Unleashing Resilience: SaaS-Powered Financial Institutions Outpace Market Peers in Turbulent Times

In today’s dynamic financial landscape, the ability to bounce back from market disruption is a critical factor for success. Recent research conducted by Mambu, a leading cloud banking platform, reveals a striking advantage for financial institutions (FIs) that run on a true Software-as-a-Service (SaaS) platform – they recover nearly 2.5 times faster than their industry peers.

Mambu’s comprehensive report, “Turning Turbulence into Triumph,” delves into the experiences of personal lenders, SME lenders, and neobanks over the past three years. It sheds light on how these financial institutions have navigated disruption and provides valuable insights on developing resilience for the future.

The research findings highlight the remarkable resilience of SaaS-powered FIs, enabling them to weather market shocks and swiftly return to growth, as exemplified during the pandemic. In 2019, FIs utilizing a true SaaS platform achieved an impressive 47% revenue growth. Although growth dipped to 14% in 2020 due to the pandemic’s impact, it still significantly outperformed the rest of the market, where comparable FIs experienced a mere 1% growth.

Crucially, SaaS FIs made a resounding comeback in 2021, with a remarkable 34% growth, surpassing their non-SaaS peers who achieved only 10% growth.

William Dale, Regional Vice President APAC at Mambu, emphasized, “The benchmarking data demonstrates how SaaS technology has empowered financial institutions worldwide to develop resilience, shielding them from severe economic shocks while driving continued growth amidst ongoing change. Moreover, the advantages of adaptability come at an affordable cost. SaaS platforms reduce core operating expenses, enabling redirection of funds into product innovation that enhances the customer experience, all while fortifying banks’ resilience to retain and attract new customers.”

The report highlights a U-shaped recovery among SaaS-powered FIs across personal lending, SME lending, and neobank segments. The most significant disparity in growth was observed in the personal lending sector, where traditional upper-tier lenders saw their loan growth plummet from 3% in 2019 to -22% in 2020. In contrast, their SaaS-powered counterparts experienced a much milder decline from 52% to 44% during the same period.

SME lenders demonstrated better resilience compared to their counterparts in personal lending. Those operating on a SaaS core achieved an annual loan growth rate of 7% in 2020, surpassing their traditional peers who reached this level of growth only in 2021. By that time, SaaS-powered SME lenders had surged ahead with an impressive growth rate of 28%.

These benchmarks were established using internal Mambu data on the financial results of existing customers, as well as publicly available reports from external parties, such as S&P Capital IQ. The data spanned the years 2019, 2020, and 2021, encompassing EMEA, APAC, and LATAM regions.

The research underscores the transformative impact of the pandemic on the banking industry, creating conditions that necessitate change. Financial institutions built on a SaaS core are uniquely positioned to not only weather disruption but also convert it into commercial opportunities, paving the way for a resilient and prosperous future.

7 June 2023

Author: Terry KS

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