In addition to Software as a Service (SaaS) and Platform as a Service (PaaS), Banking as a Service (BaaS) has emerged. Even terms like Banking as a Product (BaaP), Banking as an Ecosystem (BaaE), and Banking as an All in One (BaaA) are appearing. This shows us two things: for one, platforms have arrived in the world of banking; two, there is some confusion regarding the new possibilities – which can constitute future opportunities for many banks. This is why investigating the backgrounds proves helpful.

In this context we have to look at the scepticism prevailing in Germany regarding platforms. The new study by the digital association Bitkom confirms this. It states that 41 percent of industrial companies view digital platforms as more of a risk to their business. Only 37 percent see them as an opportunity. This attitude is shared by many banks.

Every beginning is hard

Just like businesses of other sectors before them, banks are finding it hard to transition to the digital age – even though many advisers in change management deal with successfully implementing changes in regard to digitalization in enterprises and organizations. Many digital banks have replaced important services offered by traditional banks, and the Second Payment Service Directive (PSD2) was seen as evil tidings by many bank employees at first. According to this directive, put in place by the European Commission for payment services law to regulate payment services and payment service providers, financial service providers must allow third parties access to their customers’ accounts and data, as well as provide a PSD2-compliant interface. This means that their monopoly on account data has been overthrown. Many view this as a question of existence for their business.

But this development also offers the opportunity to establish new business models. A cooperative approach can accelerate and ease this process. While banks possess data and customer contacts, FinTech companies in particular have high-performance technologies at their hands to gather and analyse data from different sources. To combine these strengths means to enable provision of a customer service that stands out in the market due to its high relevance and the resulting value add.

From B2C to B2B2C

Such Business to Business to Customer (B2B2C) models can realized with the aid of white label solutions in short time to market. Without banks having to install expensive IT, FinTech companies specifically develop applications according to requirements, which can be offered by the bank to its customers and/or prospective clients. Customizing ranges from the integration of a required service into the application to visual appearance in the corporate design. The core of the application is an intelligent software that gathers, analyses and evaluates data from the chosen sources. Based on the results, suitable suggestions are made to users, and possible actions are supported.

To give an example: When a customer links his accounts to the application, the software analyses payment flows, using classification and pattern recognition. Naming just a few, it recognizes contracts (insurances, employment situations and tenancies) and life-changing events like relocation, change of employer or marriage. Depending on the implemented options, it can be determined at this point when a contract becomes too expensive or when a due date, e.g. for termination, approaches. Suiting these insights, the bank can be supportive in choosing an appropriate product at just the right time. This support can range from action recommendations to the provision of an account switching module or a module allowing payment straight from the application.

Partnership at eye level

The user benefits from a maximum of comfort, which takes care of a positive customer experience and higher customer loyalty towards the bank as provider of the application. This way, banks can convince existing as well as new customers of their services and generate more revenue, using different models. In short: platform economy and cooperation with agile partners at eye level are the keys for future success – no matter if the decision is made in favour of a BaaS platform, a BaaE platform or a BaaA platform.