simplifies operational processes but also offers the adaptability needed for seamless scalability of IT infrastructure. Beyond cost-effectiveness, SaaS minimises upfront capital expenditures, making it an appealing choice for businesses across various sectors in Europe.
Within the fintech sector, the SaaS model is valued for its agility, cost-efficiency, and scalability. It empowers fintech startups to seamlessly integrate technologies, while fostering innovation through its pay-as-you-go model. Additionally, with the right choice of technological partner, SaaS platforms provide fintechs with the scalability for sustained growth, freeing them from infrastructure constraints.
Traditional banks have also embraced SaaS for heightened operational efficiency, substantial cost savings, and enhanced security. By automating tasks and adopting a subscription-based model, banks like ING Group, Belfius, Erste Group or Swedbank AB can optimise resources for strategic initiatives.
What’s shaping SaaS in 2024?
As we look ahead to 2024, SaaS continues to represent not just technological evolution but a strategic imperative for maintaining competitiveness in a market that demands efficiency, security, and adaptability. It becomes a strategic ally to drive digital transformation and operational excellence in the financial technology sector. Key factors that will continue to shape the SaaS market in 2024 are discussed below
Integration platform as a service
The platform as a service (PaaS) market, valued at US$44 billion in 2020, is poised for remarkable growth, projected to increase over fivefold in the next decade. PaaS, a cloud computing service, prioritises application deployment rather than service provision.
The iPaaS concept is particularly compelling, enabling fintechs and financial institutions to seamlessly integrate software applications across diverse environments, facilitating streamlined data integration and efficient app management processes.
The platform’s flexibility allows for the creation of custom connectors and modification of access mechanisms, with robust support for real-time processing, data transformation, and batch data integration.
Low-code development
Low-code/no-code development is pivotal for rapid response to market demands, allowing fintechs and traditional banks to create and integrate new digital applications without extensive coding expertise. This agility in software development is crucial in adapting to the ever-evolving regulatory changes (i.e. upcoming PSD3).
API and partnerships
APIs that connect software products are vital for seamless data sharing across platforms and departments. Establishing partnerships with white-label tech providers can empower fintechs and financial institutions to offer digital payment services seamlessly and leverage valuable integrations from issuing cards to eKYC.
Artificial intelligence
Artificial intelligence (AI) will continue to play a significant role, enhancing consumer experiences and increasingly becoming an integral part of payment services, such as AI-driven bank chatbots. The integration of AI into SaaS services is expected to surge, with almost 35% of SaaS businesses already utilising AI in their processes by 2025.
Looking ahead
The year ahead promises transformative growth for SaaS in the financial sector. Fintechs and financial institutions are poised to adopt SaaS solutions for its enhanced flexibility and cost-efficiencies driven by the growing popularity of AI and shifts in European regulation.
At the forefront of this SaaS transformation stands BPC, your ideal strategic partner for excellence in SaaS within payments and banking. With a presence in more than 120 countries, BPC’s SmartVista platform facilitates daily transactions, connecting key points in the global financial landscape.
Recognised for its flexible architecture, robust security, and customised solutions, BPC bridges the gap between the real and digital worlds, adapting to cultural diversity and the specific needs of clients worldwide.
Peter Theunis is senior vice president Europe at BPC
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