Banking has changed irrevocably. Over the past 20 years, banking transactions, half of which used to occur in-branch, have migrated predominantly to digital self-service channels. As we go along in this decade, many of these transactions will move out of the bank network altogether, into the realms of
third-party applications. This is possible due to the growing might of APIs and Open Banking, leading to the emergence of newer business models such as Banking as a Service and Embedded Finance.
While this gives non-banks and third parties a chance to venture into the banking world without much friction, banks today have an equally unique opportunity to reinvent themselves by embracing new business models. For this, banks need to mature their API ecosystems and partner with FinTechs and brands evolve innovative and contextual banking products and services.
India has been a leading example worldwide, for the adoption of these newer banking business models. Catalyzed by the regulatory and industry steer, initiatives such as India Stack, UPI, OCEN and more are fueling the bank-FinTech-Third party collaborative innovation and paving the way for a greater adoption of BaaS and Embedded Finance models.
This report explores the emergence of API banking and dives deep into its role in enabling Bankingas-a-Service (BaaS) and Embedded Finance innovations. It covers several BaaS models and sub-types, highlighting the key initiatives in the Indian market which are fuelling the growth of Banking as a Service and Embedded Finance.