Retailers Find New Revenue Streams In Banking-As-A-Service Models

In the rise of the platform economy, the super app looms large. The lines between services and brands that once were simple and well-defined — that Amazon is simply an eCommerce retailer, that Walmart is simply a retail behemoth or telecoms only provide phone service — are blurring.

Banking, in other words, does not only belong to the banks.

Serge Beck, CEO at Optherium Labs, said that a range of businesses — especially ones achieving scale and significant installed customer bases — can make the leap toward providing financial offerings to their end users. As Beck told PYMNTS: “Any company can become a neobank.”

And in doing so, they can realize additional revenue streams from providing banking that can far eclipse the contributions of their original, core businesses.

Drilling down a bit, said Beck, Optherium — which provides white-label services to companies that in turn want to do everything from issue prepaid cards to facilitate international money transfers — has seen the greatest demand from financial institutions (FIs) that increasingly want to go digital and telecoms. The white-label services allow businesses to launch web, iOS and Android applications under their brand through the granting of third-party licenses, permissions, certifications and modular microservices.

Beck noted that depending on where they operate, and the type of service(s) they endeavor to offer, companies that want to become neobanks must have a bank “back them up” in order to launch. That’s especially true in the U.S., but by signing onto the platform/white-label model, which impacts the firms’ back-office functions but is invisible to the consumer, “you can just subscribe to a service” for the necessary licenses and KYC/AML compliance. He projected that in the fourth quarter of this year — just in time for the all-important holiday shopping season — Optherium will help to launch several new neobanks in the United States, with new brands coming to market. It offers turnkey neobank services in the U.S., Europe and Brazil, with plans in the upcoming months to expand those services to 28 African countries and GCC countries.

Thus, Beck illustrated, a (hypothetical) department store bringing banking services to its clientele can market those offerings to users, saving money on the transactional fees tied to interchange and card transactions (he pointed to “seamless bank-to-bank transfers” as examples).

Moving Beyond FIs And Telecoms  

Though the current demand may be most evident among these financial institutions (FIs) and telecoms, with tens of millions of customers, Beck contended that smaller firms — those with user populations of 20,000 individuals and above — offer banking products to end users in a way that cements loyalty with the population. That spans cash and carry companies, many retailers and micro-lending firms.

And it’s important to note that the company’s neobank platform, digital-only as it is, does not tie in with crypto services, but leverages the technological underpinning of crypto — that would be blockchain — to streamline and speed the process toward neobank status. Blockchain “is tremendous” for security and transparency of transactions, said Beck.

Looking ahead, he noted that Optherium has said it is open to collaborating with system integrators, service providers, businesses, banks and governments on neobanking.

“They are reaching out to us with from all over the world,” said Beck. “They are very eager to bring our technology to their existing customer bases.” Against that backdrop, companies that fully embrace a pivot to neobanking — particularly retailers who may be facing margin pressures as they move to boost their digital presence — can, and will, see new revenue streams.

As Beck pointed out, “Those new revenue streams” — through buy now, pay later (BNPL) and other options — “may be more than what their businesses have been generating on a daily basis. The client is not only spending money within their store, but also outside and on every transaction, so the neobank benefits.”