What is Banking as a Service (BaaS)?
Let's find out Banking as a Service (BaaS) meaning, definition in crypto, what is Banking as a Service (BaaS), and all other detailed facts.
Banking-as-a-Service (BaaS) is a financial model that allows banks to integrate their APIs for non-banking third-party service providers (TPPs) and ensures a higher level of financial transparency.
BaaS is one of the components of open banking, a financial technology (FinTech) service that allows third-party developers to create applications around a financial institution and lets TPPs use the bank’s data for their services.
BaaS uses an end-to-end model for its services. This way, digital banks and TPPs connect with the bank systems via APIs. Developers can then build banking offerings into the infrastructure of the provider. These services can be integrated as part of open banking.
To start developing a BaaS model, digital banking of third-party providers pay a certain fee to be granted access to the BaaS platform. The financial institution can then open its APIs to the third-party provider. The TPP receives access to the data and the system required to build banking products, tools, and white label banking services.
Legacy financial institutions are also able to utilize BaaS platforms to offer their services online. Some of the common strategies for making BaaS platforms profitable are the monetization of monthly access or additional service fees.
The abbreviation for Banking-as-a-Service, BaaS, should not be confused with other terms, such as Blockchain-as-a-Service or Backend-as-a-Service.
Blockchain-as-a-Service is the third-party, cloud-based infrastructure for the management of blockchain applications. Backend-as-a-Service is a cloud-based model of outsourcing web and mobile applications.