Banking as a Service (BaaS)

Banking as a service (BaaS) platforms increase financial transparency by allowing banks to give up their APIs to third parties to build new services.

BaaS platforms have emerged as an important component of open banking, in which corporations give financial transparency alternatives for account holders by providing their application programming interfaces (APIs) for third parties to build new services.

This is effectively an end-to-end paradigm in which digital banks and other third parties are permitted to interact directly with bank systems via APIs, construct banking solutions on top of the providers' regulated infrastructure, and even unleash an open banking potential.

The BaaS concept begins with a fintech, digital bank, or other types of third-party providers paying a fee to access the BaaS platform. The financial institution provides its APIs to the TPP, giving them access to the systems and information needed to construct new banking products or provide white label banking services.

Legacy institutions may also create their own BaaS platforms, which offer up new revenue sources for them. Clients might be charged a monthly subscription for access to the BaaS platform, or they can be charged for each service that is utilized. This is distinct from blockchain-as-a-service (BaaS), which refers to third-party cloud-based infrastructure and administration for businesses creating and managing blockchain apps by administering the back-end operation for a blockchain-based app or platform.

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