The banking and financial services industry is undergoing a transformative shift, led by the twin forces of embedded finance and banking as a service (BaaS). While these terms are often used interchangeably, they represent distinct disruptive models that are reshaping how financial services are delivered and consumed.
Embedded finance largely refers to the seamless integration of financial services into non-financial platforms. Companies like e-commerce giants and ride-hailing apps now offer payment solutions, insurance, and even lending services directly within their ecosystems.
Take for instance, when you order lunch or a ride through Grab and pay without leaving the app, you’re interacting with embedded finance. This model offers users convenience and a seamless experience by meeting them where they already are—inside non-financial apps—and eliminates the need to engage directly with traditional banks.
BaaS on the other hand enables third-party businesses, often fintechs, to offer financial services using the infrastructure and regulatory compliance of traditional banks. BaaS allows organisations to quickly introduce bank-like products, such as branded debit cards or lending solutions, without requiring a banking license. A fintech startup, for instance, can focus on customer experience while a licensed bank handles the back-end operations and regulatory framework.
The impact of these innovations is profound. Embedded finance enhances customer engagement and drives new revenue streams for non-financial companies. Meanwhile, BaaS accelerates innovation in fintech, lowering the barriers to entry for start-ups while allowing banks to monetise their infrastructure.
Together, embedded finance and BaaS are blurring the lines between financial and non-financial sectors, creating more inclusive, accessible, and innovative financial ecosystems—ultimately disrupting the traditional banking landscape and democratising financial services.
Standing at the crossroads of such financial services innovation is audax, which began as an offshoot of Standard Chartered’s BaaS platform. Now a separate entity and business line, audax describes itself as a cloud-native digital “bank in a box” solutions provider that boasts an end-to-end digital banking platform with modularised capabilities that complements existing banking systems, deployed as a scalable layer within bank or scale-as-a-service.
Simply put, audax enables banks to seamlessly integrate digital financial services within existing systems while offering rapid cloud-based solutions. This flexibility allows banks to enhance customer experiences, streamline operations, and scale services without replacing legacy infrastructure. One of the most significant innovations audax brings is its modular technology stack, which allows for faster deployment of banking services.
The company has also collaborated with Synpulse to offer banks and financial institutions the ability to build a BaaS proposition and integrate financial services directly into diverse digital ecosystems in as fast as six months.
By combining cutting-edge technology with the ability to integrate legacy systems, audax is positioned to help financial institutions modernise at speed, meeting the demands of the digital age.
Having held transformative roles throughout his career at Standard Chartered and other banks including Deutsche Bank and OCBC, Kelvin Tan was handpicked to lead audax as CEO in 2023.
Exuding a quiet confidence, with an unwavering self-assurance that comes from a deep understanding of his craft, Tan moves with the certainty of someone who not only knows what needs to be done but also how to achieve it with precision and flair.
We had the opportunity to meet him for this two-part interview series to gather his views on the innovation challenges faced by traditional banks today, the “bank in a box” proposition, AI integration in financial services; and to find out why he doesn’t fret about potential competition from other fintech players.
What solutions does audax offer, and why?
At its core, our offering provides an entire digital bank tailored for retail and SME banking, all encapsulated in a single application. This solution, which can be deployed in six to 12 months, serves various use cases, offering a full suite of digital banking services quickly and at a fraction of the typical cost.
Our value proposition is clear: speed to market, cost efficiency—approximately one-tenth of the price compared to assembling multiple vendors—and proven success. We’ve delivered these solutions for major players like Standard Chartered, where deploying a system in China, one of the world’s most challenging markets, showcased the platform’s strength and reliability.
The fundamental hypothesis driving this solution is no longer theoretical; it’s a reality.
Retail and SME banking divisions globally are under increasing pressure to boost return on equity (ROE). Investors are scrutinising banks’ balance sheets, realising that better investment returns might be found elsewhere unless banks reduce their costs.
In order to increase ROE, banks must lower both customer acquisition and service costs. The way forward? A scalable digital model.
Whether through BaaS, embedded finance, or a full digital bank set-up, there are multiple ways for banks to innovate and streamline their operations. But at the heart of every transformation lies the need for a modern, scalable, and cost-effective technology stack. This stack includes essential components like app modules, SDKs for integration, identity and access management, and a robust security layer—everything needed to run a digital bank efficiently without incurring hundreds of millions in operational expenses.
While API integration is a critical part of this platform, it’s far more than just APIs. We offer what we call a “bank in a box” solution. Embedded finance is just one of the many use cases supported by this versatile platform. Whether launching a new digital bank, embedding financial services into other products, or transforming legacy platforms, this core banking technology stack supports a wide range of applications.
What sets us apart is that while our platform is designed for flexibility and scalability, many of our customers are traditional incumbent banks rather than new digital challengers. These institutions are leveraging our solution to modernise and compete in an increasingly digital world, underscoring the platform’s adaptability and broad appeal across the banking sector.
In short, our solution empowers banks to scale, innovate, and compete—all while keeping costs under control and speeding up time to market. The digital transformation of retail and SME banking is not just an opportunity—it’s a necessity. And we provide the tools to make it happen.
Who uses your solutions?
Most of our customers are incumbent banks—traditional, well-established institutions rather than new digital-only banks.
These existing banks face significant pressure to transform into scalable digital businesses while reducing regulatory costs and increasing ROE. This is a common challenge across the global banking sector.
One of the biggest hurdles incumbent banks face is their legacy technology, which lacks the ability to scale effectively. As a result, nearly all banks are exploring solutions that either enable smooth migration from outdated systems or introduce a complementary technology stack capable of supporting separate digital banking operations. This growing demand for digital transformation has led many banks to seek out innovative and cost-effective options.
Our technology stack was developed to address precisely this need. Originally created for Standard Chartered, it quickly became clear that the platform could be spun out and commercialised for broader use.
Since then, we’ve garnered significant interest and have engaged in numerous discussions with banks around the world eager to leverage our solution. This overwhelming interest underscores the urgency with which the industry is approaching digital transformation.
The technology we offer is easily deployable, low-cost, and highly configurable to suit a variety of use cases. Whether a bank wishes to migrate its existing operations to a more modern platform or launch a new digital banking business, our stack provides the flexibility to meet these needs. It’s ultimately up to the customer how it wishes to utilise the technology, but we can support a wide range of configurations to achieve its goals.
While we primarily target incumbent banks, other organisations, such as those looking to introduce digital banking services, have also shown interest. For example, companies like Grab, which hold banking licenses, can integrate our platform into their existing infrastructure to offer digital financial services.
However, our focus remains on banks and similar institutions, as they align best with the core capabilities of our technology stack. Our solution empowers traditional banks to overcome the limitations of legacy systems, adopt scalable digital models, and position themselves for success in an increasingly digital world.
How is embedded finance getting on, especially in this part of the world?
Embedded finance is still in its infancy with various definitions and interpretations. If you ask 50 people what embedded finance means, you’ll likely get 50 different answers.
Intrinsically, embedded finance involves the seamless integration of financial services within another company’s ecosystem, allowing consumers to access these services without interacting directly with a traditional bank.
Globally, embedded finance is still emerging. While experts predict that it could become a US$3-7 trillion industry, these numbers are often debated.
However, the trend is undeniably gaining traction. For instance, when you preload your credit card on Uber and seamlessly exit the car without making a physical payment, that’s an example of experiential embedded finance. Although it’s not a fully integrated financial service, it represents the early stages of embedding financial experiences into other platforms.
In Asia, embedded finance is growing, though unevenly. GrabPay, for example, is a form of embedded finance, and GXS is beginning to integrate banking services into Grab’s app. Similarly, in Korea, Kakao Bank is embedded within Kakao Chat, allowing users to access financial services and make payments directly through the chat platform.
However, the most mature example of embedded finance globally is WeChat and its financial arm, WeBank. WeBank is deeply integrated within WeChat, providing invisible banking services to users. Moreover, WeBank extends beyond the app, embedding itself into automobile purchases and real estate transactions in China, making it a global leader in embedded finance.
As the concept evolves, embedded finance will likely become an integral part of how consumers interact with financial products, shifting the focus away from traditional banking channels.
Would you say that China is leading on that front?
China is at the forefront of innovation in financial services, especially in areas like BaaS and embedded finance. Interestingly, despite China’s dominance in this area, platforms like WeBank and Alipay are often overlooked at global fintech events and festivals. This is ironic given their enormous scale and success.
The rapid development of China’s financial ecosystem was driven by giants like Alibaba’s Alipay and Tencent’s WeBank, which created massive ecosystems almost overnight. Initially, regulators didn’t fully understand how to manage these platforms, allowing them to grow unregulated for a time. By the time regulations caught up, these platforms already had hundreds of millions of users.
In China, embedded finance has reached a level of maturity that most other regions have yet to experience.
Outside of China, embedded finance is still in its early stages and not yet operating at scale. However, there is significant potential for growth globally. Embedded finance offers financial institutions an opportunity to acquire and serve customers at a fraction of the cost, which is why the market is predicted to grow into a US$7 trillion industry.
For banks, embedded finance is a strategic way to increase market share without the need for physical infrastructure or massive sales teams. For example, banks can white-label their products and integrate them into platforms like Traveloka, offering travel loans seamlessly at checkout. This allows consumers to use financial products almost without realising it, driving up customer acquisition at a tenth of the traditional cost.
Our platform, which originated from embedded finance initiatives at Standard Chartered, is well positioned to meet this growing demand. Many banks are approaching us because few technical platforms have executed embedded finance at scale. While most banks have kept such projects in-house, we took our platform external after proving its success at Standard Chartered. This unique approach has sparked significant interest, with around 30 per cent of our current pipeline focused on embedded finance.
In terms of competition, we don’t face fierce challenges from fintech providers. Most fintech companies are focused on specific use cases or functionalities because building and scaling an entire banking platform requires significant capital.
Our advantage lies in having developed our platform within a bank as a capital project before spinning it out. This sets us apart from typical fintech start-ups, which usually build one function at a time and require much longer to scale into a full banking platform.
What are the main challenges, aside from cost, that traditional banks face when trying to adopt digital banking?
While cost is often cited as a major challenge in banking, it’s not the biggest obstacle. Yes, digital banks in Singapore reportedly cost around S$100 million annually to operate—these are public figures—but cost isn’t the core issue. The real challenge lies in mindset shifts.
The main hurdle for banks isn’t just the expense; it’s whether they are ready to adopt scalable cloud infrastructure, embrace iterative agile development, and adopt an embedded finance mindset.
For many traditional banks, there’s hesitation. For example, when considering embedded finance, questions often arise about brand visibility and customer ownership—some worry that by integrating their services into another ecosystem, their brand could become invisible.
So, the real challenge is moving towards a more scalable digital model, not simply reducing costs. While reducing costs is important, it’s worth noting that our platform can achieve similar results at a fraction of the expense—potentially just a fifth of what other banks spend.
However, this isn’t inertia either. Inertia implies knowing what needs to be done but refusing to act. In many cases, banks don’t fully recognise what’s required for digital transformation.
Overcoming this requires education—especially at the senior executive level. Many of these leaders are open-minded and assertive, and if you can explain a better approach, they are often willing to engage in meaningful conversations.
Regarding AI and machine learning integration, our platform includes a comprehensive data infrastructure to support LLMs. If a customer chooses to develop its own AI models, it can integrate them with the platform’s data capabilities.
However, many banks face a more fundamental issue: they don’t have a unified data infrastructure in place. As I often say, “There is no AI without I”—meaning, without an integrated data framework, banks can’t fully leverage AI’s potential. Many still lack clear data classification systems or data lakes, which are essential for AI to function effectively.
In contrast, we’ve seen some banks using tools like GitHub Copilot to double their development speed, demonstrating that with the right mindset and infrastructure, significant gains can be made in digital banking.
