SaaS-Powered Financial Institutions Outpace Industry Peers, Bouncing Back 2.5 Times Faster

2 mins read

7 June 2023

Research by Mambu shows that financial institutions operating on a true SaaS platform recover from market disruptions at an astounding rate.

In a study conducted by cloud banking platform Mambu, it has been revealed that financial institutions (FIs) operating on a true Software-as-a-Service (SaaS) platform are capable of rebounding from market disruptions nearly 2.5 times faster than their industry peers.

The comprehensive report titled “Turning Turbulence into Triumph” explores how personal lenders, small and medium-sized enterprise (SME) lenders, and neobanks have successfully navigated disruptive events over the past three years. Furthermore, the research sheds light on the strategies financial institutions can employ to enhance their resilience in the face of future challenges.

The study’s analysis clearly demonstrates that FIs powered by SaaS technology exhibit greater resilience, enabling them to weather market shocks with more ease and swiftly regain momentum, as exemplified during the tumultuous pandemic period.

In 2019, financial institutions utilizing a true SaaS platform achieved an average revenue growth of 47%. When the pandemic struck in 2020, this growth figure dipped to 14%. Although there was a temporary decline, it still far surpassed the performance of other comparable financial institutions, which experienced a meager 1% growth during the same year.

Remarkably, SaaS FIs made an impressive comeback in 2021, with a growth rate of 34% compared to a mere 10% growth among their non-SaaS counterparts.

William Dale, Regional Vice President APAC at Mambu, emphasized the significance of these benchmarking findings, stating, “The data highlights how SaaS technology has enabled financial institutions worldwide to fortify their resilience, shielding them from severe economic shocks and facilitating continued growth in the face of ongoing change. Moreover, the advantages of adaptability come at a relatively low cost. Leveraging a SaaS platform reduces core operating expenses, freeing up additional funds for product innovation, ultimately enhancing the customer experience, while simultaneously building resilience that aids banks in retaining and attracting new customers.”

The study also identified a U-shaped recovery pattern among SaaS-powered financial institutions operating in the personal lending, SME lending, and neobank sectors.

The most significant disparity in growth was observed in the personal lending sector, where traditional upper tier lenders witnessed a decline in loan growth from 3% in 2019 to a staggering -22% in 2020. In contrast, their SaaS-powered counterparts experienced a much milder decline, with loan growth decreasing from 52% to 44% over the same period.

SME lenders exhibited stronger resilience compared to their personal lending counterparts, as those operating on a SaaS core achieved an annual loan growth rate of 7% in 2020. Traditional SME lenders did not reach this level of growth until 2021 when SaaS-powered SME lenders had already surged ahead with a growth rate of 28%.

The study’s benchmarks were developed using internal Mambu data on the annual financial results of existing customers, combined with publicly available financial reports from external sources such as S&P Capital IQ. The data encompasses the years 2019, 2020, and 2021 across EMEA, APAC, and LATAM regions.

These findings underline the transformative impact of the pandemic on the banking industry, illustrating that financial institutions built on a SaaS core are better positioned to convert disruption into commercial opportunities, setting the stage for future success.

To read the full Turning turbulence into triumph report, please click here.

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