How Banking-as-a-Service works: a breakdown

Banking-as-a-Service (BaaS) describes an ecosystem in which licensed financial institutions provide access to their services to non-financial businesses, generally through API integrations.

How Banking-as-a-Service works a breakdown

October 13 2021

Banking-as-a-Service (BaaS) describes an ecosystem in which licensed financial institutions provide access to their services to non-financial businesses, generally through API integrations.

BaaS is designed to give companies access to the exact financial services they need, without having to build the service themselves or establish a bespoke partnership with an existing financial services firm. They can focus on building customer-centric products and services, while the banking services they need are easily ‘plugged in’. 

In the past, we’ve explored why BaaS is such an attractive option for many businesses and where it might be used. But how exactly does it work? How are you suddenly able to get the exact banking services you need while keeping the front-end design entirely your own? 

Senior Software Quality Assurance Engineer Yusuf gave us some more information on how the integration works and what you can do with OpenPayd’s BaaS platform. 

How does BaaS work? 

The best way I can describe BaaS is to imagine it like a piece of Lego. It’s what connects fintechs to more traditional financial institutions - namely banks. It’s an instrument that is easy to plug into and receive full banking services through in a smooth, easy way. 

APIs are what make this all possible. APIs allow different systems to ‘talk’ to each other - sharing information and commands. In our lego analogy, APIs can be thought of as the pegs and holes which allow pieces to click together and become one big piece. Your business’s ‘front-end’ (the part the customer sees) is completely the same, but now it is connected to something else behind it, which is itself connected to banking services. 

What’s most important to us as providers of BaaS is that it is both fast and reliable. If you can connect with banking services but the experience for the end user is slow or glitchy, its value severely declines. Our technology is water-tight to ensure services run smoothly and efficiently at all times. 

Features of OpenPayd’s BaaS

OpenPayd offers full stack banking services. Below are some of the features that your business can plug in. 

Real-time FX engine 

Our FX engine gives you the ability to run your entire FX operation through our platform. We allow you to settle in over 24 currencies, as well as receive automated spot pricing via a single API. 

Our FX capabilities include full remittance services, from onboarding and compliance to reporting and analysis. You don’t need to find multiple partners to provide different services that your business requires, with your tech team then integrating multiple services. One developer-friendly API call and everything is taken care of.

Accounts 

OpenPayd provides you with accounts services fit for the digital world. A combination of virtual IBANs, assigned to each of your customers/suppliers/affiliates, and multi-currency accounts enables you to accept payments and make payouts in local currencies. 

This saves you huge amounts of operational overhead as reconciliation services can be automated. Automation also reduces individual error, so your business spends far less time correcting mistakes. 

Payments

Whether domestic or international, OpenPayd provides easy access to payment rails through a single API integration. We offer the most competitive pricing and are fully transparent with costs - no hidden fees, no surprise stings. 

What’s more, OpenPayd’s modular dashboard gives you full visibility of what’s happening and the ability to take full control of your business finances. We pride ourselves on flexibility - however you want to bank, we can accommodate. 

Acquiring

There are few things more important to your business than making sure you can get paid. Our card processing solution allows you to accept card payments quickly and seamlessly, whether you’re a startup or enterprise. 

As with our other features of BaaS, acquiring can be simply managed through the same dashboard as any/all other OpenPayd services you are using. In reality, the possibilities available within the OpenPayd dashboard go far far deeper than what we’ve already described. Below are some more specific examples of how it can be utilised. 

The OpenPayd Dashboard

When we designed the OpenPayd dashboard, our first priority was ease of use. We have made all client-facing features simple and intuitive, without sacrificing on the level of control you have. 

Here are some of the features of the OpenPayd dashboard which enable you to get more out of your payment services. 

Account management: All accounts have generated account statements that you are able to share with your customers should you wish. Transaction reporting is done in real time so you always have visibility over every action taken. 

Bulk payments: When you are a large organisation, the number of payouts you need to make grows. Whether from suppliers, contractors, or associates, when the number of payments increase, the cost, overhead and number of mistakes increase with it. OpenPayd allows you to make automated bulk payments, making things far easier for your accounting department and keeping your payees happy. 

AIS/PIS management: Account Information Services (AIS) and Payment Initiation Services (PIS) are features of Open Banking. The OpenPayd dashboard allows you to view data from all your external bank accounts (AIS) and initiate payments without having to log in to a banking service directly (PIS). 

Define pricing for linked accounts: OpenPayd’s flexible ledger system enables you to set up linked accounts which are fully segregated from your own ‘parent’ account. There is no limit to the number of linked accounts you can have and each account can hold multiple IBANs in different currencies. 

The pricing associated with linked accounts is completely down to you and adaptable via the OpenPayd dashboard.

Delegate users: You have your own security standards that you need your business to operate under. Delegating users gives different employees access to different information, ensuring you can keep the highest level of internal security.

This can be updated quickly and easily, so when employees join and leave your company, their access can be instantly modified.

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The traditional approach of forming banking partnerships with a variety of providers is slower, more cumbersome and usually far more difficult for your tech teams to implement. With more and more businesses taking advantage of BaaS, new companies looking for banking services will find themselves at a huge competitive disadvantage if they go down alternative routes.

OpenPayd has been providing BaaS for multiple years and serves businesses of varying sizes all over the world. Get in touch today to talk to us about what services you need.

Embedded Finance

Posted on 13th October 2021

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