Banking-as-a-Platform: A new financial model SBS

In this rapidly evolving, ever-changing market, it’s time to innovate, integrate and accelerate into the future. Digitisation has taken the world by storm, with technology and advanced analytics penetrating every industry. This has rendered traditional banking systems obsolete, as BigTech and Fintech companies close in on the banking industry faster than ever. Banks are left […]


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In this rapidly evolving, ever-changing market, it’s time to innovate, integrate and accelerate into the future. Digitisation has taken the world by storm, with technology and advanced analytics penetrating every industry. This has rendered traditional banking systems obsolete, as BigTech and Fintech companies close in on the banking industry faster than ever. Banks are left with no option but to adopt digital banking in a major banking as a service platform way if they hope to compete, and mass digitisation is no longer a choice but an inevitability, banks must now embrace digital banking. Additionally, banks are collaborating with fintech companies to develop new financial services. In the case of BaaS, the target audience is largely confined to third parties and independent developers with a good understanding of using technologies such as APIs to create new solutions.

For instance, Facebook facilitates direct interactions between content generators and users . Facebook itself is a platform owner or facilitator providing the infrastructure for the interactions, among the different customer types, to originate and sustain. In order to aggregate the data, the application extracts transaction data from all your bank accounts. Saas , IaaS and PaaS might give birth to industry specific services and platform in future such as Baas and BaaP . This project has benefitted the bank to improve the customer experience and drive customer acquisition costs significantly.

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If a bank launches a new voice based authentication, mobile wallet or even a mobile app, other banks soon follow suit with similar offerings. Today, as banks face declining interest income from their existing business models, the tactics adopted by most banks, in a bid to retain customers, lack differentiation. Companies, in general, focus on achieving product leadership, operational efficiency and customer intimacy. But the magnitude of focus on each of the three dimensions should vary depending on the maturity of the products and services the companies offer.

BaaP Examples and Advantages

In the Pāli Canon, an enlightened person is said to be neutral in terms of karma, that is, the person no longer generates karma, merit, or demerit. Some scholars have interpreted this to mean that an enlightened person attains a state where distinctions between good and evil no longer exist. Other scholars have criticized this as making little sense, considering how the Buddha would normally emphasize ethics.

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Present themselves if they are created utilizing standards like REST and Open API. Their accessibility and modularity enhance the development and use of interfaces. At their very core, these business products are best designed to address a particular requirement. To understand an API in the banking context, one must first understand what an API is. An API, or application programming interface, is essentially a piece of software that connects to other software. An API is software that serves as the interface between applications, as the term suggests.

  • Payment as a Service — kind of services is really needed or badly needed by looking at current mess or flood seen in market.
  • Starling offers a broad selection of financial services provided by third parties and includes several insurance, payment, and accounting solutions from which customers can choose.
  • Due to the sheer number of projects, customer demands, growing regulations, and constantly changing compliance standards, all staff are under more stress than ever.
  • MNO were the first to pick up the opportunity and started giving banks hard time.
  • For years, the banking sector resisted change because of concerns around security and compliance, and because they enjoyed a high degree of customer trust and loyalty.

This method also required the startup to develop technology for the user interface and onboarding, regulatory and risk controls(such as Know-Your-Customer), and periodic agency audits or government reporting obligations. With high upfront costs, investment capital required, and a timeframe of over 1–2 years just to test the market, organizations were eager for a faster, lower-cost solution. BaaP is crucial for banks to stay relevant or else banks’ run the risk of obsolescence due to fragmentation of its offerings by fintechs and non-financial services providers. Changes, product or service related, will require coordinating and communicating among multiple sets of stakeholders such as financial technology companies, service providers and independent developers. Mediating and negotiating would be important aspects of managing relationships. For banks used to absolute ownership of their product and service stacks, such a change might be difficult to adapt to.

Decoding Banking-as-a-Platform Models

Digital banking refers to the digitisation of banking services, thus eliminating the need for consumers to physically visit a bank branch. In the context of a global pandemic, traditional banking systems have become outmoded. Consumers want efficiency, accessibility, and demand essential banking services in a physically safe manner. This is where Big Tech firms and fintechs are giving traditional banks a run for their money. Businesses had a hard time getting a financial service off the ground because there were so many expensive obstacles in their way. This was a separate process that required applying directly to a bank, which may require significant amounts of money to be raised before beginning their month evaluation process.

Banking as a Platform: A Practical Business Model That Can Benefit … – Finextra

Banking as a Platform: A Practical Business Model That Can Benefit ….

Posted: Thu, 07 Apr 2022 07:00:00 GMT [source]

Banking-as-a-Platform enables third-party developers to build products and services for bank customers. Developers can extend platform functionality using APIs, while the platform itself manages data exchange and oversees authentication, as well as ensuring compliance. In this situation, banks integrate services from fintech companies in order to offer their customers a more comprehensive range of services from a single bank account. The fintech company’s services are usually fully integrated into the user interface of the bank’s application or its website via an API. In this model, the bank has a partnership with a single player per type of service. Traditional banks often use the platform banking approach to add value to the customer experience and as an incentive to secure the customer’s loyalty.

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The “non-banking” company using these services will be registered as a BaaS agent, which can be accomplished in a matter of weeks as opposed to the 6-12 months it would take to obtain a license of its own. Banking as a Service — Days are not far when one can get independent license or permission to run banking services without a beaning titled or registered as Bank. BaaS providers will provide limited services to ensure customer service at optimum level, round the clock access, access from where ever ever you are in a very safe and secured environment. FIDOR Bank, headquartered in Munich, Germany, built the banking platform from scratch in 2015. It is one of the first neobanks (100% Digital banks that reach the customers through mobile apps and computer platforms only) with a banking license.

BaaP Examples and Advantages

With the same intent all small and large banks started offering and consuming Banking API Integration. The U.S. is also moving in the direction of open banking, but in a different way compared to Europe. Rather than government regulation causing banks to become more open, these innovations are driven by enterprising businesses. That means U.S. banks and fintechs can pursue partnerships on their own terms. Building out that intermediary system on your own would be a huge burden.

Merit and wealth

Another criticism often leveled at merit-making in modern times is that it prevents people from using their resources to help the poor and needy. Very often, however, temples do have many social roles in society, and offer help to many groups in society—resources are therefore redistributed widely. Moreover, since merit-making is often done as a community, merit-making may strengthen social ties, which Walters calls “sociokarma”. Studies done in the 1960s and 1970s in Thailand, Sri Lanka and Burma showed that a great deal of time, effort and money was invested by people in merit-making, e.g. Spiro described Burma’s rural economy as “geared to the overriding goal of the accumulation of wealth as a means of acquiring merit”. In some studies done in rural Burma, up to thirty percent of people’s income was spent on merit-making.

BaaP Examples and Advantages

Also, BaaPs will be likely to provide a higher level of trust than a small player in the market. Last year in 2021, the number of internet users worldwide stood at 4.9 billion, which means that almost two-thirds of the global population is currently connected to the world wide web. As mentioned at the beginning of the article, there’s no denying that the future of many prominent industries is online. Webinars – Get the most valuable insights from industry pioneers and optimize your business. Dynamic Offer Management – Grow and enrich your customer relationships by quickly launching highly personalized and contextual offers. MenuProductsProducts Overview – Accelerate innovation and customer centricity with SunTec.Enterprise Product Management – Establish customer choice at the heart of your enterprise and enable right selling.

Similar to Banking as a platform (BaaP)(

Thanks to this new regulation, third party providers are now able to offer new services to consumers. Through the European DSP2 regulation, third-parties can access bank account information and initiate payments provided they have the user’s consent. Grewal commented for 2023, “Recent open banking legislation enacted across prominent markets such as the European Union and Hong Kong is ushering in a new wave of collaboration among banks on a global scale. As remaining markets adopt open banking regulations, they must transition to a horizontal architecture that charts a path forward for the banking as a platform model if they want to retain a competitive advantage. Such a Platform-as-a-Service could provide a single interface to the end-customer , pooling all the many services of the external FinTechs which are part of the value chain.

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