Unveiling the Challenges of BaaS and Embedded Finance: The Struggle of Apple

Apple’s partnership with Goldman Sachs, once seen as a match made in heaven, is now facing hurdles, writes Meaghan Johnson for Forbes. Complaints from Apple Savings customers about difficulties in fund withdrawals and encountering unsatisfactory customer support from Goldman Sachs have shed light on the hidden risks of collaborating with BaaS (Banking as a Service) or Embedded Finance (EF) enablers. As a company renowned for its exceptional customer service, Apple’s reputation for delivering an outstanding user experience may be at stake due to these complaints.

The global embedded finance market, valued at USD 65.46 billion in 2022, is expected to grow at a rapid pace with a compound annual growth rate (CAGR) of 32.2% from 2023 to 2030. BaaS and EF solutions continue to revolutionize and democratize financial services, offering benefits such as cost reduction, faster time to market, and pre-built technological infrastructure that meets regulatory and compliance requirements.

While BaaS and Embedded Finance have immense potential, challenges are bound to arise once the product is live. One crucial aspect that often goes unnoticed is customer support. Founders, CPOs, and CTOs primarily focus on achieving product-market fit, often neglecting the importance of a robust customer support function. BaaS and EF enablers, being B2B companies, typically have customer success or partnership managers, rather than dedicated customer support teams to address end-users’ queries.

Apple Savings customers’ experiences are not uncommon. Users who interact with the customer support teams of BaaS or EF enablers often face extended waiting periods, ranging from days to weeks. Even when fintech companies or brands have their in-house customer support teams, requests sometimes get redirected to the BaaS or EF enabler, resulting in prolonged response times and frustrated customers, leading to a disjointed experience.

Another significant challenge for fintechs and brands lies in comprehending the complex flow of funds models and regulatory complexities associated with their BaaS or EF enabler. This challenge becomes even more pronounced for multi-currency or multi-market fintechs that rely on multiple BaaS providers. Instances have occurred where business owners had to chase their fintech providers for months to resolve fund transfer issues, often lacking clarity on what went wrong.

Nick Carcaterra, a representative from Goldman Sachs, commented on the recent complaints, stating that delays in fund transfers were due to protective measures put in place. He emphasized the importance of balancing a seamless customer experience with account security.

When considering a partnership with a BaaS or EF enabler, it is crucial to prioritize a robust customer support strategy. The following points can be considered when building such a strategy:

• Prioritize in-house customer support over relying solely on the BaaS or EF enabler’s team to maintain control over the customer experience.
• Provide transparent and timely information to customers regarding fund flows to alleviate concerns about lost funds.
• Ensure that both product and customer support teams have a fundamental understanding of banking operations, including fund inflows and outflows, parties involved, and potential delays.

While BaaS and Embedded Finance present exciting opportunities, the challenges faced by Apple and Goldman Sachs emphasize the importance of prioritizing customer support and understanding the complexities of fund flows within these partnerships. By proactively addressing these challenges, brands and fintechs can navigate the embedded finance landscape while delivering exceptional customer experiences.