Banking long entailed a visit to a solid, citadel-like building that served as a repository of assets and financial knowledge. But we’ve become accustomed to a more open design in branch offices. Form is following function. Banking is becoming a more open and fluid undertaking, and FIs are adopting variations of the "banking as a platform" (BaaP) strategy to position themselves for the rapid pace of change underway. BaaP represents a profound change in the speed of access to technology innovation in products, services, and interaction channels across the values stack. Modularity and standardization of service delivery component outputs empowers financial institutions to configure themselves and their solution sets to fit the individual needs of consumers, according to the research report, Banking as a Platform: API Technology Presents Opportunity to Financial Institutions.
This report examines the use of the platform approach for financial institutions to achieve flexibility and agility in leveraging the expansive change being driven by technological innovation across industries. Banking as a platform enables FIs to better balance continued reliance and tried and true processing systems with nimble adoption of technologically enabled avenues of direct interaction with consumers.
"Financial institutions need to ensure they are more responsive to the variety of consumer needs and demands for service levels to sustain their role interacting directly with customers in the financial services ecosystem," commented author of the report Joseph Walent, Associate Director, Customer Interaction Advisory Service. "Standardization of products coupled with pervasive technologies have created an environment of interoperability promoting use of a variety of component financial services to render an individualized solutions. This model is not only possible but is increasingly the expectation of consumers having experienced personalization in other industries. Banking as a platform provides a path for FIs to adjust gradually to a collaborative economy and retain their primary position in their customers’ financial lives."
Highlights of the research note include:
- Review of the banking service delivery models afforded to financial institutions employing banking as a platform, or BaaP
- Examination of the paths available for financial institutions employing a BaaP strategy
- What large, midsized, and community FIs may expect in terms of support and benefits
- How componentization of banking process delivers individualized service
- The role and impact of regulatory agencies and market pressures across global markets
- A sample of potential opportunities that BaaP introduces for FIs and their fintech partners.
1. Executive Summary
2. Onto the Platform
- Application Programming Interface (APIs)
- Data Aggregation
5. Oversight and Compliance
6. Banking as a Platform Today
- Large Financial institutions
- Bank Processors
- Expanding Access to Tools
7. APPlicability of Data
- Online Banking
- Mobile Banking
- Personal Financial Management
- Robo Advisors Enhanced with Machine Learning
8. Conclusions: The Road Ahead
List of Figures
Figure 1: Architecture of Banking as a Platform
Figure 2: Digital Banking Platforms Pull Together Various Data Sources and Solutions
Figure 3: U.S. Consumers Have Relationships with Multiple Financial Institutions, an Average of 4.6
Figure 4: Banking as a Platform Allows FIs to Selectively Shop for Tools to Facilitate the Customer Experience