You don't know the difference between Open Banking and Banking as a service "Baas"?
I'll give you the answer with a real life examples ;)
Definition:
Open Banking: Is a regulatory framework that requires banks to share customer data securely with third-party providers via APIs (Application Programming Interfaces)
Imagine that you have accounts with multiple banks and you want to keep track of your balances and transactions in one place. Through Open Banking, you can use a third-party app to access your account information from different banks, without having to log in to each bank's website or app separately. This not only saves time, but it also helps you to have a better overview of your finances.
BaaS: Refers to the equipping the banking services by a third-party provider to another company, which can then integrate these services into its own products and services.
Let's say you have a favorite shopping app that you use to purchase clothing and accessories. If that app partners with a BaaS provider, it can integrate financial services into its platform, such as offering credit or debit cards, making payments, and handling refunds. This allows the shopping app to provide a more seamless and comprehensive shopping experience for its customers, without having to become a bank itself.
Focal Points:
BaaS is primarily focused on enabling non-banking companies to offer financial services to their customers. Open Banking, on the other hand, is focused on giving customers more control over their financial data and enabling them to access a wider range of financial services.
The Parties:
Open Banking involves three types of players: the bank, the customer, and the third-party provider
BaaS involves two types of players: the BaaS provider (e.g., a fintech company) and the company that integrates the BaaS services into its products (e.g., a retailer or a software company).
Recommended by LinkedIn
Real life examples:
Open Banking : INSTAPAY
InstaPay is an app that allows direct access to all your bank accounts across Egypt and transfer instantly using your mobile device 24/7.
so you don't need to login for each bank's internet banking to review your balance or even make a transfer
Baas : PayMint
PayMint is a one stop shop for SMEs who is looking to streamline their financial service through one window.
from payments to payouts and even access to finance the one digital window offer a seamless banking experience for SMEs without the need to deal with a bank or even pay a visit.
Overall, BaaS and Open Banking are both aimed at improving the customer experience and enabling greater innovation in the financial industry. By allowing third-party providers to access banking services and data, these concepts can lead to new products and services that better meet the needs of consumers.
Mohamed Rabie
