"Create and Consume value" - BaaP - Developers can extend platform functionality using APIs, while the platform itself manages data exchange and oversees authentication, as well as ensuring compliance.

1. Ramesh Kumar Nanjundaiya
September 2021
Bengaluru
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2.  The objective of this non technical presentation is to provide a bird eye
view of how new transformational and impact technology is influencing
all financial activities at a speed with reference to the banking sector.
 The presentation is a wakeup call for Traditional Banking organizations
to imbibe new technology to make “customer service” a very top priority
going forward otherwise they could be left behind.
 This presentation should also give new ideas to graduate students in
Commerce, Business Administration, Data Analytics, Market Research to
explore and seek new non technical employment with organizations in
the growing Fintech sector of Neo Bank, Payment Banks, BaaS and now
the BaaP sector which is growing fast and evolving at a rapid pace and
expanding across S E Asia as well as India.
 There is a fundamental difference between BaaS and BaaP which will be
covered in the presentation.
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3.  The origin of digitization in India goes back to Digital Financial
Inclusion (DFI) which is of the recent decade. It can broadly be
defined as digital access to and use of financial services by all
sections of the country's population including remote and rural
India. This initiative gave rise to Fintech activities as Payment
Banks, Mobile banking, Neo Banks, Challenge Banks, Banking as
a Service (BaaS) and now Banking as a Platform (BaaP) is coming
up at a pace. This will bring “customer service” to an entirely
new height across the country.
 While today Traditional banks have worked hard to improve
customer service and experience both online and offline
transactions, any deficiency will be addressed by a BaaP
platform. This will be in a separate sophisticated playing ground
by addressing end-to-end customer needs (at the banking level)
and will be an embedded enabler.
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4.  When we say, Banking as a Platform (BaaP), this essentially involves
software and technology providing companies. Such companies provide
servers, operating systems, development tools, applications,
middleware, virtualizations and networking capability to banks and non-
banking financial services providers.
 What does the platform do at the bank level. It can be used to provide
customer solution, funded and non-funded banking products and
services and seamless and error free financial transaction experience to
the customers.
 Why do the banks need this and how will help the banks. With BaaP,
banking and finance companies will have ample time at their disposal to
focus on their core competencies of timely product and service delivery
while leveraging the expertise provided by the third party software
companies including such aspects as infrastructure, functionality, scale
and a platform. By this way, banks will have a cost effective advantage in
development time and can provide customer service across a common
platform for most of banks products and services.
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5.  In a non technical way, BaaP (Banking as a
Platform) is a rather new technological
innovation system in the financial services
space and may be described as an advanced
fintech ecosystem which will greatly directly
assist traditional banks and licensed financial
institution by connecting with them via APIs
by way of an end-to-end secured process.
The initiator of such a third party service will
be the banks.
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6.  It removes many of the barriers that businesses
and customers have faced when trying to launch
or integrate financial products, including
complex regulation, slow-moving legacy
institutions. It means that financial services are
more open than ever before.
 To remain competitive and improve their equity
and bottom line, traditional banks will do well by
collaborating with third party technology
providers into the BaaP space and related
infrastructure.
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7.  Every decade has seen ongoing new innovation in the
banking sector for the benefit of its customers. This
decade we are into Fintech era.
 Fintech - Financial technology (Fintech) is a new
technology that tries to improve and automate the
delivery and use of financial services.
 A combination of finance and technology helps
consumers, businesses and companies to better
manage their timely financial operations by
depending on specialized software and algorithms
on computers, laptops, smart phones and mobiles.
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8.  The origin of Fintech goes back to the late nineties with the
emergence of internet and e-commerce. this activity saw rapid
growth initially as a backend system for financial institutions in
order to digitize banking operation. Since the last 10 years now
fintech has shifted its focus to consumer oriented services to
manage their finances to be accessed via computers, smart
phones, etc.
 Today it is used in various economic sectors as retail banking,
financial services for individuals, investments management,
fundraising, education sector. Crypto currencies like bitcoin are
also part of fintech development. When it comes to digital
banking services, tech savvy customers need speed, efficiency
and better user experience which is made possible by
integrating technology into banking products and services for
remote operations.
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9.  An API is a connection between computers or between computer
programs. It is a type of software interface, offering a service to
other pieces of software. A document or standard that describes
how to build such a connection or interface is called an API
specification.
 The term API may refer either to the specification or to the
implementation. In contrast to a user interface, which connects a
computer to a person, an application programming interface
connects computers or pieces of software to each other.
 It is not intended to be used directly by a person other than a
computer programmer who is incorporating it into software. An
API is often made up of different parts which act as tools or
services that are available to the programmer.
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10.  Traditional banks with a banking license have
always been known to do two main important
activities: take customer deposits and on lend
these deposits after keeping aside certain
percentage of funds with the country’s Central
Bank.
 Banks offering financial products and services
undertake significant regulatory obligations. It is
a well known fact that Traditional Banks do face
ongoing technical challenges with cumbersome
and old proprietary software run by the legacy
institutions and have been slow to adopt Fintech.
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11.  In simple words, "a platform infrastructure" for any
financial transactions would essentially mean a plug and
play approach and standards. This is today enabling
technology developers to build new, cost effective
innovative banking products and services for the end
users. This entails managing exchange of data, keep a tab
on authentication and authorization of any banking
transaction and also ensuring compliance, governance
issues with regulatory authorities and institutions.
 Also coordination with network operators and the
country's Central Banking guidelines are also part of the
platform activities. Today for traditional banks to beat
competition and survive they should be able to assimilate
a platform strategy and infact build their own platform.
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12.  Many traditional banks in the West have
already started establishing a Fintech division
(as part of their Information Technology
division) to develop software solutions for
such platforms. The current banking market
place has witnessed a drastic change in
consumer profile as new entrants (Fintech ) in
the banking activities are promoting both
online deposits and lending activities, etc.
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13.  Platform banking is quite the opposite of BaaS and open banking. In this
case, the bank do not share its infrastructure but integrates other firms’
services in its own app. The traditional bank model is rather outdated
now. It is inferior to advanced fintech services in terms of innovation and
a variety of in-app perks. There is a risk for traditional banks in losing
customers if they do not invest in technology and adopt external tools to
enhance their offerings..
Examples of platform banking via Smartphone:
Buying tickets for a bus, train, plane
 Buying tickets for various events (concerts, sports matches, etc.)
 Online games payments
 Charitable contributions
 Gift certificates
 Availing short term loans
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14.  Those banks who wish to remain competitive are adapting BaaP
to effectively redefine their own business by embracing
innovation from outsiders via open interfaces, collaborative
business models, and via modern applications providers. This is
going to be the road map to reconfigure obsolete financial
services system.
 The banks now wish to tap the ever growing new generations of
users who are mobile savvy, socially-engaged and desire timely,
superior, error free financial tools. Small and large businesses
demanding scalable and more accessible banking services. Well
heeled customers as well as the poorer section of the society
equally deserve access to necessary financial products. The
platform based business model will take hold of the digital
economy and banks do not wish to be left behind.
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15.  Open banking is the system of allowing access and control of
consumer banking and financial accounts through third-party
applications. Open banking has the potential to reshape the
competitive landscape and consumer experience of
the banking industry.
 Open banking functions through APIs. API-banking is a technology
service provided by banks to all third-party firms, provided they
meet the banks’ standards and guidelines. APIs for open banking
platforms are tailor-made and restricted to a fintechs that form
partnerships with banks.
 Open Banking APIs increase the appeal of a bank and enable them to
meet the changing demands of existing customers as well as appeal
to prospective customers. These APIs can also serve as a unique way
to increase customer engagement and attend to customer needs in a
secure, agile, and future-proof method. Open banking will become a
major source of innovation that is poised to reshape the banking
industry.
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16.  Baas - A simple definition could be that BaaS (Banking as a
Service) is a type of white label banking in which a bank makes
its banking products and processes available to third parties who
may not be necessarily regulated under banking laws. These
third parties build their own products, based on APIs for
customers based on this background.
 BaaP – (Banking as a Platform) Here Banks bring their own
banking products into third party processes / interfaces. This is
also API based. However, the bank itself remains a visible
product supplier and uses the third party more as a further
distribution channel. In a BaaP situation, a front-end provider
(licensed or unlicensed) aggregates different financial products
from different providers onto one platform.
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17.  It cannot be generalised as both platforms are very superior. It basically
depends on the banks as to which system works best for them.
 BaaP - As stated in the earlier slide, in the BaaP model, the bank itself
becomes a core platform owner and third parties (fintech companies)
build apps and functionalities on this platform. So effectively, the bank
consumes the APIs and open data of the third party service provider. By
using such an arrangement, banks will be able to expand their business
at a good pace with new services or find new markets a kind of a
symbiotic technology relationship.
 BaaS - In the case of Banking as Service, here the banks functionality is
taken as a whole and this gets individually offered to no finance
companies. Here BaaS providers use application programming interfaces
(APIs) to provide connectivity with its users. Since the providing bank has
all of the regulatory permissions to offer banking services, BaaS users
can integrate them without having to go through regulatory issues
themselves. Here the non financial companies can build new products
using banking services of deposits, payments, forex, lending money
transfers, etc.
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18.  Easy-to-integrate front ends and “plug and
play” connections,
 FinTech integration,
 Third party communication,
 Data flow synchronisation at differing traffic
speeds,
 Scalable open API platform,
 Robust Business Process,
 Personal Financial Management (PFM) tools,
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19.  Today technology and advanced analytics has gone into all
industrial and service sectors and digitization has penetrated all
over the globe. Big tech and Fintech companies have entered the
banking sector across the globe at a fast pace thereby rendering
traditional banking systems obsolete.
 Banks are thus forced to adopt digital banking technology in a
big way so as to stay in business. Thus, the importance of BaaP is
that it enables third party developers to build products and
services for banks clientele. Third parties can extend platform
functionality while the platform (belonging to the bank) itself
manages data exchange and oversees authentication. This will
help banks to tap new tech savvy and growing finance, money,
deposits and lending market.
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20.  Mr. Nanjundaiya Ramesh Kumar, is a multilingual marketing expert with dual Master’s degrees
in Industrial Economics from Brussels University, Brussels, Belgium, and in Business
Administration from Boston University, Boston, US. He currently resides in Malleswaram,
Bengaluru, India.
 A career International Banker with over three decades of work experience in well-known
International Banks in diverse countries as Greece, Belgium, UK, Egypt, UAE, Oman, Saudi
Arabia, and India. A widely travelled person across various continents and with a deep interest
in banking, fintech, communication, international trade, global culture and international
student mobility. His forte is franchise promotion and exploring and assisting in furthering
two-way bilateral relations and investment avenues. To this end, he has developed a global
mindset and specializes in driving economic change and social impact in this fast paced digital
economy by networking to build international collaborations and relationships.
 He initiates sharing of best practices in commercialization of technologies, innovation, and
sustainable business ecosystem to foster entrepreneurship, new learnings in the local
community to bring in stakeholders together to facilitate business opportunities across
borders. Well versed with foreign delegation visits, organizing international seminars,
facilitating overseas business immersion, executive education & start-up programs, and also
delivering his thoughts as a Chief Guest speaker at various academic forums as well.
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