Open Banking: APIs to Open Banking to BaaS

Tony Crivelli
December 14, 2021

This is our second article in our Open Banking series. 

We want to focus on a less documented customer experience within the space of this new technology: small businesses doing cross-border trade

The way we see it, Open Banking has so far mostly served consumers, but as more progress and change is being made, businesses will be the next to benefit - and massively too. 

But before that, I want to build up the layers of the current ecosystem that we’re seeing and use that as a foundation for the art of the possible for SMEs and their expanding needs in cross-border trade. 

The big API fuss 

Let’s first define what an API is. Application Programming Interface (API) is a software intermediary allowing two applications to freely exchange and leverage data with each other through a defined set of rules. 

Previously relegated to only the techiest of the tech, in the past decade APIs have boomed, becoming the backbone to most of the applications we use on a daily basis - personally and professionally.


At their core, APIs enable four key elements:

  • Integration and collaboration: one single platform can now integrate with many third-party apps to improve workflow processes and collaboration, breaking down silos and improving communication. 
  • Innovation: a new market of business partners, customers and services are made available because of the flexibility that APIs offer. 
  • Monetising data: we have data all around but now, it’s value can be monetised. APIs open gateways to new partners who see your data in dollar signs. 
  • Greater security: APIs provide an extra layer of security through the predefined set of rules and the use of additional measures such as, tokens and encryptions. 

All in all, they’re a big deal and have been a true game changer. 

APIs to Open Banking APIs 

While APIs have been in the realm of banking for some time, there is a distinction between a bog-standard API and an Open Banking API. 

Banks, as standard, use APIs for their partners, like Visa and Mastercard but these are often bespoke, built to specification and according to their relationship.

In more recent times, banks and financial institutions (FIs) have gotten wise to the concept of open APIs, giving access to the bank’s own API to any third-party.

It’s created a greater marketplace, pushed innovation and the possibility for broader partnerships. 

This is all very different to Open Banking APIs though.

The ethos behind Open Banking is having just one standard API; a trusted, simple standard to share data and move money, no matter where you are. 

With one standardised method, consumers, businesses and banks can be confident that their partners are following the same protocols and that any anomalies or deviations will be spotted quickly, or simply disallowed from the start. 

Open Banking API to BaaS API 

Ok, let’s go further here. 

Banking-as-a-Service APIs are different to Open Banking APIs. As Open Banking APIs provide access to the data of a bank account, it doesn’t allow much else in the way of usual banking activity. 

Critically though, BaaS APIs unbundle traditional banking requirements like opening an account, retrieving metadata and making this usable for next steps, like finding and securing a loan. These APIs therefore allow BaaS to maintain autonomy, working entirely within an embedded context for the whole lifecycle. 

While Open Banking is categorised under the term embedded finance, it only really goes so far because of the need to interact directly with a bank for certain actions.

On the other hand though, BaaS can look and feel like a bank because of how deeply it can be embedded - to the point that it can go hardly unnoticed within a fintech application. 

Fluenccy’s View 

Open Banking has been great at getting the banking scene reinvigorated and updated, but BaaS is now doing more. These smarter, more intelligent APIs are changing the way of the world for SMEs, who have been consistently underserved in the financial space. 

SMEs have historically lacked the time and tools to invest in a better financial risk management solution, and due to their nature, often lack access to the expertise even if they do have the above. Baas APIs enable FinTechs like Fluenccy to act as an orchestration layer that bridges this huge legacy gap. 

Embedded finance and BaaS APIs solve for a few key elements for the SME:

  1. Fuller account information that is provided more conveniently and in a digestible format. 
  2. New tools that use data holistically, as opposed to just storing and presenting it. 
  3. Intelligence and expertise for the next steps and actions. 

The old adage in serving SMEs in foreign currency and cross-border was ‘get to know my business and tell me what to do’. Tomorrow, this will sound more like ‘just give a bunch of smart APIs I can trust, they’ll know what to do’. Bottom line: things are changing. 

Next up in the series: CX and Open Banking

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