<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/banner1251-3-1.webp" alt="M2P Fintech" title="" id="ilmzze2wy" width="100%" height="317">The world has been churning the Open Banking mill for years, and India recently joined the bandwagon. The Indian government set the scene for the Open Banking system with the advent of UPI in 2016. However, in the last two years (post-pandemic period), the nation witnessed an extensive acceptance and adoption of Open Banking in the BFSI sector, fast-tracking fintech innovations. This feat is directly proportional to the government's nationwide campaigns that include the roll-out of IndiaStack, the launch of scalable Open Banking initiatives by banks, and improved funding to Banking-as-a-Service platforms. Today, India is at the forefront of Open Banking with a market size of around 3 to 4 million customers and is expected to grow by 46% by 2026.<h2 class="heading-node" id="h3j68aay1" style="text-align: justify">What is Open Banking?</h2>Open banking is a new-age banking practice that provides Third-party Service Providers (TSPs) open access to consumer and financial data from banks and Non-Banking Financial Companies (NBFCs). It uses <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">Application Programming Interfaces</a> (APIs) to converge data from the banking world with the rest of the financial universe.It is imperative to note that financial data is made accessible to TSPs only after explicit customer consent. Thus, customer data is transparent yet secure and accessible anytime.Expected to hit $48 billion in 2026, open banking has accelerated technology innovation and adoption. It has facilitated a level-playing ecosystem via data portability and interoperability across the country. As trailblazers in enabling open banking ecosystems, fintech firms are aggregating data from various financial institutions and giving people and businesses more freedom in leveraging financial information.Open banking helps personal finance businesses analyze spending habits and offer personalized product recommendations. Lenders can comprehensively view customer’s financial situation, assess risk levels and offer optimal account terms. Customers can also leverage open banking to understand their financial situation before making financial decisions. By providing a window into customer behavior and expectations, open banking helps reshape customer experience and frictionless commerce.Before we go further, let’s explore the roots of open banking.<h2 class="heading-node" id="a0b5" style="text-align: justify">Origin of Open Banking</h2>The concept of Open Banking dates back to the 80s in Europe. Fast-forward to 2007, the arrival of a Payment Service Directive 1 (PSD1), harmonized payment services regulation and increased competition among financial service providers in the EU.The primary aim of PSD was to harmonize consumer protection with the rights and obligations of payment service providers and users. It established an integrated payments market that offered best-in-class security and infrastructure to the end users.&nbsp;PSD also allowed countries to include sections that are explicitly valid for their payment industry. It was released as legislation on November 1st, 2009, and accepted by all EU and EEA member states.However, even though PSD offered a comprehensive framework, it was not inclusive when considering international payments outside the European Union (EU). Furthermore, it was not designed for TSPs in its scope.These bottlenecks led the EU to build a more robust framework for this directive, which resulted in Payment Service Directive 2 (PSD2). It came into force on January 13th, 2018 with new rights for certain third-party providers (TPPs) to directly access online payment accounts with explicit customer consent through the bank's dedicated interface (built on APIs).Customer authentication is the main element of PSD2, and it encompasses the following points:<ul class="list-node" id="4wrs9fhmn"><li>Strengthen customer trust by deploying the highest standards of security</li><li>Offer a better pricing model to the consumers</li><li>Make transactions safe and secure</li><li>Level the playing field for payment service providers for both current upcoming players</li><li>Transparency in payment services</li></ul>Since this legislation has been out and about, many fintech, merchants, and tech players have been vigorously channeling their resources in becoming TPPs. PSD2 categorizes the TPPs into two categories.1. Payment Initiation Service Providers (PISPs): Regulated TPPs can initiate payments directly from the customer’s accounts based on their explicit consent.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-9-3.webp" alt="M2P Fintech" title="" width="100%" height="253">2. Account Information Service Provider (AISP): Regulated TPPs who access customer data and provide them a single view of all their accounts for better financial management. Even this action requires the customer’s explicit consent.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-10-2-1.webp" alt="M2P Fintech" title="" width="100%" height="253">PSD2 laid the groundwork for open banking, a practice that is very relevant, safe, quick, and easy to use.<h2 class="heading-node" id="29wqtnyhx" style="text-align: justify">Need for Open Banking</h2>The world of financial services is a dynamic environment. It can be primarily ascribed to the rise of new technologies in the digital banking ecosystem, heightened regulation scrutiny, and constant change in customer behavior and expectations. Besides these, the relentless search for a sustainable service model for underserved markets and additional revenue streams also define the landscape of financial services. &nbsp;In addition, FIs are obliged to stay compliant, manage costs, and maintain security and trust, and governments look for ways to boost innovation and competition across the banking sector. &nbsp;To manage complex customer needs and drive innovation and opportunity far beyond banking, the financial services industry needed to break through the conservative wall around the customer's financial data. Thanks to PSD2, banks and fintechs can now make the data useful and relevant. It now serves as the key to enhancing collaboration between financial services providers, rendering superior products and services for customers, reducing risk, pursuing strategic growth opportunities, and adapting to the new-age banking ecosystem.<h2 class="heading-node" id="i8q4vgmvm" style="text-align: justify">Closed Banking Vs. Open Banking</h2><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-11-4.webp" alt="M2P Fintech" title="" width="100%" height="253"><h2 class="heading-node" id="dc6a" style="text-align: justify">How do APIs work in Open Banking?</h2>APIs are the backbone of Open Banking infrastructure for two reasons.<ol class="list-node" id="6ipr9y3o8"><li>It facilitates the exchange of information between two financial parties</li><li>It offers secure interoperability that is compliant with region-specific laws and regulations</li></ol>The world of finance sees it as an open source platform that allows legacy financial institutions to collaborate with modern age fintech platforms.&nbsp;With APIs at the forefront, customers will get a consolidated view, and financial providers such as lenders will get the required data to make the right decisions. This empowered banks and FIs to revamp their products and services to meet ever-changing customer needs.&nbsp;The APIs can be classified into three categories:&nbsp;<ul class="list-node" id="z7d94jny8"><li>Public APIs are the most popular connectors for open banking. They give TPPs access to customer information from the bank, but they don't store or save that information for later use.&nbsp;</li><li>Partner APIs are specific APIs designed to allow the exchange of data between two companies or businesses. They facilitate vendor-to-vendor communication channels.&nbsp;</li><li>Internal APIs are proprietary APIs used by an organization to secure and manage its own database.</li></ul><h2 class="heading-node" id="6a44" style="text-align: justify">Use Cases in Open Banking</h2>Financial ServicesOpen banking is all set to reinvent the way financial services are now perceived. The highlight of this reinvention is that they do not intend to eliminate the players but give them a new avatar. In simple terms, there is no customer data without banks.A bank’s responsibility is to provide the necessary platform for its customers to have their pick of the services. As fintechs are now offering that choice, banks are pressed to reinvent and partner with these new age fintechs to retain the competitor status. Today, several leading banks have formed successful partnerships with fintechs to offer the following services.<ul class="list-node" id="ypujhtj6f"><li>A comprehensive view of core banking accounts</li><li>Payment services and choice of networks</li><li>Commercial and personal loan histories</li><li>Tailored investment portfolios</li><li>Native bank apps and enriched experiences</li></ul>Small businessesAkin to individual customers, small business owners can use open banking to gain insightful visibility into their financial management. They will be able to understand the realities and ripple effects of their financial decisions such as loans, mortgages, and expansions. Small business owners can leverage the understanding to improve their cash flow. Likewise, lenders can devise practical loan offerings with an expedited delivery timeline to meet business needs.InsuranceInsurance providers can access a complete, dynamic, and current portfolio of the applicant’s finances. They can use the data to draw sound insurance decisions that matches the client’s best interest and business profitability. The customers also get an unparalleled view into spending behavior resulting in diligent financial decisions.CustomersOpen banking is all set to provide customers with a supermarket aisle experience where they can pick and choose the financial products they want. This tailored experience offers several advantages to new-age customers as listed below.<ul class="list-node" id="a66wr4nq7"><li>Augmented account visibility and security</li><li>In-depth visibility into spending habits and behaviors</li><li>Instantaneous access to market investments</li><li>Interoperable online and physical payment options</li></ul><h2 class="heading-node" id="uv1rt4xby" style="text-align: justify">Challenges in Open Banking</h2>Open banking removes interpersonal relationships between the customer and the bank. As everything is handled digitally, the human connection takes a dive.Customers might not be willing to share their details, and there could be a lack of apathy/credibility from the customer. Convincing them about the benefits and converting them into leads might take a while.Security concerns play a huge role in this field as it is a relatively new field, and it is filled with many trial and error situations that are yet to happen.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-12-1.webp" alt="M2P Fintech" title="" width="100%" height="253"><h2 class="heading-node" id="47f6" style="text-align: justify">Opportunities in Open Banking</h2>The open data philosophy will improve the transparency and democratization of the banking platform. It will provide access to the credit deprived and also facilitate entry into foreign markets. The most important benefit of all would be the ideation and creation of apps that will be fielded in the market by upcoming fintech players. Tools like Artificial Intelligence and Machine Learning will be able to predict solutions based on customer spending habits. Automation will be a game changer for many services.Intrigued about the forthcomings of open banking and financing?Reach out to us at <a class="link" href="mailto:business@m2pfintech.com">business@m2pfintech.com</a> to know more.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Open Banking- A primer

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/04/banner1251-12.webp" alt="M2P Fintech" title="" width="100%" height="662"><a class="link" href="https://m2pfintech.com/blog/neo-banking-101-all-you-need-to-know/">Neo banks</a> deliver digital banking services on steroids. The digital empowerment and financial possibilities they offer the underbanked and unbanked population are phenomenal. Their ability to foster <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">financial inclusion</a> with digitized convenience, lower cost, and personalized customer experiences are a few of the primary reasons for the success of <a class="link" href="https://m2pfintech.com/blog/top-14-neo-banks-that-reinvent-banking-experience-in-india/">neo banks in India</a>.Competing heavily on customer-centricity and deep tech, neo banks bridge the experiential gap between traditional banking services and evolving customer expectations. Free from legacy infrastructure hurdles, complex value chains, and stringent regulatory requirements, neo banks deliver super-fast, mobile-first services by leveraging advanced, agile, and lean business models.In the next five years, the global neo bank market is slated to grow at 47.1% and hit $333.4 billion market size. In India too, neo banks are a thriving industry with a huge market potential of over 190 million unbanked/underbanked people who still need access to basic financial services.So, if you are looking to set foot in the <a class="link" href="https://m2pfintech.com/blog/neo-banking-the-rise-of-new-age-banking/">neo banking</a> industry, this is the opportune time for you.We are here to help you with step-by-step guidance.Now, this is not unqualified guidance. We have immense experience and expertise in enabling neo banking services for leading players like Zenpay, Niyo, and Finin.Let’s get started!<ul class="list-node" id="4te59z1wy"><li>Step 1:&nbsp;Define target audience &amp; value proposition</li><li>Step 2:&nbsp;Identify and analyze audience pain points</li><li>Step 3:&nbsp;Work on innovative, customer-centric strategies</li><li>Step 4:&nbsp;Build a strong core and backend infrastructure</li><li>Step 5:&nbsp;Focus on experience design</li><li>Step 6:&nbsp;Manage compliance and security</li><li>Step 7:&nbsp;Ease onboarding, engagement, and marketing</li></ul>Fasten your seat belts!<h2 class="heading-node" id="958f" style="text-align: justify">Step 1: Define target audience &amp; value proposition</h2><a class="link" href="https://m2pfintech.com/blog/top-14-neo-banks-that-reinvent-banking-experience-in-india/">Neo banks</a> challenge the status quo of banking and payments for niche audiences. Hence defining that target audience is imperative to set up a neo bank.For example, neo banks like FamPay&nbsp;cater to teenagers, and&nbsp;Zenpay&nbsp;caters to blue-collared workers. FamPay’s proposition comprises cards and bank accounts that teenagers can use under parental supervision. Whereas Zenpay offers payroll cards that provide blue-collared workers instant access to salary and incentives.So, you need a crystal-clear understanding of your audience demographic and pain points to develop a value proposition accordingly. This will help you come up with a definitive reason why your customers should choose you.<h2 class="heading-node" id="9b55" style="text-align: justify">Step 2: Identify and analyze audience pain points</h2>Once your target audience is clearly defined, identify and analyze your target audience’s needs and pain points. This knowledge will help you include features that resolve audience issues, build trust and attract the right customer to your service. For example, Zenpay came at a time when the blue-collared workers were underbanked and were not able to access salaries and track their spending. The lack of access to salary accounts and other financial exclusion was the pain point for Zenpay’s audience. And their value proposition and services sought to resolve the challenge.Looking at your target audience’s pain points and working to close the gaps is a key step while setting up a neo bank. This knowledge will help you differentiate and stand apart from other players in the industry.<h2 class="heading-node" id="9050" style="text-align: justify">Step 3: Work on innovative, customer-centric strategies</h2>Neo banks stand apart because of their agile, innovative, customer-centric business strategy. Leverage technology to make your business model and strategy as convenient and user-centric as possible. Pack in unique features that will get your customers coming back to you.When it comes to features, some are must-have, and others are nice-to-have types. Must-have features are a necessity, without which the product or service will surely fail. Nice-to-have features are those that will add greater value and aid greater customer acquisition and retention.Here are some examples for more clarity.<h2 class="heading-node" id="7961" style="text-align: justify">Must-have features</h2><ul class="list-node" id="rcccmzkkk"><li>Low-cost structure</li><li>Easy money flow across borders</li><li>Quick account creation</li><li>User-friendly Interface</li><li>Real-time banking solution</li><li>High yield savings</li><li>Personalized card issuance (Physical/Virtual)</li></ul><h2 class="heading-node" id="b571" style="text-align: justify">Nice-to-have features</h2><ul class="list-node" id="zqdexn79o"><li>Zero joining fee</li><li>Zero annual Fee</li><li>Zero hidden Charges</li><li>Zero documentation</li><li>No-cost EMI</li><li>Personalized banking services</li><li>Educational loans/investments</li><li>Seamless budgeting</li><li>Tangible rewards</li></ul>With advanced technologies such as Artificial Intelligence and Machine Learning ruling the neo banking industry, you can include new features, upgrades, and everything your target audience expects without any hassles.<h2 class="heading-node" id="b472" style="text-align: justify">Step 4: Build a strong core and back-end infrastructure</h2>A robust neo banking app demands the best suite of core and back-end applications. As it has to deftly manage multiple applications and transactions without lags, the core and back-end infrastructure must be powerful enough. To build a strong neo banking app, you need <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">APIs</a>, a card processing app, and back-office tools.<ul class="list-node" id="fg87tfapd"><li>API:&nbsp;To connect your neo bank app with other services like payment gateway or authentication segment.</li><li><a class="link" href="https://m2pfintech.com/blog/credit-card-processing-a-definitive-guide/">Card Processing App</a>:&nbsp;This&nbsp;app is responsible for all the transactions or anything related to cards.</li><li>Back-office Tools:&nbsp;Manages the neo bank in the whole perspective.</li></ul><img src="https://miro.medium.com/max/1400/1*hYBMUudyKsAoH36Za4l89Q.png" alt="Backend infrastructure framework to create Neobanks" title="" width="100%" height="529">The back-end infrastructure can be built in three different ways.<h3 class="heading-node" id="e1a9" style="text-align: justify">1. Developing from scratch</h3>You require a banking license and a huge investment of time, effort, and money, as you are developing infrastructure, design, implementation, tech stack, and also the future sketch by yourself.<h3 class="heading-node" id="822d" style="text-align: justify">2. Partnering with banks</h3>To minimize the time and effort, you can integrate with established banks and get your neo banking model started. It also does not require much work in terms of customer acquisition as you can leverage the bank’s trusted customers, to begin with.<h3 class="heading-node" id="94bc" style="text-align: justify">3. Partnering with <a class="link" href="https://blog.m2pfintech.com/wp-admin/post.php?post=2422&amp;action=edit">BaaS</a>/API Provider</h3>You can partner with fintech companies to provide <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">APIs</a> to develop the core and bank end infrastructure for your neo bank. This decision with catapult your go-to-market speed to the next level with lower investment in terms of time and effort.For example, fintech firms like&nbsp;<a class="link au mu" href="https://m2pfintech.com/" target="_blank" rel="noopener ugc nofollow">M2P</a> power neo banking apps by delivering tech stacks and best-in-class infrastructure to build customized products with seamless integration. We serve as an account aggregator of multiple banks and help neo banks leverage our partnerships and compliance to its best potential.When it comes to card transactions, we take care of webhook notifications, reconciliation settlement, and even customer reports. For some of our neo banking customers, we also created co-branded debit cards with banks. We help them design their own debit card with features like multiple controls (PIN), lock/unlock cards, security measures, setting preferences, virtual cards, and more.In India, neo banks do not work independently. Hence partnering with the right banks and API providers is critical to increase go-to-market speed and achieve growth and profitability.<h2 class="heading-node" id="fbc3" style="text-align: justify">Step 5: Focus on experience design</h2>Humanizing transactions and enabling personalized experiences is key for the success of a neo banking app. To that end, you need to prioritize experience design for visually appealing app design and easy-to-understand interfaces and clear call-to-action.Experience design enables frictionless navigation and improves customer experience by focusing on speed, convenience, security, and seamlessness. Ensure your neo banking apps are aesthetically designed for a smooth customer journey and satisfaction.<h3 class="heading-node" id="a249" style="text-align: justify">Step 6: Manage compliance and security</h3>Better the security, better the trust!Regulatory compliance and security infrastructure design play a significant role in neo banks, as customer data and money are at stake here. Managing <a class="link" href="https://m2pfintech.com/blog/pci-dss-the-payments-armour/">PCI DSS compliance</a>, <a class="link" href="https://m2pfintech.com/blog/how-does-payment-tokenization-work/">tokenization</a>, the generation and issuance of payment tokens, and the operation and maintenance of a token vault is a laborious yet critical process.Hence, start with setting up the Security Office Center (SOC), which will function as a command center for your neo bank app. This helps you in analyzing every crumb of information in your infrastructure. You can even implement Security Information and Event Management (SIEM) software solution to secure and analyze every activity in your neo bank.You can even go the extra mile by building your own security tools and solution to protect customer data. It is highly advisable to maintain access logs or anything happening in your neo bank platform to have a record for your security team to look into any time in the future.Before stepping onto the deployment stage of your neo bank, run a series of checks and automated tests to identify and get rid of the issues. Think of every possibility your user may utilize your app for. Here’s a series of tests you can opt for:<ul class="list-node" id="yk7tuv0ut"><li>Unit-testing</li><li>Integration testing</li><li>Security testing</li><li>User acceptance testing</li><li>Regression testing</li></ul>Ensure your team runs the tests even after the app goes live because this lowers the chance of your app facing security issues later. Automating the tests by implementing a custom infrastructure helps in this case.Fuse security onto DevOps — <a class="link" href="https://m2pfintech.com/blog/devsecops-the-future-of-financial-software-development/">DevSecOps</a> to develop your neo bank application. At the time of upgrades and new releases, you can go to market quickly and seamlessly.<h2 class="heading-node" id="ecd2" style="text-align: justify">Step 7: Ease onboarding, engagement, and marketing</h2>Don’t just sit back after launching your neo bank. Your journey has only begun.Ensure onboarding is simple, smooth, and effortless for customers. Focus on marketing efforts to acquire and retain customers. Ensure you engage your customer throughout their journey with your neo bank.Remember, the profitability of your neo bank can be determined by the customer Life-Time Value (LTV)/ Customer Acquisition Cost (CAC) ratio. The higher the LTV/CAC ratio, the greater will be the income generated per new customer. So, the key is to keep your customers happy.All set to start your own Neo bank? Got more questions in your mind?Ping us at&nbsp;business@m2pfintech.com.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

7 steps to start a Neo bank from scratch

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/banner1251.webp" alt="M2P Fintech" title="" id="pzkn5bsd" width="100%" height="356">A crowded building with people spending a lot of hours in a queue to get their service done – this is almost everyone’s idea about the term “Bank.” But now, it looks suave after an upgrade with a fresh look.Gone are the days when people spent a day getting their banking service done. After the great technological innovation, traditional banking is no longer considered a troubling word. Several advancements acted as a trigger for the players like fintech companies and other third-party service providers (TPSP) to cause a paradigm shift that posed a challenge to traditional banks.<h2 class="heading-node" id="kqq3yw2uf">What does Banking as a Service mean?</h2>Simply put, Banking as a Service (BaaS) is an end-to-end process that involves FinTechs and other third-party service providers(TPSP) to access the bank’s financial services through <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">APIs</a> for offering a different and personalized financial approach to their customers.<h2 class="heading-node" id="83d7">Banking as a Service - The Bonanza</h2>Over the years, banks provided financial services to their customers using rudimentary infrastructure. But now, many tech-savvy banks evolving around have pushed every bank to upgrade their services to maintain their lifetime value. To meet this rising demand, FinTech comes into play by integrating their white-labeled services by accessing the bank’s APIs.Looks like banks were on a ride of a lifetime to the technological planet with many advancements at fore. One such advancement is Banking as a Service. It is a business model which plays a crucial role in strengthening the customer base with the help of fintechs that provide innovative financial assistance to the bank. Banking as a Service pioneers a huge window of opportunities for digital banking and rockets the revenue.As<a class="link" href="https://m2pfintech.com/blog/embedded-finance-101-the-bridge-connecting-tech-and-financial-services/"> embedded finance</a> is treasured and demanded by many NBFCs, software companies, and logistic firms, BaaS has gained popularity and is now ubiquitous for bringing promising financial features for their customers and even escalates their revenue growth.Predominantly, fintech start-ups have come up in large numbers. They target banks to promote and promulgate their business by offering innovative products and services. The fintech sector collaborates with banks to gain rapid acceptance by the customers to provide loans, cards, deposits, insurance, make payments, and many trusted financial services.<h2 class="heading-node" id="e682">The Working Mechanism of BaaS</h2>Banking as a Service works on providing trendier products than ever to customers with a more qualified user experience. The pandemic skyrocketed the demand for payment digital apps. Amidst the chaos, these contactless payments created a brighter picture by providing ease of use while staying indoors.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-7-9.webp" alt="M2P Fintech" title="" id="49t76cu8b" width="100%" height="284">There are two ways to carry Banking as a Service seamlessly.<h3 class="heading-node" id="6785">API- based stack</h3>With API’s intervention, FinTechs and other third-party service providers (TPSP) can help banks offer customers a transparent, smooth, and customized financial service along with the existing banking services. Customers feel a better user experience when providers synchronize and connect with the bank’s tools and services. Simplified money flows are now possible with very few clicks for the customer.The fintechs are given secured access to banking services followed by integrating bank’s APIs with the provider’s products to further execute seamless white-label banking services using upgraded technology. They strictly abide by the rules and regulations in carrying out the bank’s data safely using top-notch security systems like PCA.<h3 class="heading-node" id="b6e9">Cloud-based stack</h3>Here, the licensed tech companies operate as regulated banks to offer the services by pushing the traditional banks to the inoperative section in this play by redefining their stacks to cloud sections.<h2 class="heading-node" id="0ecf">The Three-Layered Structure of BaaS</h2><ol class="list-node" id="1ye58bqfe"><li>Infrastructure as a Service (IaaS) includes the basic financial services provided by the traditional banks through an IaaS provider.</li><li>Banking as a Platform (BaaP) is placed above IaaS, which includes the customized services offered for fintech start-ups and companies. The data carried out between the banks and fintechs are monitored securely as data security is concerned.</li><li>FinTech SaaS — Here, the fintech companies which offer financial services interact with the end-users to carry out the data or requests and sends it back to BaaP securely.</li></ol><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-10-3.webp" alt="M2P Fintech" title="" id="k6nerr46b" width="100%" height="284"><h2 class="heading-node" id="80d9">Evolution of Banking</h2>This era has witnessed the massive emergence of tech-savvy banks. One such popular emergence is the&nbsp;<a class="link au js" href="https://m2pfintech.com/blog/neo-banking-the-rise-of-new-age-banking/" rel="noopener">Neo Banks</a>. They are digital banks that operate only online with the help of artificial intelligence, machine learning technologies, and <a class="link" href="https://m2pfintech.com/blog/the-world-of-apis-how-they-power-fintech/">APIs</a>. Cost-efficient, convenient, and user-friendly interface are what makes them stand out. Neo banks partner with traditional banks to digitally offer services from opening a bank account to money transfers/bill payments 24x7.FinTechs play a crucial role by building their innovative infrastructure on top of it, making the Neo Banks more popular. Banking as a Service is the backbone of Neo Banks as they are dependent on APIs and other crucial financial services they offer.We take pride in the fact that <a class="link" href="https://m2pfintech.com/">M2P</a> powers&nbsp;Finin, India’s first neo bank with our APIs that enables instant provision of user’s bank account and prepaid cards.<h2 class="heading-node" id="ka11sfo39">Types of BaaS Providers</h2>BaaS providers can be classified into three models based on their purpose.<ul class="list-node" id="knjzk1ypi"><li>API Stores&nbsp;— Traditional banks open their API for fintechs and other TPSPs to incorporate their innovative bank services for customers.</li></ul>Services offered: eKYC, beneficiary validation, remittance, inquiry, etc.<ul class="list-node" id="dcdqfn7c5"><li>White-Label Platform&nbsp;— Companies that don’t carry a license can also approach fintechs and other TPSPs to offer their white-labeled service. But, in India, a license is a must to carry out this model.</li></ul>Services offered: Digital banking &amp; cards, lending, blockchain, payments, etc.<ul class="list-node" id="ikgg6uif1"><li>BaaS as Co-branding&nbsp;— The fintechs or neo banks carry their appearance in the forefront for the traditional banks to offer their effective services.</li></ul>Services offered: Banking &amp; Cards, Integrated payment gateway, etc.<h2 class="heading-node" id="b3e1">Open Banking vs. Banking as a Service</h2>Let us elucidate the long-haul confusion between <a class="link" href="https://m2pfintech.com/blog/open-banking-a-primer-2/">Open Banking</a> and Banking as a Service. In a nutshell, the usage of APIs by fintechs determines the difference between these two.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/1_PMHIFWMQVSCmoFwYkpGQkg.webp" alt="M2P Fintech" title="" id="fcg7dxzxw" width="100%" height="181"><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-11-2.webp" alt="M2P Fintech" title="" id="9n9mxbvuv" width="100%" height="284"><h2 class="heading-node" id="c3d7">Benefits of Banking as a Service</h2>Nowadays, fintech start-ups shine with their innovative ideas and serve any financial need, making banks powerful. The mobile-first approach and everyday emerging digital advancements made Banking as a Platform a successful one in the industry. Also, the transparency and ease of use foster the growth of open banking by quickly nearing the go-to-market reach.Banking as a Service is the new evolution for both traditional banks and fintech sectors. The traditional banks who are smarter enough in adapting to the digital era can attain profitable accomplishments. They are forced to attract more young clients with their newer technologies and methodologies in financial services. For instance, the traditional banks can now collaborate with third-party service providers to expand their services like vehicle insurance, lending, <a class="link" href="https://m2pfintech.com/blog/remittance-with-upi-a-giant-leap-for-cross-border-payments/">remittance</a>, rewards, currency exchange, and many more.Many banks’ go-to option is now BaaS since they cannot remodel their infrastructure for back-end, front-end development and give a more product-centric approach as fintechs do. Banks prefer it is better to approach fintechs and TPSPs rather than making a huge investment building in-house.With banking service as a platform, it is simpler to launch and integrate banking features with the magic wand called <a class="link" href="https://m2pfintech.com/blog/the-world-of-apis-how-they-power-fintech/">API</a>.To make the long story short, BaaS is the savior for many banks, non-financial companies, and customers.Yes! We all have the same thought. The future holds more for banking.We can conclude that it will always be a money-spinning venture as fintechs and banks follow the collaborative way of doing business to produce more innovative services to their customers. Without a shadow of a doubt, the journey of Banking as a Service had just started, and we have a lot more to witness together.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Banking as a Service - Redefining Financial Services

<blockquote class="block-node" id="l59nir9cq">How Covid-19 Pandemic shaped the Remittance sector in the year 2020?</blockquote><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com//m2p-website-file/marekting-cms/m2p-blog/2025/05/Upward-spiral.webp" alt="Upward Spiral" title="" id="agehfg19l" width="100%" height="358">When the ongoing Pandemic hit in 2020, the World Bank and other agencies predicted a substantial fall in the <a class="link" href="https://m2pfintech.com/blog/remittance-with-upi-a-giant-leap-for-cross-border-payments/">global remittance</a>. This fall would have done sufficient damages to the domestic finances of South Asian nations like India, Pakistan, Sri Lanka, Bangladesh, and Nepal. The first four countries observe maximum outward remittance from the GCC region, and as we were present in the region (HQ at Abu Dhabi), we thought of doing an analysis.We collected data from various sources and what we found was an extraordinary Story of the Upward Spiral in Remittance in the year 2020. The facts and figures we collected, pointed towards growth in outward remittance from the UAE and Saudi Arabia. Further, as brick-and-mortar stores saw closure due to the pandemic, growing remittance gave a level playing field for the rising Fintechs in the region. Read on to know more.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-3.webp" alt="M2P Fintech" title="" id="t2yql5oox" width="100%" height="1466"><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1.webp" alt="M2P Fintech" title="" id="hc3yiy8pk" width="100%" height="1212"><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-2.webp" alt="M2P Fintech" title="" id="kszqc4ge3" width="100%" height="2066"><a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Upward Spiral In Remittance - 2020

&nbsp;<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/04/banner.webp" alt="M2P Fintech" title="" width="100%" height="529">Decades back, our banking systems were massive local servers poised at a physical location of a bank. The conversation between branches happened only at a specific time. Any transactions that occurred after were reserved for another day.The local servers handled the heavy load of deposits, account openings, loans, and credit processing in its designated area. So, going to the bank to avail these services required planning downright to its every tiny detail.Fast-forward a few decades, banking has taken a its digital avatar where traditional banks and new-age neo banks compete for customer attention and retention. Traditional banks are now making the hard choice of restructuring the legacy systems. But, they face the unique challenge of data management and processing.Just to render swift and intelligent services, they need to leverage analytics, break down data silos and restructure data according to the needs of the business. The vast amount of data generated brings the points of scalability and flexibility into focus. It has driven banks towards a service-based delivery model.The primary challenge that banks face is in consolidating data and offering contextual banking. The legacy systems are often limited by performance and horizontal scalability. They also have a minimal understanding of polymorphic data handling capabilities.This is where APIs come to the rescue; as banking is a global transaction exercise, they seamlessly integrate as a plug-n-play platform. With <a class="link" href="https://m2pfintech.com/blog/neo-banking-101-all-you-need-to-know/">neo-banking</a> and <a class="link" href="https://m2pfintech.com/blog/open-banking-a-primer-2/">open banking</a> on the rise, <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">banking APIs</a> offer the following benefits:<ul class="list-node" id="78x0lme2c"><li>Multiple platform data aggregation and gain a higher share of target customers</li><li>Enhanced operational efficiencies with automated processes</li><li>Niche digital user experience</li><li>Potential to scale complex operations with minimal effort</li></ul>Many banks have integrated APIs as microservices and adapt cloud-based processes whilst reducing their dependency on the core banking system. Furthermore, APIs have helped improve a bank’s or any financial institution’s native service and offerings.To sum up, APIs have enhanced banking services and have helped craft a user-driven experience that focuses on experiential generation.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Transactional to experiential banking- The Paradigm Shift

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-7-1-3.webp" alt="M2P Fintech" title="" id="1rpwrq7ge" width="100%" height="447">Like every other English, the term over-banked has its share of meanings:<ul class="list-node" id="23k37tfcl"><li>It denotes a place with an excessive number of banks.</li><li>It also indicates people with too many bank accounts.</li></ul>But the true meaning of the word is that your watch is malfunctioning, and you need to get it repaired.Coming back to the people’s perspective of the overbanked, they are the ones who are financially literate with efficient money management skills. They get the most out of their bank accounts as banks operate on a minimum balance model with numerous benefits for every account category.In countries like the USA, the overbanked often rely on sites like Mint.com, Personal Capital, or LearnVest to manage all their accounts in one platform. They can oversee and make decisions while having a 360° view of their financial activities.In fact, one of our customers, Finin, a Bengaluru-based startup and India’s first-ever neo-banking platform, offers the functionality of viewing different bank accounts aboard their platform. They offer account aggregation, bill and subscription management, smart budgeting, and goal-based saving.With all bank accounts in one place, the app would understand the bill, subscription, and EMI cycle of the consumer and tell you what your future expenses will be. The initiative is to build a savings first consumer-focused <a class="link" href="https://m2pfintech.com/blog/neo-banking-101-all-you-need-to-know/">neo bank</a> that will collate the many concepts related to wealth management into today’s Fintech scenario.Such apps would take what is known as a&nbsp;“Nudge approach,”&nbsp;where it will alert you about your spending behavior. With Artificial Intelligence and Machine Language, an individual’s saving and spending behavior is also understood, thereby providing a hyper-personalized service.The Overbanked tend to make decisions based on how much they gain; thus, the “relationship” with an institution is usually dismissed. This is where FinTech's use hyper-personalization as a hook to reel in today’s millennials. They aim to create an incredible user experience for the overbanked with financial literacy and freedom at its core.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Why do the overbanked need Fintech?

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/04/banner-1251-2.webp" alt="M2P Fintech" title="" id="g4x9lr2sv" width="100%" height="479">Bridging the shortcomings of traditional banking through integrated value chains and regulatory requirements, <a class="link" href="https://m2pfintech.com/blog/neo-banking-101-all-you-need-to-know/">neobanks</a> today offers a holistic twist to banking services. User-friendly and completely digital, these banks work on referral-based acquisition and competitive pricing.With no banking license of their own, neobanks partners with traditional banks to offer their service suite. While this might be a pain point, neobanks target niche micro-segments like the Gen-Z because of their higher transaction volumes. Coupled with Data Analytics, neobanks bring forth innovative solutions to help individuals keep better track of their finances.For instance, our client Finin, India’s first neo bank, has brought on a feature where users can have a unified view of their bank accounts via their platform. It helps a user to keep better track and plan their financial journey.<h2 class="heading-node" id="27ed">Unbundled Banking</h2>Neobanks today are focusing on offering one type of product/service with complete functionalities. They operate with customized tech stack modules aimed at niche segments with user convenience as the focal point. Some of the top global neobanks are Revolut, Monzo, WeBank, Chime, etc.Paradoxically, legacy banking institutions cannot create these experiences as they face redundant processes, <a class="link" href="https://m2pfintech.com/blog/why-payments-interoperability-is-a-must-for-todays-generation/">interoperability</a>, etc. Fintech professionals realized that an obsolete technology stack was limiting the interoperability of traditional banking. This, in turn, guided the notion of Unbundled Banking, with neobanks steering the helm.Unbundled banking further narrowed that focus on customer experience, user convenience, and simplified processes. In this approach, anyone can launch banking products minus the need to go through a rigorous process of setting up a bank.<h2 class="heading-node" id="d0fd">Neobanking Revenue Model</h2>Neobanks operate on a strong cost-efficient model backed by less complex IT systems. So, their revenue model depends on the kind of products and services offered by them. Cross-selling of products/services to niche customer segments also acts as a secondary revenue stream for neobanks.They are driven by data-based decisions that depend on a decision-making model. Neobanks gather consumer data and analyze them and predict consumer behavior. These predictions help to offer customized services to their target customers. By deploying AI-driven chatbots, video chats, and data analytics, neobanks are available to customers as a cost-effective banking service right at their fingertips.Neobanks cross-sell and generate secondary revenue streams with a range of customized offerings suitable to customer’s needs. They also offer payments and accounts back-end platforms for other fintech companies to build their own interface on top of it.<img src="https://miro.medium.com/max/1400/1*ccQft1zHg2RQupLqXoK1YA.png" alt="Neobanks’s revenue model" title="" width="100%" height="306">Plug and Play solutions with 3rd party service providers with ease and data insights. With this, they can offer a range of products and services based on customer appetite and financial goals to boost up the secondary revenue lines and opportunities for cross-selling.&nbsp;Boosting lending options to customers and the SME sector will help generate revenue options.<h2 class="heading-node" id="6d68">Neobanks &amp; the less-digitally savvy users</h2>The audience that comprises this segment is often elderly and rural customers; capturing their trust is quite an uphill task for neobanks. They gain such customers with a free account and low fees and budgeting tools and cash projections based on past spending, and ‘savings pots’ for spend categorization. Offerings like High-Yield Savings Accounts and easy money movement through lower fees &amp; charges are some ways.Neobank growth can be accelerated through adaptable services and convenience in money transfer like cheaper lending rates and better rural audiences’ products. Creditors can choose borrowers and information from diverse sources and technology-based lending.&nbsp;Like how social media platforms have pulled in rural customers, neobanks also need to create awareness through their user-friendly applications.Reduced data rates &amp; smartphone prices will also encourage rural customers to use neobanking apps and gain trust.<h3 class="heading-node" id="e927">Neobanks &amp; Transparency</h3>The issue of banking transparency is closely linked to <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">financial inclusion</a>. Neobanking transparency can be improved through dashboards, reports across products with enhanced interfaces, and easy-to-understand services such as payments, payables and receivables, and bank statements. They must explain real-time notifications, any charges, and penalties incurred by the customer too. They should send instant alerts to customers to know exactly what is going on with their account.<h3 class="heading-node" id="2fb2">Security &amp; Privacy</h3>Neobanks were the primary users of security-enhancing models. These were MCC block, single-use <a class="link" href="https://m2pfintech.com/blog/all-you-need-to-know-about-virtual-cards/">virtual cards</a>, and tokenized online transactions. They rely on security and safety when designing platforms, like data localization or 2-factor authentications (2FA) for card-based transactions.Neobanking enables third-party financial service providers (TPPs) to access customer data from banks or financial institutions. They must maintain robust online anti-fraud systems and inform customers of breaches as soon as it happens.Customer permission is required to ensure data privacy or share certain information with banks or providers. For instance, if the customer gave consent, they can share financial data like spending habits and regular payments with other banks.Providers must comply with <a class="link" href="https://m2pfintech.com/blog/gdpr-in-a-nutshell/">GDPR regulation</a> and data protection rules. They must provide transparency on how and for what the data will be used, for how long before they get a customer to sign up.<h3 class="heading-node" id="04ca">Trust</h3>Neobanks have strong drivers for securing their customers’ accounts, which are reputation management &amp; consumer perception. Developing trust can also be a challenging factor for loyal traditional banking customers.&nbsp;Fines, data breaches, and attacks can significantly damage consumer trust in non-traditional banks. Therefore, neobanks must protect consumers from mobile Trojans phishing scams and account takeover attempts. They can earn consumer trust through advanced authentication concepts such as dynamic linking, device binding for mobile apps, mobile application shielding, and transaction risk analyses.Strong privacy and data protection policies like removal of hidden fees and charges can help build consumer confidence in neobanks.<img src="https://miro.medium.com/max/1400/1*0VH_WhJDpgy4AEpgB9ivEA.png" alt="Advantages of Neobanks" title="" width="100%" height="306">Neobanks are trying to simplify the ways of transacting through digital mediums through:1. Simplified process with minimum steps to complete with minimum redirect for the transaction/payment 2. Tightly tying up and different players in the ecosystem (Retailers, Digital Service Providers, Issuer and Acquirer banks, etc.) 3. Standardization across devices and internet browsers 4. Compatibility across platform and technologies 5. Educating conventional customers on digital payment and ensuring that money is safe.<h2 class="heading-node" id="1e23">Neobanks Vs. Traditional Banks</h2>Traditional banks are focused on product-centric models, meaning high verticalization of products, no strong communities built around the brand/product, increased customer acquisition cost, and legacy technology infrastructure.But currently, traditional banks have been increasingly offering unique products and services to customers. One might wonder how neobanks will continue to differentiate themselves from conventional banking as a result.Neobanks can tackle product competition by keeping the focus on a platform-centric model. For example, high community engagement with the product, product horizontalization with best-in-class apps, open-banking APIs, and capitalize on a mobile-only approach for the low customer acquisition cost. A lower dependency on 3rd party providers and real-time data integration and management might help too. Above all, customer-centric organizational design and customer needs to drive data architecture.Neobanks create an ecosystem of services around their infrastructure, shifting the banking value from branches to their <a class="link" href="https://m2pfintech.com/blog/the-world-of-apis-how-they-power-fintech/">API</a> layer.&nbsp;They expand their user base by providing services on a 3rd party platform or offering 3rd party services on their platform.The neobanks’ value propositions &amp; CLV is based on lower costs, personalized insights, predictive intelligence, user-friendly interfaces, easy accessibility, and simplified processes.<h2 class="heading-node" id="17cf">The Global Way Forward</h2>On a global scale, neobanks are on an upward growth trajectory in Europe, followed by America. The real neobank growth is being unlocked in the APAC region, with many countries devising their virtual banking systems.Hong Kong, Taiwan, and Singapore have already implemented virtual banking licensing, with Thailand and Malaysia following suit.In India, neobanks are still nascent. Still, they are playing a leading role in helping small businesses to manage finances conveniently and comprehensively. The data below shows that the Indian neobanking market is growing fast:<ol class="list-node" id="701721vxm"><li>Average market maturity of India is 2–3+ years compared to 5–6 years+ in Europe and the US.</li><li>Number of neobanking players in India has gone up in the recent past compared to global markets.</li><li>Fund raised by Indian neobanks have gone up to $168 million</li><li>Indian neobanks are boosting up the competition through value-added services apart from standard offerings.</li><li>Indian Government supports the MSME sector through different schemes that open up Indian SME neobanks opportunities.</li></ol>Neobanks are expected to explore strategic partnerships with&nbsp;established traditional banks to grow in India. The Reserve Bank of India (RBI) has not permitted a digital license to neobanks yet. RBI has initiated the change by providing a license to small finance and payment banks, to begin with. Banking Industry experts are hopeful that RBI will also work on policies to approve banking license for digital-only or neobanks soon in the post-covid-19 era. This will keep the fate of neobanks blurry.<h2 class="heading-node" id="c577">Conclusion</h2>Fintech will continue to push neobanking as the new normal. The pandemic is just a catalyst to ignite the digital transformation. Neobanks are challenging mainstream traditional banks. They are backed up by digital backing licenses and control most of the value chain from front-end to back-end.Till then, neobanks in India will have no option but to continue partnering with the traditional banks to offer services.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Neobanking - The Rise of New-age Banking

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<a href="https://m2pfintech.com/blog/pci-dss-the-payments-armour/">PCI DSS stands for Payment Card Industry Data Security Standard</a>. A collaboration between top reputed <a href="https://m2pfintech.com/blog/credit-card-processing-a-definitive-guide/">credit card</a> brands such as American Express, Discover, JCB, Mastercard, and Visa in 2004 resulted in PCI-DSS launch. Organizations who store or process, or transmit the cardholder data either as clear or in an encrypted manner should comply with PCI regulations.

A short survey showed that most people give the above description when quizzed about PCI-DSS. When we further probed them about the levels present in this compliance, we came up short. So, we came up with a quick read of the PCI-DSS compliance levels.
<h2 id="6c0f" class="rz sa ps bn ds sb sc sd fr se sf sg fv sh si sj fz sk sl sm gd sn so sp gh sq dr">PCI DSS Compliance levels</h2>
Divided into four levels, the PCI Compliance levels are based on the number of credit or debit card transactions processed by a business annually. These levels determine what needs to be done by an enterprise to remain compliant.
Level 1:
Applies to merchants who process more than six million real-world credit or debit card transactions annually. An authorized PCI Qualified Security Assessor will conduct an annual internal audit and an on-site evaluation of the organization to:
· Authenticate the assessment’s scope;
· Evaluate technical information and documentation;
· See whether the PCI-DSS standards are being met;
· Assist and guide the compliance process and
· Also, evaluate the compensating controls
On successful evaluation, the QSA will present an RoC (Report on Compliance) to the organization’s acquiring bank, thereby demonstrating its compliance.
Level 2:
Applies to merchants who process between one and six million real-world credit or debit card transactions. Security testing reports on network hosts and applications should be completed on a defined frequency. The RoC is also applicable for level 2 organizations.
Level 3:
Applies to merchants who process annually between 20,000 and one million e-commerce transactions. A yearly assessment must be done using the relevant SAQ (Self-Assessment Questionnaire)along with a quarterly PCI scan.
Level 4:
Applies to merchants who process annually fewer than 20,000 e-commerce transactions or those who process up to one million real-world transactions. They must complete a yearly assessment using the SAQ and a quarterly PCI scan.

<h2 id="7604" class="rz sa ps bn ds sb aed sd fr se aee sg fv sh aef sj fz sk aeg sm gd sn aeh sp gh sq dr">What is this Self-assessment questionnaire?</h2>
PCI-DSS lists several kinds of SAQs for every level, and it is also based on how the merchant processes card information. Given below are some of the types of SAQs applicable to levels 2–4:
SAQ A: Merchants who outsource their entire card data processing to certified third parties. The transactions also include e-commerce transactions.
SAQ A-EP: Applies to E-commerce merchants who outsource their payment processing but not the site’s administration.
SAQ B: Applies to E-commerce merchants who don’t receive cardholder data, but they have control over the process through which data is redirected to a third-party payment processor.
SAQ B-IP: It applies to merchants who don’t store cardholder data in electronic form but will use IP-connected point-of-interaction devices. These merchants may handle either card-present or card-not-present transactions.
SAQ C-VT: Applies to merchants who process cardholder data via a virtual payment terminal.
You must select the right SAQ because every level has compliance requirements based on how payment card data is processed.

<h2 class="rz sa ps bn ds sb aed sd fr se aee sg fv sh aef sj fz sk aeg sm gd sn aeh sp gh sq dr">How to become a PCI DSS compliant</h2>
The PCI DSS specifies six control objectives for an organization to achieve compliance:
1. Build and maintain a secure network
2. Protect cardholder data
3. Maintaining a vulnerability management program
4. Implementing strong access control measures
5. Regular monitoring and testing of networks
6. Maintaining an information security policy

<h2 id="2e3a" class="rz sa ps bn ds sb aed sd fr se aee sg fv sh aef sj fz sk aeg sm gd sn aeh sp gh sq dr">The penalties of non-compliance</h2>
As cardholder data is considered personal data, a PCI DSS breach can also be regarded as equal to a <a href="https://m2pfintech.com/blog/gdpr-in-a-nutshell/">GDPR</a> breach. If PCI regulations are not adhered to, organizations will face severe financial penalties or even lose their facility to accept card payments.
In short, PCI-DSS is a standard that ensures trust, business continuity, and safety of the cardholder data.
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Follow us on&nbsp;<a href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.</body></html>

PCI DSS- A quick guide to its levels

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-7-7.webp" alt="M2P Fintech" title="" id="dfm3kye4j" width="100%" height="479">Traditional insurance firms are yet to touch the foreign shores of technology adoption or disruption. Nevertheless, this pandemic has Insurance players considering their strategies and adopting technology to retain its customer base.So far, many insurers or insurance companies have adopted a technology-based process only on a cellular level. But, given the wave of innovation, Insurance companies are yet to arm themselves for the upcoming digital transformation. That is where InsurTech comes in to save the day.<h2 class="heading-node" id="971b" style="text-align: justify">InsurTech- Overview</h2>InsurTech is a component of <a class="link" href="https://m2pfintech.com/blog/fintech-101-discover-the-3ws-of-fintech/">Fintech</a> dedicated to delivering a complete set of <a class="link" href="https://m2pfintech.com/blog/digital-lending-open-credit-enablement-network/">digital insurance solutions</a> and services. When FinTech started, it mostly worked with banks as partners and improved user experience through online/mobile banking or <a class="link" href="https://m2pfintech.com/blog/the-rise-of-digital-payments/" target="">digital payments</a>.As a striking contrast, InsurTech focuses on the consumer segment than the commercial one. The reason is that digital-savvy individuals consider insurance products like any other consumer goods and are willing to try or switch new insurance policies. They are incredibly comfortable in submitting an insurance claim online or browsing for insurance policies online.<h2 class="heading-node" id="d670" style="text-align: justify">Product Strategy and Value Chain</h2>Today, most InsurTech applications cover consumer insurance product lines like Property &amp; Casualty (P&amp;C), Non-Life Insurance, and Health Insurance. And so far, P&amp;C has been a significant contributor to InsurTech’s revenue.Moreover, with extensive real-time data collection and analysis, InsurTech minimizes the number of false insurance claims considerably compared to legacy systems. It’s interesting to see that the same P&amp;C insurance product’s value proposition differs between incumbents (existing insurance providers) and new entrants (tech-based insurance companies).Currently, InsurTech is targeting the sales, pricing, and distribution areas predominantly in the overall value chain. For higher growth, it should expand across the entire value system, including new product development, and start offering more commercial or retail and life insurance services.<h2 class="heading-node" id="e14b" style="text-align: justify">Technology Triangle and Benefits</h2>Most of the tech adoption has improved the method of delivering and buying claims and paying and billing. For instance, streamlining the claim disbursement user journey is of utmost importance to InsurTech.Today, they include as many digital touchpoints as websites, apps, smart devices, wearables, and much more. Additionally, they are keen on instantly issuing claims right away when the customer faces damage. Many InsurTech has already accepted digital card payments instead of checks from customers to disburse and process claims at lightning speed.Therefore, the existing programs in InsurTech revolve around providing a better customer experience, lowering acquisition costs, minimizing risks, increasing upsell, and cross-sell.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Tag: "Digital Banking (38)"

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