A recent Juniper Research study has found that the market revenue for Banking-as-a-platform is set to grow 1,125% by 2028, reaching USD 49 billion globally. The study has contended that traditional banks could work towards increasing their value against neobanks with the help of Banking-as-a-platform, from USD 4 billion in 2023 to USD 49 billion by 2028.

Banks could regain their advantages through collaborating with vendors, therefore being able to offer new services, such as embedded insurance, access to Human Resources services, and lifestyle benefits with the help of partnering brands. Traditional banks could also partner with industry leaders to develop their core banking model, thus offering users services that are more accessible and easily operatable. Through partnering with Banking-as-a-platform services, banks would be able to transition to API-focused models, which are easily integrable and more flexible.

In addition, the partnership could widen the banks’ service range, while also not deviating from their core values. Adapting to digitalisation could be achieved through banking marketplaces, as banks are able to create financial services ecosystems with personalised customer experiences. Banks need to distinguish between core services and nonessential ones that can easily be replaced with solutions offered by third parties.

With their help, the already existing services can be improved, while also introducing new cost-efficient and user-friendly solutions. Banking-as-a-platform model As defined by Juniper Research, the Banking-as-a-platform model enables third-party partners to build products and services for bank customers. The bank manages the data exchange, oversees authentication and ensures compliance, while the third-party associate provides the APIs, building applications and functionalities on the core platform of the bank.

The areas in which core banking platforms operate include banking licences, bank accounts, customer databases, credit or debit cards, compliance, and e-wallets. The bank selects the third-party partner through bidding for each available service, as the parties can cover investing, trading, brokerage, insurance, or wealth management. Through the ‘platformisation’ movement, individual products and services shift to services as intermediaries for transactions.

Traditional banks that have an interest in Artificial Intelligence and customer experience technology, advance towards a Banking-as-a-platform operating model. By integrating a platform banking model, businesses’ strategic goal is to incorporate partnerships that can improve their products and services offered to both retailers and corporations. Most banking platforms offer solutions regarding payments, wealth management and trading, cryptocurrency, embedded insurance, and foreign exchange.

The majority of partnerships between traditional banks and platforms focus on the payment process, from sending to accepting money. Other areas of interest include mobile payments, commercial payment systems, and payment terminals via an application. Banking-as-a-platform services can also be used for exchanging currencies at lower rates, with no hidden fees.

Banking-as-a-platform does not solely focus on financial services, as digital banks can partner with a variety of providers, each offering suitable solutions for different demographics. As providers have various capabilities, banks need to take into consideration their needs, the costs involved and the suitability of the products for their customer base. .