Today’s consumers can bypass traditional bank branches for things like applying for a loan or even a mortgage . The financial services sector isn’t typically synonymous with nimbleness. But today, adaptability and quick iteration are precisely what consumers and business owners expect—and, increasingly, need.

Beyond setting up accounts at different banks, the owners at Hair Flair spend time each week reconciling finances across these accounts to track their money, pay bills, and avoid bounced checks. It also means a significant portion of their earnings may be tied up in transfers before they’re able to spend it. Banking-as-a-Service Embed financial services in your platform or product. The open banking movement is proliferating around the world, creating new opportunities for emerging players in the space, and forcing legacy banks to re-examine their business models as a result.

But had the bank not existed, I think there probably would have been some kind of financial institution that was catering to that ecosystem. You already had big banks, like Wells Fargo and Bank of America, that had divisions that were doing that stuff. She covers bank reviews, banking guides, and banking and savings articles for Personal Finance Insider.

Organizationally, banks will need to create multidisciplinary teams, redesign customer experiences and reshape business architecture. The regulatory mandate to open APIs is both a threat and an opportunity for financial institutions. Per one recent study from Accenture, banks that embrace Open Banking trends could profit from a potential revenue uplift of 20 percent, whereas those failing to do so risk losing 30 percent to disruption by the end of 2020. As sharing of customer data between buyers and sellers is integral to platforms, new risks and privacy considerations become key. Third-party relationships will likely also expose banks to various forms of operational risk, including information misuse and theft , system failures, business disruptions, legal disputes, and regulatory noncompliance.

Platform banking is not restricted to retail financial services—it does apply in the institutional context as well, whether for corporate customers or buy-side firms. FXall, an electronic, foreign exchange trading platform, offers access to over 180 liquidity providers.4 While FXall is a third-party platform, it illustrates the potential of platforms in the institutional markets as well. BaaS is based on an API software connection between banks and non-banks, including FinTech companies.

What is Banking-as-a-Platform

However, federal oversight overlaps state regulation, as PayPal is also under the purview of the federal Consumer Financial Protection Bureau. In those less socially distanced days, fintech was the unsung hero of your Friday night. Their tech team developed a JB Open Bank Platform , which provides flexible, comprehensive, and customizable architecture to address the modern-day technological needs.

NCino Bank Operating System is used by over 1,700 financial institutions worldwide. The platform has highlighted its success with customers like the Navy Federal Credit Union, SunTrust Banks and ConnectOne Bank. You can also use software platforms to introduce additional functionalities to your bank’s core systems through API integrations, automation and no to low code builders for pages and features.

Financial Services Industry Overview in 2023: Trends, Statistics & Analysis

The future of banking platforms looks to be focused on delivering higher customer personalization and improving security to prevent cyber-attacks. And Hair Flair can easily spend that extra capital on their business card they have through The Brush. The card is tied to their financial account and can access all of their funds in one place. Funds are immediately available, so they can use their card as soon as clients pay for their services.

  • Finastra’s Fusion Digital Banking combines core banking functionality with digital experiences for customers, with a business edition supporting workflows for higher risk transactions.
  • The main problem for a small bank like Legence was to provide this service at a cheaper cost than the big multinational banks.
  • WorldPay founder Nick Ogden unveiled UK-based ClearBank in 2017 after three years of secretly working on the project.
  • For banks seeking only business optimization as the goal of their digital banking strategy, a digital banking multichannel solution will meet those needs.
  • Some fintechs, in fact, exist largely outside or on the fringes of current regulatory oversight.
  • Artificial intelligence combined with massive troves of consumer data helps fintech businesses understand their customers and powers their marketing campaigns, product development and underwriting.

The move, taken in response to the COVID pandemic, meant banks were no longer required to maintain a minimum level of reserves to meet their customers’ demands. By eliminating reserve requirements, the Fed made the banking system more vulnerable to crisis, as banks were no longer required to hold a buffer of cash reserves to meet potential withdrawals. Rising interest rates and rampant inflation has dried up the liquidity that funded the startups and future unicorns conducting business with these banks. Yet, the collapse of Silvergate and Signature banking collapse is closely related to the crypto crashes of 2022, while Silicon Valley Bank’s concerns are much more troubling.

So, yes, we are entering a different phase, but that doesn’t mean this is the end. There’s always this desire to say, “Well, that was fun, it’s all over now, on to the next thing.” I think that would be a more dramatic story, but I don’t think that’s actually what’s going on now. I do think there’s been abundant evidence that moving a little slower on a lot of things could be beneficial, whether it be designing software or AI, or simply doing more due diligence. Vox talked to Silicon Valley historian Margaret O’Mara, who literally wrote the book on Silicon Valley’s history, about the bank’s place in the tech world and how the fallout from its collapse might change the region — or not. It’s possible it was the begging from the VCs that got the Biden administration’s attention. But multiple reports suggest that the federal government very quickly realized the need to act lest SVB’s fall trigger a larger collapse akin to the 2008 financial crisis which led to the Great Recession.

Fintech also automates many services businesses use, such as loan underwriting and real estate appraisals. Artificial intelligence combined with massive troves of consumer data helps fintech businesses understand their customers and powers their marketing campaigns, product development and underwriting. Banks use fintech for back-end processes—behind-the-scenes monitoring of account activity, for instance—and consumer-facing solutions, like the app you use to check your account balance. Individuals use fintech to access many bank services, including paying for purchases with a smartphone and receiving investing advice on their home computers. A digital bank is essentially a virtualization of customer needs and requirements offered in a physical bank.

For distributors, it is an opportunity to open new revenue lines at attractive margins and gain a much deeper understanding of consumer behavior through financial data. There is a lot more room for fintech companies to customize their financial products to the market and empower customers by allowing them to manage their payments or subscriptions through a more digitalized platform. Businesses today are experiencing a financial revolution and have changed how they handle their finances and receive payments. Banking-as-a-platform alleviates the burden of developing and operating a digital infrastructure to support desired banking services, allowing businesses and firms to focus more on providing an exceptional banking experience. The platform can then be used to deliver custom solutions, services and experiences to customers. There appears to be a latent appetite for platform services among consumers, as evidenced by two separate Deloitte surveys.


An online marketplace allows its customers to create their own deposit accounts to use as an e-wallet. With the help of a BaaS solution, the marketplace offers unique online bank accounts for individual users. Once you have defined your requirements, the next step is to evaluate the available corporate banking platforms on the market. You can start by conducting research online, reviewing vendor websites, and reading reviews from other banks that have implemented similar solutions. In a more competitive market, differentiation is of high importance and BaaP providers allow banks to identify their strength and build their ecosystem around it.

What is Banking-as-a-Platform

A bank’s customer acquisition cost is lower when BaaS partners have existing relationships with customers. Digital banking platforms centralize a wide variety of financial products and functionalities. Without the right support, the comprehensiveness of your digital solution can add confusion to customer onboarding and adoption workflows. You can use the Q2 platform to give end-users a clean and modern user experience for digital banking, lending and account onboarding. Despite being feature-rich, Q2 customers like the simplicity of navigating through financial products and discovering services tailored to their use cases.

You can build an application dashboard that highlights the financial services most important for customers and their specific use cases. Forbes that digital payments and e-wallets provide more security than physical cards. An excellent digital banking platform provides a wealth of security features, allowing you to take more security precautions than you typically would when accessing financial information at a bank. These precautions include biometric identification — like facial recognition, voice recognition, and fingerprint recognition —, multi-factor authentication, and immediate alerts when logins are attempted in unfamiliar places.


It lets Uber drivers and delivery partners receive earnings and access loans and gas discounts. BBVA Open Platform, a bank-created BaaS system, powers digital-only banks and non-bank applications in the U.S. Financial institutions in the banking industry are licensed and regulated. These regulations include Know Your Customer , anti-money laundering , OFAC sanctions lists, and data privacy and security. For Banking as a Service to function as expected and banks to remain in regulatory compliance, RegTech should be part of the BaaS process. The embedded BaaS financial services can be co-branded or implemented as white label banking (meaning it doesn’t show the bank’s branding).

What is Banking-as-a-Platform

The simplest option is to use one solution that offers both payments and BaaS services. This significantly reduces the complexity required to go to market and scale your offerings, lowering internal cost. Because everything is in one system, you don’t have to worry about complicated funds management and customers only have to share their information once, during onboarding, to access a variety of different financial services. This also allows you to continue focusing on your core product while your provider handles the work needed to solve your customers’ financial pain points. A decade ago, almost every platform could be considered “SaaS 1.0,” where they simply offered tailored software services and generated monthly recurring revenue from customer subscriptions. Today, most platforms are considered part of the “SaaS 2.0” generation, which facilitates online payments for their customers—marking their first step into embedding financial tools into their product.

You’ll find several online-only institutions featured in our best high-yield savings accounts guide. Fintech is now so pervasive in financial services that it’s all but ubiquitous. Fintech is firmly entangled in the fabric of our financial society, and it appears its influence will only grow in the future.

How should the responsibility of preserving customer privacy be allocated? Answers to these questions may not be easy but should be addressed at the outset with regulators. Barbara is currently a financial writer working with successful B2B businesses, including SaaS companies. She is a former CFO for fast-growing tech companies and has Deloitte audit experience. Barbara has an MBA degree from The University of Texas and an active CPA license.

How Does Fintech Affect Me?

Online banks can take various forms, all of which challenge the high fee, low yield brick-and-mortar banking model. In some cases, they may be affiliated with a traditional brick-and-mortar bank, serving as its online division. More recent fintech iterations have included what are referred to as neobanks or challenger banks. The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless.

What is Banking-as-a-Platform

Stripe is the easiest and most flexible way for platforms to build and launch their own full-featured, scalable embedded finance features—whether it’s payments, lending, cards, or bank account replacements. Stripe’s banking-as-a-service APIs, along with our robust payments solution, let businesses—from fintech startups to established platforms—embed financial services directly into their existing software. Companies like Shopify, Housecall Pro, and Lightspeed partner with Stripe to solve critical problems for their customers and create additional lines of revenue for their businesses. Banks, credit unions, and financial institutions use digital banking platforms to give customers online channels for conducting traditional banking processes and activities.

Intuitive interface.Since online banking platforms are online-only, these institutions will often include many advanced and intuitive features. Some, like Chime, have features that also help show progress in financial goals. Legence could afford to provide the customers the platform services like CSI CRM, mobile banking platforms, and connected baking platform at cheaper costs than many of their competitors with the help of CSI’s tech experience. Online banking describes how customers transact with legacy institutions of physical banks, and is more like a service arm of the bank;s suite of products.

Schematic Representation of Banking as a Platform

This feature has become table stakes for platforms; without embedding online payments, platforms have a much harder time competing in the market. Facilitating online payments also helps SaaS 2.0 platforms generate more revenue—in addition to charging for monthly subscriptions, they can also charge customers for access to payment processing. Bankable is a London-based startup focused on enabling incumbent financial institutions, fintechs, and other corporations to bring new payments solutions to market.