After 15 yrs in FinTech, I notice there is still confusion around Open Banking, Core Banking and BaaS. Yes, all 3 involve Banking & APIs. But they're totally different. Quick thread to resolve this👇
1. BaaS/Embedded Finance via #API >> make digital banking services a part of your product and customer experience. No need for an external #banking app! Use cases: smart company cards w/your logo, or create a #neobank!+lots more. @Railsbank @TreezorBanking @Solarisbank @swanapi
2. Open banking >>by law, banks must expose their APIs. You can ask clients for access to their account statements. Or permission to make transfers on their behalf. Use cases? Personal Finance Manager, Credit Scoring, epayments by transfer(vs by card) @Plaid @Tink @Bankin
3. Open banking vs BaaS? A big upside to open banking is you don’t have to bother your client to open an account. The downside is that basic common APIs offered by banks are quite limited.
4. Core banking>> Unless you’re a bank you probably don’t know this word. It’s a retail banking thing. The backbone software of a bank, managing ledgers, connected to Visa, Mastercard, SEPA… (@Mambu @TagPay @Vodeno)
5. Core banking vs Baas? CoreBanking is to BaaS what Boeing is to American Airlines. Every BaaS has a Core banking system that helps it run.
6. Baas ≠ OpenBanking ≠ CoreBanking. If you are specialized in Fintech you should know this. A soccer coach would never assign a midfielder as a goalkeeper...well, in Fintech, we need to understand our options and talk about/use them appropriately :)
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