The Bank OS: Revolutionizing Embedded Banking

Treasury Prime has pioneered the Bank OS — an Embedded Banking Operating System that's revolutionizing the industry. Since our founding, we’ve prioritized bank operations and management controls, dedicating our efforts to building a robust Bank OS tailored specifically to banks. This isn't just another Banking-as-a-Service middleware product. It’s a comprehensive solution that allows banks to extend access to their products and services through APIs while maintaining the oversight, visibility, and controls expected in every other business line they run today.

Core principles of the Bank OS

1. Banks have all the authority: At Treasury Prime, we recognize that only a bank can truly run a Banking-as-a-Service program. Though we've created a new banking standard, we are a software company enabling banks, not trying to be a bank ourselves. This approach ensures that our partner banks always remain in control and confident in the system. The regulators have spoken clearly and declared that there is no Program-Management-as-a-Service in banking.

2. It’s the bank's ledger: Treasury Prime has always maintained that we are a software and third-party service provider. Our banks are active participants in the upkeep, maintenance, and balancing of the ledger every day. This approach ensures that they remain comfortable and confident in the balances on this ledger, just as they are with any traditional account. Ultimately, our banks recognize and understand it’s their Banking Charters and FDIC coverage being leveraged for these bank accounts, and it’s their inherent responsibility to keep those funds safe.

3. Segregation of funds: Every program we onboard at Treasury Prime receives its own unique and segregated set-up on the bank's traditional core. This segregation eliminates any possibility of funds being commingled or mismanaged between programs. Treasury Prime has effectively given each of our partner banks an "embedded banking core" that the bank owns and manages.

4. Real-time transactions: A necessary component of the Bank OS is making a true direct-to-bank connection for every partnership. Every transaction has equal 1-for-1 inputs on the ledger and core, ensuring clear fund flow built on reconciliation controls and transparency.

5. Multiple bank partnerships: To ensure fault tolerance, the Bank OS is designed to work with many banks. Every good fintech has multiple opportunities to find a bank partner, even if its initial bank wants to limit or ultimately end the relationship.

The Bank OS in action

Here’s a simple example of how the Bank OS moves money:

Let's take a consumer who has a checking account with XYZ fintech at bank ABC. The consumer wants to ACH $1,500 to an external bank account held at the consumer’s local bank to pay their mortgage.

1. The client logs into fintech XYZ's app and instructs a $1,500 ACH to be sent immediately.

2. Fintech XYZ passes that instruction through the Treasury Prime APIs in collaboration with the bank partner, which triggers a series of events. Each event is trackable, and a complete audit trail is recorded by both Treasury Prime and the bank’s underlying embedded banking core.

3. If the consumer’s ledger account has sufficient funds, the account’s available balance is adjusted and reduced by $1,500 on the embedded banking core.

4. Treasury Prime instructs an equal transaction (book transfer) on the bank traditional core - this would debit XYZ's FBO or Omnibus account by the $1,500 and credit an ACH settlement account. Since this is an on-core activity, this is reviewable and reversible by the bank.

5. Treasury Prime then creates the NACHA file for the next ACH window that will include this $1,500 and submits the file to the bank partner.

6. The bank's payment gateway processes the NACHA file, and the $1,500 is processed out of Fintech XYZ's ACH settlement account and out the door to the bank's settlement account at the Federal Reserve Bank. Since this process relies on the bank's standard tools, it can be monitored, controlled, and (most importantly) reconciled.

Treasury Prime’s hard-won experience has taught us that this is the best way for the bank to manage the fintech relationship and for us all to reconcile safely. 

Why Treasury Prime and the Bank OS Win

Treasury Prime's Bank OS wins in the Banking-as-a-Service arena because it recognizes this fundamental truth: Banks provide Banking-as-a-Service. Treasury Prime writes the software to make it work.

By following this core principle of the Bank OS, Treasury Prime avoids the very pitfalls we have all recently seen take place in this space. It ensures clear fund flows, easy reconciliation, and maintains crucial checks and balances between all parties involved. The result is a robust, scalable, and secure system that empowers banks to offer modern financial services while maintaining full control and oversight. This transparency builds trust and ensures the system's reliability.

In an era where the financial landscape is rapidly evolving, the Bank OS stands as a beacon of innovation, security, and transparency — shining a light into the future of embedded banking.

‍