In the fintech sector, which is a popular trend globally, one of the most talked about business models is Service Model Banking. BaaS; It consists of the initials of the English expression Banking As A Service. BaaS model; Banking transactions can be offered through different platforms other than banks, thanks to new technologies. The BaaS model, which has become a star in the Fintech ecosystem in recent years, is one of the most important concepts that pave the way for users or customers to access banking services through different and alternative channels.
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In addition to transferring traditional methods in the banking and finance sectors to the digital world, financial technologies try to create new needs in users and produce solutions that meet these needs.
Digital Journey of the Banking Industry and BaaS
Banks, which have an important place in the modern age, are digitalizing their services with the development of technology. Thus, it can reach its customers through different channels. The digitalization journey of banks clearly started with ATMs for users in the last quarter of the 1900s; It gained a different dimension with internet banking and mobile banking. Following these developments, the next step is the concept of fintech, that is, third-party companies or platforms that provide services between banks and their customers in recent years. These platforms; Sometimes it becomes a solution partner in the digitalization of banks. Sometimes it plays an intermediary role in making bank services reach more people. This is where the BaaS model comes into play. In other words, we can define the BaaS business model as a new business model to expand the customer portfolio of banks and increase the quality of their activities.
The simplest definition of the BaaS business model is that “banks offer their banking services through different platforms, applications, websites or companies other than their own channels.” The most important detail here is that although the service offered belongs to the bank, the channel through which it is offered is a different address.
BaaS Business Model Example
It is possible to give many examples for the BaaS business model both in Turkey and around the world. A good example of the BaaS business model is that a platform operating in the field of tourism offers different credit options for the payments of its users. If we explain this example, we see that a loan product belonging to a bank is offered to customers through a tourism platform other than the bank. In this business model, an agreement is made between the tourism platform and the bank for consumer loans. Thus, the tourism platform acts as a service provider for the relevant bank. In addition, all transactions, from the application for the loan to the usage phase, take place on the tourism platform.
BaaS in Turkey
In Turkey, the BaaS concept took its place in the legislation with the Regulation on the Operating Principles of Digital Banks and Service Model Banking (“Regulation”), which was published in the Official Gazette on December 29, 2021 and entered into force on January 1, 2022. The Banking in Service Model (BaaS) business model is defined by the relevant regulation. According to this; For service bank, the term “bank providing service model banking services” is included. The interface provider is defined as “Enterprises established as capital companies that enable their customers to carry out their banking transactions by accessing the banking services offered by the service bank through the bank’s open banking services, through its mobile application or internet browser-based interface.”
In addition, the relevant regulation also explains the legal relations between the bank and the service provider, security issues and other technological details.
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