Railsbank, the open banking and compliance platform, has picked up further investment, following the company’s $10 million Series A in September 2019.

This time backing comes from Visa — a strategic investment, if you will — along with Global Brain, a venture capital firm based in Tokyo, Japan. The exact amount isn’t being disclosed, though sources peg it as “several million” U.S. dollars.

In addition to investment, Railsbank  is announcing that it has signed a 5 year partnership with Visa to deliver Banking as a Service (BaaS) innovation in Southeast Asia, and recently became a Visa “principal issuing” member.

“Being a principal Visa member and by joining Visa’s Fintech Fast Track Programme, Railsbank can now access Visa’s growing partner network, technologies and experts, enabling Railsbank’s customers to rapidly and effectively launch Visa based products throughout Asia and beyond,” explains the company.

Railsbank co-founder and CEO Nigel Verdon, who previously founded Currencycloud, says the partnership with Visa signals the fintech’s intent to be “the most innovative banking platform business” in Asia-Pacific. “Our API focussed platform is the simplest way for any business or brands to quickly conceptualise, build and launch digital finance products that easily incorporate Visa’s product suite and capabilities,” he adds.

To that end, Railsbank positions itself as a “utility” on which other companies — spanning fintech upstarts, challenger brands, to incumbent banks that want to re-factor their tech — can build and sell various financial services or add fintech features to their products.

When the company closed it Series A, Verdon likened it to what Amazon has done for data centres with AWS. “Railsbank is a utility for the compete financial services backend: platform, connectivity, operations, scheme memberships (e.g. Visa), regulation, and compliance,” he told me at the time.

Cue statement from Naoki Kamimaeda, Partner and Europe Office Representative of Global Brain Corporation: “We see huge potential in Railsbank’s vision and open banking platform. Corporates, especially in Asia, are more willing to have banking services and Railsbank can provide them with a turnkey solution for this. We are very excited to join Railsbank’s bold vision and look forward to actively supporting its expansion and penetration in Japan and Asia.”

Railsbank is headquartered in London, but also has offices in Singapore, Lithuania, the Philippines, Vietnam and Sri Lanka. Meanwhile, I understand that it could announce U.S. expansion plans in the coming weeks.

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Starting a bank used to be a painstaking process, with many having to craft an entire banking technology stacks from scratch.

Luckily the digital banking boom has given rise to a host of so-called banking-as-a-service providers, where banking capabilities can now be rented and spun-up in weeks rather than months.

Household names like Lloyds, Mastercard and RBS are all using banking-as-a-service to build and deploy new features and services without having to develop the technology in-house.

But which UK players are leading this space?

Thought Machine

Who started it?

Founded by former Googler and serial entrepreneur Paul Taylor in 2014, Thought Machine’s main product is its core banking platform Vault, that handles things like current account balances, transactions, savings, loans, credit cards and mortgages.

Though Machine hit the headlines this week as part of a new funding round led by Draper Esprit which will see the business grow and soon expand to the US.

How is it funded?

This week Thought Machine secured an additional $83m (£64.75m) as part of its Series B funding round, bringing the total amount raised by the business to over £82m.

Who are the customers?

Among Thought Machines’s core banking customers are Atom Bank, Lloyds Banking Group, Standard Chartered and Nordic corporate bank SEB.

Starling Bank

Who started it?

Founded by Anne Boden in 2014, Starling Bank is primarily a retail challenger bank going head-to-head with the likes of Monzo and Revolut. 

In 2018 Boden announced the bank would also be opening up its APIs for other companies to start using its payment rails and eventually full current account support with KYC/AML checks.

How is it funded?

Starling recently secured an additional £60m from its existing investors, taking the bank’s overall capital raised to over £323m.

Who are the customers?

Starling’s customers include Raisin, SumUp, Square, Flux, Mastercard and the UK’s Department for Work and Pensions.

Bankable

Who started it?

Founded in 2010 by Eric Mouilleron, Bankable similarly to Starling began life as a payment services provider but has since expanded into the whole of banking-as-a-service.

Today Bankable offers virtual ledgers, for corporates who want to streamline their existing accounts across multiple banks, as well as digital banking services like current accounts, faster payments, etc.

How is it funded?

Last year Visa made an unspecified “financial investment” in Bankable, the size of which has not been disclosed. So far Visa is the only reported outside investor in Bankable.

Who are the customers?

Bankable counts customers including Spendesk and ABN Amro, though its Money You brand.

11:FS Foundry

Who started it?

Started by David Brear, Jason Bates and Simon Taylor in 2016, what began as a challenger fintech consultancy has grown into a fully-fledged banking-as-a-service provider and media empire with its popular podcasts brands.

It’s 11:FS Foundry was established in 2018 as its own company, led by CEO Leda Glyptis, offering a host of banking products from current accounts to loans and wealth management

How is it funded?

Last year Norweigan financial giant DNB said it would “extend” an existing £3m investment in 11:FS, and remains the bank builder’s only outside investor.

Who are the customers?

11:FS’s most high-profile customer is RBS, which turned to the team to help build its business challenger bank Mettle, but DNB is 11:FS Foundry’s first customer as well as an investor.

ClearBank

Who started it?

Launched by Nick Ogden in 2017 as the first regulated clearing bank to enter the UK market in 250 years, ClearBank’s core banking, clearing and settlement services were built in partnership with Microsoft.

How is it funded?

ClearBank launched with £25m PPF Group and CFFI Ventures in addition to investments from the founding management team. Last year ClearBank was awarded £60m from the Banking Competition Remidies fund in partnership with SME banking app Tide.

Who are the customers?

Tide, unsurprisingly, along with OakNorth, Dozens and Nationwide Building Society.

The post Here are the UK’S 5 leading banking-as-a-service providers appeared first on FinTech Ranking.

Bankable says it will aim to provide Visa’s U.S. clients, including corporate and financial institutions, with access to its real-time and “modular” banking solutions, enabling them to deploy digital banking and faster payment services.  

Bankable and Visa have struck a strategic partnership to support the fintech’s firm’s global growth just weeks after the payments giant snapped up Plaid for $5.5bn.

Bankable, a “Banking as a Service” fintech, says it aims to provide Visa’s U.S. clients, including corporate and financial institutions, access to its real-time and modular banking solutions, enabling them to deploy digital banking and faster payment services.  

To accommodate ongoing work in the U.S., Bankable is opening an office in New York, which is Bankable’s fourth office after London, Brussels and Dubai.

The new premises will become Bankable’s U.S. hub, allowing the company to accelerate strategic initiatives across corporations, banks and fintechs headquartered in the country. The company is planning to make a raft of new senior hires in the next few months as the NY team will shoulder London and Dubai operations. 

“Our strategic partnership with Visa represents a great opportunity to further accelerate digital payments innovation in the region. Our commercial team will initially focus on B2B payments,” said Eric Mouilleron, CEO and founder of Bankable. 

“As we already serve American clients, we see huge opportunities to digitally transform corporates headquartered in the U.S. as well as leading regional, community and selected global banks organized to support fintechs. We anticipate more than 50% of our revenues to come from the U.S. by 2024.” 

“The financial ecosystem is evolving at rapid pace, and Bankable’s model helps financial institutions, corporates and fintechs be increasingly nimble to remain competitive,” said Terry Angelos, SVP and Global Head of Fintech, Visa. “Building on what we’ve done with Bankable in other regions, including CEMEA and Europe, we’re excited to now extend the partnership into the US.” 

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Singapore-based Arival Bank, a fintech bank for small and medium-sized enterprises and crypto businesses, has applied for a digital wholesale banking license in the city-state.

Arival was founded in 2017 as an internal venture spun out VC firm Life.Sreda. The company is led by CEO Vladislav Solodkiy, chief financial officer Igor Pesin, and chief operating officer Jeremy Berger, who are all part of the VC firm’s leadership team.

With its bid, Arival plans to focus on serving what it calls “abnormal” clients or higher-risk customers, who usually get turned down by more traditional banks, according to a Business Times report.

“The focus on ‘abnormal’ or underbanked SMEs gives us the opportunity to not compete with other digital or traditional banks, avoid spending money on advertising or customer acquisition, and allows us to focus on margins,” Berger told the Business Times.

The digital bank hopeful also said it plans to aggregate fintech products from third-party service providers and make them available on a single platform powered by open application programming interfaces. In addition, it looks to offer a banking-as-a-service platform that would help other fintech firms launch.

Berger noted that the company’s “compliance-as-a-service” product, which provides easily integrated compliance solutions, also serves as a key differentiating factor in favor of Arival.

According to its website, Arival is not a bank yet, but it has applied for a US-based international banking license that is on track to be granted this year. Berger told the Business Times that the US license, which is in the final stages of receiving preliminary approval, will be “complementary” to the Singapore license.

“It gives us a unique entry to the US banking market as well, and allows us to contribute to an ecosystem that is in need of a natural remedy for economic boost such as fintech,” he added.

In addition to the US and Singapore, Arival has also started the application process for a similar license in Europe and looks to receive it by the end of the year.

Arival joins a growing list of companies that have announced their Singapore digital banking bids: Grab and Singtel, Ant Financial, Sea, and an Enigma-led consortium, among others. Singapura Finance and digital payment startup MatchMove Pay have also reportedly teamed up to apply for a digital full bank license in the city-state.

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Branches don’t pay off like they used to for building deposits and loans, so why keep sinking more money into them? Using application program interfaces, built on new technology instead of old core, can put banks and credit unions into new geographies without new bricks.

While strong demand for loans continues, banks and credit unions have been struggling to raise the necessary deposits in their local markets. For many institutions, growing deposits remains tied to the diminishing returns of maintaining or building more branches as the primary means of attracting depositors.

Falling traffic means that branches are no longer the revenue generators they used to be. Only about 25% of account holders visited a branch in 2018 to open a new deposit account, while only 19% visited to apply for a loan, according to Market Force. The vast majority of in-branch interactions today are confined to troubleshooting and transactions. This gives financial institutions with limited out-of-market digital capabilities little recourse in growing deposits to fuel lending activity.

But there are solutions. A key one for community banks and credit unions, which may not see enough ROI in building more physical branches, can be found instead in the more intensive adoption of banking-as-a-service solutions and models. This approach brings banking services like checking, savings and payments to other markets using APIs (application program interfaces).

These open a portfolio of growth opportunities in new markets. Turnkey deposit offerings that leverage flexible open APIs give financial institutions the tools to expand their out-of-market presence, bringing in additional deposits and thereby increasing their lending capabilities with a less-rigid cost structure and a better overall experience for account holders.

Banking-As-A-Service Addresses Tech Limitations

Existing legacy technology isn’t structured to support out-of-market — and therefore out-of-branch — deposit acquisition at scale. Its limitations, and the tremendous cost burden associated with decades-old systems that predate the internet, are natural growth inhibitors to out-of-market deposit- and customer-acquisition strategies. With these underlying factors firmly ensconced, traditional financial institutions seem confined to their local markets.

This is why new models become critical, and where exploring an approach similar to that of emerging direct banks, fintechs and the most forward-thinking community financial institutions becomes lucrative. Launching an out-of-market effort that is independent of traditional infrastructure creates new growth opportunities for institutions willing to invest in low-cost options that sit alongside — rather than replace — legacy tech.

This opportunity will become more and more prevalent as fintech adoption rates across all consumer segments continue to grow. Recent research from Cornerstone Advisors and Q2 indicates that 46% of all U.S. consumers already use financial services offered by fintechs or would consider doing so the next time they need a new product or service.

The most fundamental requirements for expanding a financial institution’s deposit business are more flexible, self-service digital options that reduce costs while enhancing customers’ ability to spend, save and move money.

A lightweight, cloud-based core system, for example, has little operational overhead; can easily launch competitive deposit products without geographical restrictions; and can leverage modern know-your-customer protocols like AI-based identity risk-scoring and verification that can give financial institutions confidence in the authenticity of new accounts.

This new, more flexible banking-as-a-service approach to tech strategy positively adjusts a financial institution’s business model, which previously made the cost of maintaining low-balance accounts prohibitive. Combined with a streamlined online account opening approach that reduces onboarding time, the possibility of developing a sticky, efficient out-of-market deposit acquisition strategy becomes much more achievable — and profitable.

Building Strong Customer Relationships Remotely

Such possibilities also provide new avenues to deepen relationships with out-of-market account holders through deposit-based products like branded debit cards, not to mention the added benefit from the resulting interchange revenue for institutions that fall outside of the Durbin Amendment’s limitations.

Combined with powerful analytics that can offer more personalized experiences and products specific to an individual customer’s financial journey, an account holder who lives 1,000 miles away suddenly doesn’t seem so far at all.

It’s been clear for more than a decade that the financial marketplace is in a state of near constant change. Financial institutions that are open to new BaaS business models can do more than simply overcome changing market pressures. With the right tools — and a mindset that focuses on future possibilities using the latest innovations in financial services, rather than the more traditional and established methods for growth — financial institutions can thrive.

For deposit and lending growth specifically, customer acquisition strategies through self-service digital channels that deploy open technology provide the path of least resistance and lowest cost.

For those willing to consider new possibilities, there’s a world beyond their home region full of people expecting an easier financial experience above all else, whether that’s for a checking account, loan or something entirely different. Now, finally, institutions have an easy, cost-effective means of getting in front of them regardless of how far away they really are.

By Paul Walker, General Manager at Q2 Open

The post Banking-as-a-Service Model Extends Hunt for Deposits to Fresh Markets appeared first on FinTech Ranking.

In Europe, banking upstarts are gaining traction in digital banking, with new products and services focused on enterprises and consumers alike, easing account to account payments, international transactions and data security. Think of it as Banking as a Service — and some of these tech-savvy firms have banking licenses, newly-granted, in hand.
In France, Treezor, a banking as a service platform, said this week that has deployed the Thales SafeNet Data Protection On Demand solution for what is being billed as “safety across the entire payment chain, from tier one banks and neo banks to crowdfunding organizations,” as noted in a release.

The post In Europe, Digital Banking And APIs Eye Banking As A Service appeared first on FinTech Ranking.

Open banking is happening — it’s just not coming from the big name brand banks. Banking as a service firms are opening up the banking technology stack so that any finance, retail, or travel app can offer financial services without the headache of becoming a bank.

Oracle’s ERP, netsuite is also a major player here. As a leading cloud system of record for midmarket and growth businesses, NetSuite has its own banking as a service offering which enables banks to deliver financial services where their customers reside — in the ERP. Major financial institutions like JPMorgan, Visa, and the Marco Polo Network are connected to NetSuite’s BaaS offering.

Scott Derksen is the senior director of business development and SuiteCloud evangelist at Oracle’s NetSuite. We talk about how finance is everywhere and why banks and their customers are choosing to collaborate on top of NetSuite. NetSuite launched its BaaS solution just a few months ago and Scott shares some of the early work and use cases of the platform.

NetSuite, Oracle, and the cloud

NetSuite is today the largest cloud ERP in the midmarket. It has always been cloud since its beginning. The focus was always to bring the general ledger, and everything needed to run a business, into the cloud. One of its differentiators is SuiteCloud, which enables some of the programs I work on. It’s been a big growth story. Oracle acquired NetSuite in 2016 for $9.3 billion and the reinvestment happening right now is amazing. I think we’re at the pointy-end of the spear for Oracle’s cloud strategy.

NetSuite’s move into banking as a service

It’s a convergence of a bunch of things. Everybody loves to have a moment in time where you have an unfair strategic advantage based on things you did in the past. There’s this movement in the industry where the banks are focusing on open banking initiatives. In the upper market — it all works out perfectly. You hire Accenture and they make your system of record communicate with bank systems.

The challenge is in the growth or mid markets where there aren’t big IT budgets. Banks run into the wall because customers aren’t there to bear the cost of the initiative. What we have with our banking as a service platform, it allows a bank to extend the APIs at the edge of the bank to where the customers are. They create brand experiences right inside of NetSuite. It’s great for a bank because they’ve invested heavily in APIs and it’s a small incremental investment to get to a super large audience that’s growing like crazy.

Working with banks and bank APIs

I remember one of the genesis meetings. I’m sitting with about 100 banking professionals and a bank executive bravely stands up and says that in the NetSuite ecosystem, there already are quite a few fintechs. When our banking customers join NetSuite, digital payments go here. Merchant services go there. Until all we’re left holding is a savings account. We really want to have a more meaningful relationship with our customers than that.

Then we brought in customers and asked them what they’d like their relationship with their banks to look like if their banks could leverage technology. The answer was across the board that they value their relationships with their banks but if they never had to log in to multiple systems again, they’d be really happy. Out came the idea that we don’t need to have a line drawn between banking and the ERP world. They should feel like the same system.

The evolving technology-enabled relationship with banks

We discussed head-on with banks their concerns about whether the ERP becomes a sales channel for them. Most of our customers have a dedicated banker working on their account. That relationship doesn’t change — it just becomes easier to operate. As a customer, I have a variety of processes that touch the bank, like order to cash processes. When those transactions flow automatically to and from my bank through my invoicing system, reconciliation becomes super simple and the relationship with my banker transparent.

Bank challenges to adopting banking as a service adoption

For big global organization, different business units want to drive the roadmap for these applications. You take a very big international bank and their foreign exchange team is all over this because their clients want to be able to guarantee a rate at the shopping cart and make transfer of international funds easier. On the other hand, the Marco Polo Group is focused on getting working capital into the hands of their customers. Others want to be able to provide better analytics on their future cashflows.

The post NetSuite’s Scott Derksen on why ERP sits at the center of banking as a service appeared first on FinTech Ranking.

Starling Bank recently raised £75 million to fund a European expansion. As part of that announcement, the UK-based challenger said it had signed on three new clients to its banking as a service.

According to Starling, it has 20 institutional clients on its BaaS platform, which it launched in August 2018. Payment volume through the service is doubling month over month.

Challenger bank turns into a platform

With its banking as a service, Starling enables other companies to offer banking services without the headache of running a bank. Banking as a service exposes all the technology Starling built for its own retail offering and makes it available to other companies to embed in their apps and software.

Starling created a standard set of APIs so partners can get up and running quickly. Startups, in particular, can use banking as a service to expand into financial services for their users.

“How you consume the APIs is very important,” said Julian Sawyer, Starling Bank’s chief operating officer. “If you are a big company or startup, you’ll get the same service from us. We hope, through our services, that startups become the next big unicorns.”

Starling’s first client was Raisin. The savings marketplace required a current account to hold client money before it was invested. But the firm didn’t want to become a bank. In this model, Raisin captures all customer information while Starling performs AML and KYC requirements. Through an API, the banking as a service delivers an interest-bearing account and access to payment functionality to Raisin customers.

Outsourcing the bank, insourcing the functionality

With BaaS, partners don’t have to obtain the appropriate licenses or struggle with the burden of running a regulatory organization — a huge hurdle to get over in order to enable financial services. Instead, they rely on Starling for technology and oversight.

“Why would anyone want to become an emoney institution?” said Sawyer.

“120 years ago, a factory owner needed a generator and had to pay people to feed coal to produce electricity. Power generation was part of a core value exchange. With modern electricity, I wouldn’t think about running a furnace. With banking as a service, you just plug into payments infrastructure. Starling is better at running payments and banking infrastructure than you are.”

It’s unclear whether other challengers will follow Starling’s path and offer BaaS solutions. Revolut, Chime, and Monzo didn’t respond to Tearsheet’s request for comments to this story.

Some challengers, like N26, have built platforms to ingest other firms’ technology to offer to their own customers. In this way, they become like marketplaces for top fintech firms to reach retail banking customers. For example, N26 integrates Transferwise to its banking app, so customers can use the popular money transfer service to convert foreign currencies.

“We always want to give our customers the best product offerings and services available, and we do this either by building a solution in-house or partnering with other fintechs,” said Nicolas Kopp, US CEO of N26. “Our partnership with Transferwise for international money transfers is one example of a successful integration.”

Challenger banks like Starling see themselves more as technology companies than banks. Their technology was deliberately built with scale in mind which enables partners to grow with them. This is a far cry from the days when financial services companies developed technology solutions in their IT departments.

“Google, Amazon, Facebook and Apple already control data which can predict how a consumer will spend their money without the financial data required in the past,” said Eric Solis, CEO and founder of MovoCash.

“With this power, coupled with open banking where banks are slowly being forced to make available their APIs to these giant tech companies, banks’ long standing moat is quickly eroding.”

The slowly evolving ecosystem

As more firms enter the banking as a service market, the ecosystem of vendors and buyers is also shifting. Instead of relying upon a handful of big providers, there are more options now. Banking software vendors like Fiserv, FIS, and Jack Henry typically had a symbiotic relationship with their clients, supporting each other’s growth.

But over time, this created massive technology platforms that are complex and difficult to change. “While vendors may sell a product as nimble and agile, in reality there’s a huge foundation supporting that technology,” said Paul Thomas, managing director at Provenir.

“You can almost compare it to an iceberg: what you’re sold is the visible tip of the product, and what you end up getting is a huge behemoth of a solution that takes an incredible amount of effort to maneuver.”

Challenger banks still face an uphill and expensive marketing challenge acquiring and servicing new clients. Also, regulations, like capital requirements, are onerous for small banks. This may be pushing banks like Starling to explore different business models.

“For some challengers, the temptation may be to capitalize on their distinct advantages by partnering with or selling services to traditional players,” said Ruth Foxe-Blader, managing director at Anthemis. “Essentially, the business model shifts from direct to consumer to business to business.”

The move to distributed financial services enabled by banking as a service is growing. For some basic banking tasks, like moving and managing money, people are changing their consumption habits. Walmart customers have their paychecks deposited, spend money and earn rewards off their Walmart MoneyCard, using it like they would a bank. Walmart didn’t create a bank to offer this service. MoneyCard is powered by Green Dot’s banking as a service.

“Banking services will increasingly be integrated with business operations processes and personal financial management tools to provide decision support and execute banking functions in a real-time or near real-time fashion,” said Frank Sanchez, co-founder and CEO of Finxact.

“The inherent friction, delay and risk associated with exchange of value and settling transactions will be dramatically reduced and minimized. Commerce is becoming more efficient.”

The post ‘Why would anyone want to become a bank’: Will more challenger banks evolve as banking as a service providers? appeared first on FinTech Ranking.

Like other industries, banking is in the slow process of moving to the cloud. As this happens, banking functionality is becoming available on demand. By working with a banking as a service provider, any app can bolt on a current account or process payments. This move calls into question what a bank really is and who will function as a user’s primary financial institution.

What is banking as a service?

Banking as a service enables the digital delivery of banking services via APIs.

The problem is that no one in financial services can actually agree on what it means or how far this definition should extend. What about recreating an entire bank in the cloud? Is that banking as a service?

“We don’t use that term,” said Mark Gunning, global business solutions director at Temenos. “It may invite preconceptions that can disappoint or confuse. We’ve seen a similar term used in wealth management where it refers to software as a service and outsourcing. We’ve seen it used by banks offering a white label service. It’s confusing.”

There are wildly different understandings of what constitutes BaaS. For the sake of consistency, we’ll look at banking as a service as a digital version of Amazon’s AWS. This flavor of banking as a service applies to B2B customers who specifically aren’t banks, who don’t have a banking license.

In this model, at least one sliver of the banking technology stack gets integrated into a third party app or website.

So, a personal finance manager may decide that it makes sense for it to store and move money on behalf of its users. Short of becoming a full-fledged bank, the PFM can use banking as a service technology from companies like Green Dot and Cambr to power a current account and debit card. Some people in the industry call this functionality accounts as a service.

Providers that offer digital core banking technology wouldn’t fit into this definition of BaaS because their primary customers are banks.

How is banking as a service different than traditional core banking?

Others define banking as a service very differently. For banks with a license that want to move their technology stack to the cloud, they can use third party providers to host much of or the entire banking infrastructure instead of building it themselves. This is much deeper technology than just bolting on an ATM card to a popular app. Firms like Temenos and Q2 help power digital banking offerings for traditional retail and community banks that want modern infrastructure and functionality.

Digital core banking providers can often supply some or much of the the technology stack for new challenger banks. Temenos, for example, powers Australia’s Volt Bank and Greece’s Praxia. Some people call this a bank in a box.

Challenger banks turning into BaaS providers

As challenger banks mature and customers give their tech favorable reviews, some of these neobanks start looking for alternative sources of revenue and offer their platform as a BaaS.

As a challenger bank, Starling Bank has close to 500,000 personal and business accounts. On the heels of a recent investment round, Starling offers its own banking as a service offering (as well as payments as a service). Partners like Raisin, a European savings account marketplace, work with Starling for service bank accounts and payment processing capabilities.

“This becomes really interesting because up until now, if you had a great idea, you would need an emoney license, a bank board, and lots of capital,” said Julian Sawyer, Starling’s chief operating officer. “All this work is needed before you even start talking about a customer. Now, a company can code against our APIs and get a customer-centric product out into the market really quickly.”

Traditional banks have also gotten into the banking as a service game. Global bank BBVA has made a big bet on the opening up of banking tech infrastructure and in the US, is attempting to ramp adoption of its banking as a service platform.

The future of banking as a service

We think the future of BaaS is a much more mature version of what we see now. The definition of BaaS will split into multiple, clear sub categories, with many more new companies entering the market. Long term, the industry wil likely grow more transparent, where firms will offer most, if not all, their banking services via API.

This distributed model of banking pushes out banking services to apps and other pieces of software. Consumers no longer need to go to a bank to complete banking activities. It’s entirely possible that the nature of a primary banking relationship changes as users do their banking with companies that aren’t banks at all.

Tearsheet’s Meir Leff and Zack Miller contributed to this article.

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Offering what it calls Banking-as-a-Platform, FinLeap, the German fintech ‘startup factory’, has hatched its latest venture.

Read more about Baas – Banking-as-a-Service: Common play of banks and fintech

This time the Berlin-based company builder (to use the preferred terminology) is investing and betting on the underlying regulatory and financial technology infrastructure — the picks ‘n’ shovels, if you will — in the form of solarisBank, a fully licensed digital bank designed to power an array of fintech services.

Born out of the frustration experienced by FinLeap’s own startups when faced with the need to piggybank an existing banking license and technology in order to be able to offer various financial services, solarisBank has developed what it is described as a modular-based banking toolkit, including, and crucially, various modern banking APIs. This means that its able to offer other fintech business various service that, in turn, they can offer to their own customers.

These include account and transaction services, compliance and trust solutions, working capital financing, and online loans. Those service not only require a technology solution, but in many instances, a banking or e-money license. SolarisBank handles the heavy lifting for both.

“We are confident that most major Internet companies will want digital banking solutions that expand their product range and offer it within a challenging regulatory environment,” says FinLeap Chair Jan Beckers in a statement. “We haven’t seen a bank that offers a technology platform like ours and can partner with so many different kinds companies and business models.”

While solarisBank is officially de-cloaking today, it has already begun servicing a number of test customers. It isn’t disclosing who they are, however I understand that one is an e-commerce platform that is using the banking platform to offer new value-added financial services relevant to its existing customer base, such as loans. In this instance, SolarisBank is acting as both regulatory banking partner and technology partner. A second customer is a gift card provider who would other require an electronic money license.

“Solaris’ services are like Lego bricks: our partners can pick the bricks they require and assemble custom solutions to fit their business needs,” a company spokesperson told me via email.

“Partners can access Solaris Platform services via our easy-to-implement API. The frictionless and straight-forward integration enables solarisBank partners to launch quickly and concentrate on their core business. In addition to the focus on technological innovation, we meet or exceed all regulatory requirements with our full bank license.”

The article first appeared in the Techcrunch.com

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