Banking and Financial services are undergoing rapid changes and it could lead to redefining the concept of baking. Banking as a Platform is a new emerging concept which would require bank/financial institutes redefining their business model to embrace invocation from outside their close environment.

1. June, 2017
BANKING AS A PLATFORM
It’s time for banks to open-up and integrate!!!
Rahul Bansode
rahulbansode@hotmail.com
Abstract
Banking as a Platform (BaaP) is a new emerging concept which would require
banks/financial institutes redefining their business model to embrace innovation from
outside their closed environment and opening their services to be integrated with new
and vibrant innovator which in-turn would redefine the customer experience.
White Paper
By:

2. CONTENTS
DISCLAIMER.................................................................................................................................................................. 1
ACKNOWLEDGEMENT.................................................................................................................................................. 1
INTRODUCTION............................................................................................................................................................2
What is Banking As A Platform?...............................................................................................................................3
Why Banking as a Platform - the way forward? ......................................................................................................3
BANKING AS A PLATFORM - ADOPTION .....................................................................................................................5
Reason for Banking, Financial and Insurance is not adopting................................................................................5
Challenges faced by Banking and Finance Industry................................................................................................5
New Entrants ....................................................................................................................................................... 6
Client Expectation ............................................................................................................................................... 6
BANKING AS A PLATFORM - LANDSCAPE ...................................................................................................................7
Payment Services Directive (P2D2) – Europe......................................................................................................... 8
Benefits of Banking as a Platform........................................................................................................................... 8
CONCLUSION............................................................................................................................................................... 9
REFERENCES...............................................................................................................................................................10

3. Banking as a Platform
RAHUL BANSODE 1 | P A G E
DISCLAIMER
The content provided in this white paper is intended solely for information and education purpose
only. All information and views presented in this article are based on the authors personal thoughts
and some references reading from multiple article, website, blogs. The author is not engaged in any
professional advice or services.
ACKNOWLEDGEMENT
The views represented in this article are based on the authors personal thoughts and some reference
reading from multiple online article, websites, blogs etc. Some of the images are downloaded from
online search and reference to the image source is provided accordingly. The list of all the References
is listed on the last page of the article.

4. Banking as a Platform
RAHUL BANSODE 2 | P A G E
INTRODUCTION
Digital Transformation (DX) is an ongoing industry trend which has been at the fore-front for
each of the client and their business proposition at every stage. Banking and the Finance
sector is not different to it. The traditional financial service industry has huge IT budgets and
huge knowledgeable and intelligent staff strength, who are engaged in maintaining the banks
position in the market against their key peer competitors through introduction of new
products and services.
But in the current Digital Transformation era, financial industry is on the verge of new
paradigm shift. The traditional approaches of business services and working model are
causing hindrance to address the needs to digital savvy client/customer base.
As the technology advances, it has been disrupting the traditional industry model and thus
more start-ups are tapping into the customer base and revenue model of the traditional
financial institutes. These new start-ups are uses new technology work for them with new
business model. Mostly all segments of industries have taken the new technological
advancement with open arms and now it is time for the financial industry accept it and adapt
to the change to survive and thrive in the new eco system.
The purpose of this document is to share and explain the Digital Transformation trends in the
Banking and Finance Industry and how the Banking as a Platform (BaaP) is emerging concept
post the advent of the FinTech revolution.

5. Banking as a Platform
RAHUL BANSODE 3 | P A G E
What is Banking As A Platform?
Banking As a Platform concept calls for banks redefining their business model to embrace
innovation from outside their closed environment and opening their services to be integrated
with new and vibrant innovator. Banks and Financial institution needs to open their secured
data, product and services to external partners (third party developer, retail business and
others) through a well-defined Standardized + Secured Protocol and Application
Programming Interfaces (API).
Figure 1: Banking as a Platform Overview
Why Banking as a Platform - the way forward?
The digital environment around us, workspace and social has been changing; and the pace at
which it is changing and accelerating has been tremendously faster and aggressive. Well
established industry segments have been disrupted (primarily the service industry) by the new
entrants which leverages technology and digital landscape for providing service platforms by
adopting – social, mobile, analytics and cloud.

6. Banking as a Platform
RAHUL BANSODE 4 | P A G E
Figure 2: Industry Disruptors of today
The above picture says it all and this revolution has happened in last 5-6 years. These new
entrants have scaled their business model and platform to cover all the geographical
locations. It is just a matter of time before the banking and the financial industry would be
disrupted by the new entrants.

7. Banking as a Platform
RAHUL BANSODE 5 | P A G E
BANKING AS A PLATFORM - ADOPTION
Reason for Banking, Financial and Insurance is not adopting
Following are the some of the key reason for these financial institutions to not adapt/willing to adapt
Banking as a Platform:
 We are number 1 in the business:
o Every financial institution thinks that they are the market leader and too big to disturb
their customer base
o We have all the knowledge and history of experience in banking/insurance service; so
why partner with other third party new comer
 We have large trusted customer base:
o Once an account is opened with bank/insurer; it is normally considered long term
relationship
o Product could be pushed to customer and the assumption is they would buy it
o We own the large customer base; so why share it with partner
 We have best product/services
o Bank and Insurance firms, believes they have the best product/service offering in
market
o We have best product to offer to customer; so why partner with other third party
Above are some of the key reason why banks and financial service providers not willing to accept the
digital changes. But the computer technology and algorithm are becoming so strong that it has
potential to revolutionize any industry.
Challenges faced by Banking and Finance Industry
Each of the banking, insurance and finance organization is currently a well stabilized organization,
huge customer base and competitive product/service line-up. Primarily challenges faced by financial
institutions:
 Driving growth and profitability
 Managing compliance and Regulatory Reporting
 Mitigation Fraud/Cybersecurity
But banking and financial industry is in the process of facing their worst challenges which is agreed
by most of industry leadership which are as follows:

8. Banking as a Platform
RAHUL BANSODE 6 | P A G E
New Entrants
Currently, banks are not facing any challenges from their peer bank; insurance providers are not facing
competition from their peer insurance provider; and mortgage agents are not concerned about other
agents in their local area. Their real challenges are from the new FinTech start-up who has nothing to
do with banking, finance or insurance.
Figure 3: New BFSI Ecosystem - FinTech Startups (Source – BusinessInsider.com)
The above is just the small snap-shot of the FinTech start-up who as disrupting the financial industry.
These new service providers have following things in common:
 Easy to setup account
 More attractive rates/fees
 Faster service
 Access to different product and services
Client Expectation
The use of the digital technology in everyday life has tremendously increased. Thanks to the daily use
of FaceBook, Twitter, YoutTube, FitBit, Uber, WatsApp etc. Most of people are constantly using this
apps and constantly in the app environment. Thus, gradually the peoples (customer) expectation is to
have similar user-friendly and fast app from bank and financial institutions. Client expectation has
increased tremendously. Thus, the expectation from the banking and the financial industry is to also
provide such user experience.

9. Banking as a Platform
RAHUL BANSODE 7 | P A G E
BANKING AS A PLATFORM - LANDSCAPE
Traditional business models are straight forward as it is fully managed and controlled by the respective
bank/financial service. Product and Services are created for each market segments and pushed/sold to
the end customer. The customer does not have much choice apart from leveraging the
product/services of the banks/insurance.
With the new Digital revolution happening; it has potential to allow the customer to take control of
their own things, manage their finances and banking operations, apply for loan or invest their money.
Banks would have to adopt to this new challenges to remain float in this new digital transition era and
to be continue to be vital part of the economy.
Unlike traditional banking model, a Banking as a Platform does not push product/services. It allows
third party to create and consume value. External developers leverage can extend platform
functionality using APIs to create and consume the value. In this model, financial services, software
and technology are not the end-products. Instead, they simply serve as the underlying infrastructure
that enables users to interact with each other.
Figure 4: Technology Evolution in BFSI

10. Banking as a Platform
RAHUL BANSODE 8 | P A G E
Payment Services Directive (P2D2) – Europe
The Payment Service Directive (P2D2) is an EU Directive, administered by the European Commission to
regulate the payment service and payment service provider. Once passed by the EU commission it
would allow creation of the foundation for single market place for payment processing. It would also
require banks to open their infrastructure through bank API and allow 3rd
party to connect to customer
account.
Essentially, banks would become a platform for banking and provide API to access the data and
information for its customer. Customer would always be the main components of this process and
would have to give permission to 3rd
party agency to connect to their bank accounts.
Benefits of Banking as a Platform
P2D2 currently might just allow to access the bank account through an API. It would open the new
market for innovative companies to come forward and create new product/services to the customer.
This would also help resolve some of the traditionally problems which customer faced due to the
closed structure of the banking information.
Banking as a Platform would be the first steps toward open banking concept. But in longer run it would
banking operation to become faster, safer and give more control to the customer.
Following are some of the few examples:
1. Image a new FinTech coming up with a service to allow customer to manage all their accounts
through a single platform. Customer would not require to long into multiple online banking
sites to access and perform banking transactions
2. Transferring money from 1 account to another account of different bank is a big issue as bank
charge huge fees for same. These kinds of issues could be resolved very easy with open
banking API accessibility.

11. Banking as a Platform
RAHUL BANSODE 9 | P A G E
CONCLUSION
Banking as a Platform has been the new financial industry trends as part of the digital
disruption which is happening across all the industries. At the holistic view, the platform is
driven by the evolving customer behavior and use of technology. Financial institutions who
cannot define and /or adopt to this new revolution – risk losing customer, revenue and market
position to news FinTech startups who are digitally focused service providers.
Digitization is disrupting each segment of the industries and the pace of disruption is very
strong and fast. Banking and Insurance sector would have to adopt and/or re-energize to
sustain in the business. As part of the strategy to innovate and position themselves as leader;
bank needs to closely work with their innovation teams, acknowledge and welcome new ideas
and be agile in adapting to the new industry trends.

12. Banking as a Platform
RAHUL BANSODE 10 | P A G E
REFERENCES
1. “Exploring Banking as a Platform (BaaP) Model” The Financial Brand Article -
https://thefinancialbrand.com/57619/banking-as-a-platform-baap-structure/
2. “The Most Important Thing in FinTech: Advent of APIs and Banking APIs are real to” Lest Talk Payment by
Amit - https://letstalkpayments.com/the-most-important-thing-in-fintech-advent-of-apis-and-banking-apis-
are-real-too/
3. “Top 10 Retail Banking Trends and Predictions for 2016” - The Financial Brand Article -
https://thefinancialbrand.com/55952/2016-top-banking-trends-predictions-forecast-digital-fintech/
4. “The Everyday Bank – A New Vision for the Digital Age” – Accenture LLP - https://www.accenture.com/us-
en/~/media/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Digital_2/Accenture-Everyday-
Bank-New-Vision-For-Digital-Age.pdf
5. “Shifting Model: Banks will be acting as a platform to many FinTech firms” National Crowdfunding
Associations of Canada - http://ncfacanada.org/there-is-a-new-shift-in-the-banking-business-model-where-
banks-will-be-acting-as-a-platform-to-many-fintech-firms/