Infrastructure is indispensable

There is a phrase attributed to Bill Gates that has been repeated for decades at technology and financial innovation events: “Banking is necessary, banks are not.” Curiously, no one has managed to prove that he actually said these words. The closest historical record shows Gates saying in 1994 that banks were “dinosaurs” and could be bypassed by technology.

Regardless of its authorship, the phrase ended up shaping how we imagine the financial system’s future. For years, people believed technology would replace banks.

Thirty years later, banks have not disappeared. There have never been so many institutions authorized by the Central Bank, so many fintechs or so much investment in financial infrastructure. What changed was something deeper: banks ceased to be necessarily the interface between the financial system and consumers.

This is exactly the transformation Banking as a Service represents.

For decades, infrastructure, regulatory licenses, technology and customer relationships were inseparable. Anyone wanting to offer financial services needed to be a bank. Today, that logic has changed. Specialized institutions provide accounts, payments, Pix, cards, credit and various other capabilities through APIs, allowing companies across different sectors to incorporate financial services into their own platforms.

This separation created two distinct layers. On one side is financial infrastructure, responsible for transaction settlement, regulatory compliance, anti-money laundering and system stability: financial service providers. On the other are recipients of financial services — retailers, marketplaces, ERPs, digital platforms and technology companies — that create the customer experience.

As a result, financial services are consumed within other digital journeys. Regulation requires transparency about the financial institution responsible for the operation, but the customer experience is increasingly built by platforms, retailers and technology companies. The providing institution remains responsible for infrastructure, regulatory compliance and transaction execution, even if it does not always occupy the center of the consumer relationship.

This change does not diminish financial institutions’ importance. Quite the opposite. The more companies offer financial services, the greater the need for robust, secure and compliant infrastructure. The leading role moves from the shop window to behind the scenes.

Perhaps this is Banking as a Service’s true innovation. It has not replaced banks or eliminated their relevance. It has merely redefined their role. The bank is no longer necessarily the customer’s destination and becomes the platform on which countless financial experiences are built.

So perhaps the phrase attributed to Bill Gates deserves an update: “Banking is necessary. Banks are optional. Infrastructure is indispensable.”

📌 Originally published in Cantarino Brasileiro