Banking as a Service vs. Open Banking vs. Platform Banking. What Are They And What Are They Not?

By Maryna Cherednychenko

Banking as a service (BaaS), open banking, and platform banking are not new concepts. They appeared several years ago and have been actively used in fintech development ever since. Although the notions are close in meaning and often used interchangeably, they are not the same. This post will scan each of them and share use case ideas for your app.

What Is Banking as a Service?

The BaaS model is similar to renting cloud resources from third-party providers, like AWS or Google Cloud. The “lessee” themself chooses what tools to use. In turn, the banking infrastructure offers a wide range of services:

  • license
  • payment processing
  • card issuance
  • information security
  • limit management system
  • real-time cash flow logic
  • etc

Using these instruments, the BaaS user can perform standard banking operations in their app. For example, they can implement balance checks, online payments, history views without any interaction directly with the bank.


BaaS Use Cases

The above does not mean BaaS is only suitable for those who want to create their custom bank. This model allows any business to run banking operations (like lending or depositing) through its interface.

For example, if you own an airline, a restaurant, or a retail shop, you might offer branded debit cards and reward users for using them. You could also track spending behavior and use this data to improve your marketing strategy. Another idea is to give an online loan for the purchase of your goods and services. This would help you raise customer loyalty and build brand confidence.

BaaS Providers

  • Solarisbank
  • ClearBank
  • Railsback
  • Starling Bank
  • Société Générale

What Is Open Banking?

Open banking is a part of the open innovation model. It comes along with the growth of technology and changing attitudes towards ownership of user data. With the release of PSD2, banking data is now available through public API, which kickstarts the rise of new fintech initiatives gainful for service providers, developers, and users.

Open Banking Use Cases

Open banking

Open Banking Platform Providers

  • Klarna
  • Yapily
  • Bud
  • Akana
  • Plaid

What Is Platform Banking?

Platform Banking Use Cases

  • buying tickets for a bus, train, plane
  • buying tickets for various events (concerts, sports matches, etc.)
  • online games payments
  • charitable contributions
  • gift certificates
  • etc

It is very convenient to have such services in a mobile banking app because they allow users to perform all daily transactions in one place without the need to go to third-party sites or apps. If you need a fresher idea about platform banking, take a look at the robo-advisors side. Having them in place enables users to invest in projects without leaving the app.

Platform banking

Enroll In Fintech Development

Considering today’s statistics, driven by the growth of investments and the number of services, now is the time to set foot on the path of fintech development. Whether you are a small business or a large organization, there is a fintech niche that can bring you fame and fortune. For a better start, consult with fintech experts and get a clear plan for your project execution.

This article was originally published at Softensy.

Softensy specializes in fintech development and enterprise-level apps. Our team helps companies automate business processes by developing software solutions.