The Evolution of Banking: A Look Back and a Glimpse into the Future | GBAF

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Home > Banking > Banking As A Service Will Redefine How We Use Financial Services

Banking As A Service Will Redefine How We Use Financial Services

Published by Jessica Weisman-Pitts

Posted on February 2, 2022

6 min read

Last updated: January 28, 2026

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How Banking as a Service is Transforming Financial Services

By Mike Orlic, Vice President, TTEC EMEA.

The banking industry has experienced one wave of disruption after another for at least the past thirty years. When First Direct launched in 1989 it was suddenly possible to engage with your bank at any time – and on any day. Nationwide and Royal Bank of Scotland launched their Internet banking services in 1997. The Cooperative launched their Smile brand in 1999, which was the first digital-only bank in the UK.

Since these innovations, there has also been a dramatic change in the way that customers interact with their bank. Apps are now completely normal for most customers and branch networks are being reduced. Who would have imagined, back when branches were first being challenged by Internet banking, that customers would now be chatting to Barclays Bank on Instagram?

Throughout this period of rapid change and evolution there has been an adjustment of the relationship between the customer and bank. Ask anyone who can remember banking in the seventies and eighties about their experience applying for a loan and the stories sound like a pupil being called in front of the headmaster. Easier access to banking services also changed the nature of the customer relationship.

But most banking services remained essentially the same. A current account offering an online statement, rather than a monthly ream of paper sent in the post, remained a current account. Most retail banking services remained similar to the services offered before the arrival of the Internet.

The more recent evolution in banking has been largely driven by financial technologies (fintech). There were some innovative companies, such as Zopa, exploring new banking models as early as 2005, but Apple and Google only introduced the app store concept in 2008 – this was the catalyst for more rapid innovation.

Apps are cheap and easy to develop. Once an app is released to the Apple and Google stores it has the potential to be available globally. This is an incredibly important development for many industries, beyond just financial services alone. Anyone with a great idea for a service can launch an app and access a potentially vast number of customers. Instagram only had 13 employees when it was purchased by Facebook for a billion dollars a decade ago. The word game ‘Wordle’ was only released in October 2021, but it has already been purchased by the New York Times for ‘a seven-figure sum.’

Apps allowed financial service companies to specialise. Instead of going to your current account provider to arrange for some foreign exchange, you could use Transferwise (now Wise) and get better, faster service at lower rates. Services such as FX or personal loans could be detached from the usual suite of banking services and offered by new companies. They didn’t have the history or reputation of the high street banks, but so long as they were regulated they were trusted – and they thrived.

These waves of digital transformation are continuing. Open banking is now creating many new services and opportunities that reach far beyond the focus on loans or accounts that persisted when retail banks originally went online. Open banking in the UK is now just over four years old and is a sector that is growing rapidly. Many customers now understand that banking can actually be a platform on which many other services can exist – banking as a service.

Here are a few examples of how some open banking apps are reimagining the way that people can interact with their cash:

Wagestream: allow employers to ‘stream’ smaller, more frequent amounts of cash to employees. Rather than a monthly salary, employees can choose to be paid as they earn – weekly or even daily.

Moneybox: rounds up all your debit purchases to the nearest pound and adds the change to a savings account so you are constantly saving without noticing. For example if you buy a coffee for £2.40 then 60p would be transferred instantly into your savings account.

Canopy: helps renters to ensure that their rent payment is being recorded on their credit score, regardless of whether their landlord is reporting the transactions or not. This can help renters to build a better credit record.

Kalgera: share your financial activity with family members (amounts rather than exact details) so you can monitor transactions for potential fraud. This can be useful for adult children to monitor elderly parents – there is no need to identify exact details as the system highlights suspicious activity.

Mojo: helps customers to obtain a mortgage from over 90 lenders and uses your actual financial data to prepare an application – even advising if you are ready to apply with each lender.

It is clear that open banking allows a much richer level of customer engagement when compared to basic banking services alone. Services like Kalgera are offering financial protection, particularly for individuals who are still independent, but may be entering a period where degenerative diseases are becoming an issue. Mojo helps guide individuals towards the target of getting a mortgage by indicating who will be prepared to lend and based on which loan criteria.

The level of innovation and customer centricity displayed by all these services goes far beyond what has traditionally been provided by retail banks. Combining traditional accounts, loans, and these connective services, using open banking, really does start delivering a new financial environment that can be summarised as banking as a service.

I believe the next steps will be in cryptocurrencies and the metaverse. Many of us will soon be working and socialising in virtual environments that are an extension of what we can already see in games like Fortnite. Transactions are already being promoted in many of these environments – for virtual homes, offices, and even clothes.

For now, the metaverse is still focused solely on the early adopters. It may take most of this decade for the public to truly buy into greater virtual experiences, but the banking industry needs to be thinking ahead. Will open banking transfer into the metaverse and what kind of banking services will be needed in a virtual environment? Can I buy a virtual home with a real mortgage and who regulates these transactions?

Banking as a service has a long way to run, but the focus today is already the customer, not the bank, and that’s already a very positive change from the past.

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