What Is Banking as a Service (BaaS)? Banking as a service or BaaS platforms provides a higher level of financial transparency options by letting banks open up their APIs for third parties in order to develop new services. BaaS platforms have surfaced as a key component in open banking, in which firms provide financial transparency options for account holders through opening their application programming interfaces or APIs for third parties in order for them to develop new services. This is essentially the end-to-end model in which digital banks, as well as other third parties, are allowed to connect with the systems of banks directly through APIs, and can build banking offerings on top of the providers’ regulated infrastructure and can even unlock an open banking opportunity. The BaaS model essentially starts with a fintech, digital bank or another form of third-party provider paying a fee in order to access the BaaS platform. Here, the financial institution opens its APIs to the TPP, where they are granted access to the systems as well as information that is required to build new banking products or offer white label banking services. Legacy institutions can also launch their own BaaS platforms, and these are in turn opening up new revenue streams for them. Monetization strategies include charging clients a monthly fee for access to the BaaS platform or charging for each service that is used. This differs from blockchain-as-a-service (BaaS), which refers to third-party cloud-based infrastructure and management for companies building, as well as operating blockchain apps through running the back-end operation for a blockchain-based app or platform.
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