Bank as a platform conceptually means moving from a point where
a bank is an entity which builds all of its own products and services,
runs those by itself,
offers those products and services under its own brand to customers which it
seeks to engage with directly and own effectively from a banking standpoint.
Moving from that model to one in which a bank may provide only
for instance backend transaction or payment services,
while allowing another company to build and deliver the frontend customer experience.
In fact, that backend platform provider could support
many frontend providers with the backend provider in
this example specializing in processing volumes,
economies of scale, and IT efficiency and
the frontend provider specializing in branding, marketing, customer experience.
The revenues that have traditionally accrued to banks can be
divided in specific ways based on arrangements like this,
as can authorization and licensing requirements.
A handful of banks have begun to make
a banking as a platform or a banking as a service model a reality.
Solaris bank, Fidor, Wirecard,
Modulr, which is a payments as a service platform.
An example may be best to describe the implications.
Telefonica in Germany, a large telecommunications company,
leveraged Fidor's banking platform to build and launch a mobile banking app.
So Telefonica owns the O2 brand and Telefonica built
an O2 banking app which is available in Germany on iOS and Android.
O2 customers who download the app and seek
bank-like services through the app are able to make payments via phone numbers,
they're able to access a free MasterCard debit card,
and they're able to apply for and receive instant loans,
all through an O2 bank interface.
O2 doesn't have a banking license,
Fidor has a banking license and provides the license and
the back-office systems to O2 in order to support this offering.
The play here strategically for Telefonica is to increase their touch points,
their ownership effectively of their customers,
while Fidor is happy to share the backend systems that's developed with a new player.
Given that it's part of Fidor's business model,
Fidor being built specifically with the aim of
supporting third parties as a bank as a platform supplier.