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BaaS: Create a Bank


Banking-As-A-Service (BaaS) Will Disrupt Banking Whether Bankers Like It Or Not.




Marco Essomba
Marco Essomba
I have recently completed a Banking-As-A-Service (BaaS) infrastructure project for a large UK Managed Service Provider (MSP). This is a glimpse of what banking technology, at least from the network infrastructure point of view, will look like in the future. If you are a BaaS or Financial Technology (FinTech) fan, this article is for you. I share some of my thoughts and at the end complete with some of the lessons and tips gained from that project.

BaaS Will Disrupt Banking Whether Bankers Like It Or Not

Imagine, in a not so distant future, a new FinTech start-up wants to re-invent how we do banking. They have the banking expertise but lack the knowledge required to build a complex banking infrastructure and underlying systems to deliver a fast, secure, and highly resilient online banking system.

Not to worry. Welcome to the BaaS market place where BaaS providers rule. A place where you can order your banking platform tailored to your customers’ needs. A place where you can buy speed, security, and resilience and run your core banking applications on a robust infrastructure, fully compliant, fully automated; ready to go at a push of an API button. This banking platform is delivered as a service with the usual core banking frameworks and APIs, and you only pay for what you use. You can extend the platform to support extended APIs allowing apps developers to create more banking services that your customers will love. Happy days!

What Makes A Banking Infrastructure?

Without going into too many technical details, a banking platform can be segmented into 2 main groups of components. One group includes components that are part of the core banking software. These are programs or tools that perform several specialised banking functions such as customer and business processes management, banking transactions control, financial analysis and analytics, data fraud prevention, documentation and account management, reporting, and business intelligence. Another group of components include the middle-ware systems that are glued by the underlying network or digital infrastructure. That digital infrastructure also called Application Delivery Infrastructure (ADI) must be very fast, highly secure, and resilient. Here we focus more on the digital infrastructure behind BaaS.

Banking Platforms Made Easy With BaaS

If you are a FinTech start-up trying to launch a bank it could be a daunting task building both the software and network infrastructure required to create a complete banking platform. Don’t forget the regulations and licenses that must be acquired to start trading and offering services to customers. A tiny number of providers in the UK are now able to take away the pain of building the complex digital infrastructure that makes up a banking platform.

MSP that focus on providing a robust and flexible infrastructure ensuring that banking apps are delivered in a fast, secure, and highly resilient manner.

Fast, Secure, And Resilient Is All You Need For BaaS

The Application Delivery Infrastructure (ADI) that is at the core of the all banking platforms is based on three core principles:

1) Speed — Faster is always good for consumers. The consumerization and proliferation of mobile devices means that banking customers are expecting to access online banking services from anywhere, anytime, and any device in a fast and timeless manner. It is unthinkable in the digital economy to be waiting for more than a few seconds for a mobile or desktop app to load. Failure to ensure that the underlying banking infrastructure used deliver web services is extremely fast simply means lots of complains and ultimately loss of customers to the competition.

2) Security — Cyber security is also a major concern for consumers when it comes to online banking. The increasing number of cyber attacks and data breaches in small and large corporations is only contributing to the security hysteria amongst consumers. A major breach like the one that was publicised at the Telecom company TalkTalk has resulted in a massive loss of customers and long-term damage to the firm reputation. That must be avoided at all cost in any financial systems, more importantly in a BaaS infrastructure.

3) Resilience — The ability to recover from a major banking component failure quickly must be part of the BaaS design. It is crucial to ensure the highest uptime of all web services in order to maintain and drive up customer satisfaction. The recent banking platform ‘glitch’ at RBS and Natwest is a case in point.

How Fast Can You Create A Bank?

BaaS brings the flexibility and agility required by start-ups in the FinTech space to focus on their core banking applications whilst the complex network infrastructure required to interconnect those banking applications is taken care of by a third party provider. That includes compliance with strict banking regulations such as PCI-DSS in order to ensure the highest standard of security when handling customers’ data. For a FinTech start-up that flexibility means speed to market and the agility to react quickly to changing market dynamics.
What I Learned From Building The Next Generation BaaS

Infrastructure

1) Network engineers must learn to program. The increased use of APIs in IT to streamline processes and drive down IT cost means the benefits of automation and orchestration are far too important to be ignored by enterprises. Engineers with the combined expertise in programming and networking will be in great demands in the near future.

2) IT Automation and orchestration will rewrite the rules on how we deliver complex network infrastructures. Giving the cost saving attributed with automation and orchestration trivial tasks will be taken care of by machines and certain types of tasks currently carried out by humans will disappear.

3) Stronger cyber security is achieved when technology, humans, and processes are tightly integrated and working as one.

4) Security analytics will play an essential part in helping companies manage and monitor complex network infrastructures and make sense of the exponentially increasing number of security events and incidents that require detailed investigation.

5) Banking platforms as we know will change fundamentally. Similar to the adoption of SaaS, IaaS, and PaaS, it makes sense to move towards BaaS. Moreover, FinTech start-ups will benefit greatly by offering service via APIs that conventional banks may otherwise not be willing to offer.

6) Fast, secure, and resilient remains the motto for Application Delivery Infrastructures. Whatever the banking platform, speed, security, and availability remain the highest concerns for all stakeholders. All banking infrastructures must have all three.

7) Artificial Intelligence will help businesses reduce cost and offer better service to consumers. Some of the mundane tasks currently carried out as part of the business-as-usual (BAU) routines will be fully automated and carried out by machines or robots. Call it AI if you will.

About The Author
Marco Essomba is a network & security expert with more than a decade of experience in the field. Marco is CTO & CEO at AMPS Global, a World Class Consulting firm that enables organisations in banking, healthcare, retail, finance, insurance, and technology to design, implement, and support their digital infrastructure for the most secure and optimised delivery of Enterprise Apps. AMPS Global core expertise is cyber security focusing uniquely on leading products such as Clearswift and F5 Networks (BIG-IP LTM, GTM, APM, ASM, AFM, VIPRION, iRule, iApps, iControl, APIs, DevOps, and Scripting). Projects and case studies available here.

Information on contacting Marco:
Email: Marco.essomba@amps-global.com
Blog (Medium): https://medium.com/@marcoessomba
LinkedIn: https://uk.linkedin.com/in/marcoessomba
Other Publications by Marco: https://www.linkedin.com/today/post/author/posts#published?trk=mp-reader-h
Originally published at: http://www.linkedin.com/pulse/banking-as-a-service-baas-disrupt-banking-whether-bankers-essomba?trk=hp-feed-article-title-publish

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Mercredi 20 Juillet 2016
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