Among proponents of believer’s-baptism-only, one often hears that baptism is an outward sign of an inward change. But I don’t think we can rightly limit the significance of baptism. Baptism signifies several things each of which is attested to either in the NT text itself or from NT background.
Water Baptism and Spirit Baptism
I must point out at the beginning that it is easy to say that we will limit our discussion to water baptism but to do so is to overlook the clear and unavoidable connection between water baptism and Spirit baptism. Everett Fergusson in his recent magnum opus dealing with baptism points out this close connection in Acts, which is the NT writing where baptism is most often seen. In Acts 2:38, Peter promises that baptism will result in those being baptized receiving the Holy Spirit. This is evident from the phrase “you shall receive the gift of the Holy Spirit” in which “gift of the Holy Spirit” must be taken as an objective genitive since this phrase corresponds to the use elsewhere of the more simple phrase “receive the Holy Spirit” (8:15, 17, 19; 10:47; 19:2) and of the expression “gift of the Holy Spirit” in 10:45 where the reference is clearly the Holy Spirit himself (cf. 11:17).
This stated connection is illustrated in the account of Cornelius’ household. This account indicates that while there is a distinction between baptism of the Holy Spirit and water baptism (here the Holy Spirit baptism preceded the water baptism), the Holy Spirit baptism was given in order to convince Peter to baptize Gentiles.” This presupposes a strong connection between the two baptisms, otherwise, Peter might not have recognized it.
A similar connection may be made in the case of the Samaritans in Acts 8. Citing Acts 8:16, Ferguson writes, “From Luke’s perspective, there was an anomaly thus far about the conversion of the Samaritans.” The anomaly was that they had been baptized in the name of Christ but had not yet received the Holy Spirit. While Ferguson points out that this was a unique case designed to show the “significance of the expansion of the gospel to Samaria and to confirm the unity of the Jews and Samaritans in the church,” it also demonstrates the close and vital connection between water baptism as a sign of the reception of the Spirit by believers. Ferguson concludes, “The Holy Spirit…was promised as a ‘gift’ (2:38) to be received by all who identified with Christ through baptism in his name.”
James Dunn also points out the connection between water baptism and Spirit baptism. John preached that his baptism of repentance was preparatory to Messiah’s baptism which would involve two aspects: the outpouring of the Holy Spirit, and judgment. Jesus deliberately took up and echoed John’s words in Acts 1:5 and 11:17 which highlighted both the eschatological nature of baptism (both John’s baptism and Christian baptism) and the close connection between water baptism and Spirit baptism.
This is where 1 Corinthians 12:13 is significant. This verse is often taken as a reference to water baptism when it is not a reference to water baptism but to Spirit baptism. This is evident by the equivalency to the phrase “baptized into Christ Jesus,” and by the context of 1 Cor. 12 where Paul is talking about unity and diversity in the gifts of the Spirit. Assuming that it is referring to water baptism, for this to refer to “baptism as standing for conversion or spiritual transformation” this would require “the translation of ‘in’ the Spirit” which is only supported two evangelical translations: ESV and NET Bible (and Tyndale, which, though a little out-of-date, would make three). While the six other uses of “baptism in the Holy Spirit,” seem to support this view, they are not in Paul and are in a set phrase.  Instead, Paul is again talking about unity using participatory language.
Union with Christ’s Church
There are other valid meanings that may be attached to baptism. Baptism signifies that the one being baptized is united with Christ’s church. Since everyone undergoes the same initiatory rite, baptism identifies one with God’s people. As Richard DeMaris points out, coming to faith in the ancient world might very well have involved breaking kinship ties. Baptism served to solidify and acknowledge the making of new ties with the covenant community and so served as an identity marker. Baptism, then, is the initiatory ordinance which marks out those whose allegiance is to Christ. BDAG indicates that Christian baptism was initiatory and cites the use of the various prepositions that indicate one is “baptize[d] in or w. respect to the name of someone” to indicate this. More may be said about this below.
Similarly, baptism is a sign indicating the covenant one has entered into with Christ through his death. In many theological traditions (especially the Baptist tradition), the church is seen as a covenant community, in covenant with God and with each other. This is why Baptist churches (among others) publish and subscribe to church covenants. A church is united together in joint confession of Jesus Christ as Lord. Baptism, then, serves as the covenant seal indicating lifelong, public commitment to follow God and obey his Word in the context of the covenant community of the local church.
Broader in scope, baptism signifies unity with the greater body of Christ. Teachers often reference Ephesians 4:5 but fail to see that Paul is talking there, not about transformation, but unity. This is evidenced by (1) Paul’s statement in v. 3, (2) by the list of common elements to the Christian faith, (3) by the use of the word “faith” immediately preceding, which here must be objective, “the faith,” and (4) by the use of “each one” in v. 7 which personalizes the things held in common in the preceding statement. This is yet another meaning of baptism beyond inward transformation and is consistent with Paul’s teaching in 1 Cor. 1:13 where Paul also uses baptism to indicate unity.
Union with Christ and Death to Sin
Baptism signifies union with Christ and consequent deliverance from the power of sin as in Romans 6:3-4. BDAG says that “To be baptized εἰς Χρ. is for Paul an involvement in Christ’s death and its implications for the believer.”
The location of discussion is informative. Paul has already talked about justification and has moved on to a discussion of the presence of ongoing sin in the life of a believer and how the Christian deals with that sin. Paul invokes Christian baptism as being illustrative of what has happened to a believer that affects his or her relation to ongoing sin. “Burial certifies the reality of death. Baptism is the ritual act that portrays this burial.”
Our baptism then identifies us with Christ so much so that we may see ourselves as dead just as he was dead. Just as Christ was buried and in that burial was no more present in the world, we too must in the same manner be dead the sin prevalent in our flesh and in the world. Christ’s death also liberated us from the power of sin just as Christ’s death liberated him from the bonds of this world. Just as Christ as raised from the dead in new life, we, too must see ourselves as risen with Jesus in new life. This union with Christ should cause us to see our lives in light of our union with Christ and our hope of ultimate liberation from the sin prevalent in the world and in our flesh. All of this illustrated by baptism.
The prepositions in Romans 6:4 and Col. 2:12 also demonstrate this expanded meaning. Dunn explains that based on these prepositions, we may conclude that, “Baptism was in some sense the medium through which God brought the baptizand into participation in Christ’s death and burial.”
Baptism and Resurrection
By the time of Ignatius, baptism had also come to symbolize resurrection. Ignatius specifically says that Christian baptism makes us “partakers of his resurrection.” For someone of a baptistic bent, this is evident in the act of baptism itself. Though Dunn points out that “Paul refrains from pressing the symbolism [of baptism] farther” by drawing a clear connection between baptism and resurrection, it is a reasonable inference from the argument Paul makes in Romans 6:5ff. On a similar note, The relationship between of baptism in connection with the forgiveness of sins in Acts 2:38 may indicate that this rite was for the purpose of beginning this inward change and becoming “more devout, more just, and better in every way.”
In Ignatius’ Letter to Polycarp 6:2, Ignatius writes, “Let your baptism endure as your arms; your faith as your helmet; your love as your spear; your patience as a complete panoply.” Baptism then signifies not only an element of the Christians struggle in living the life of faith, but also the endurance necessary to persevere to the end and “obtain…a most worthy recompense.”
Baptismal Submission and Hierarchy
Baptism can also signify submission and hierarchy since the one being baptized must themselves to be baptized at the hand of another. There is no evidence of self-baptism in the NT, either the apostles or their representatives baptized. In light of the Roman customs of patronage (which later caused problems in Corinth leading to factionalism), baptism may have served as a reminder of one’s place in the hierarchy of a given local body. The benefit was to remind the newly baptized of their need for growth and leadership by the mature members of the congregation. In the case of elders baptizing new converts, it may have served to solidify their authority in the congregation. As noted above, the downside occurred when baptism was interpreted in terms of cultural understandings and practices rather than in light of Christian teaching, resulting in Paul’s much-needed corrective in the opening chapters of 1 Corinthians. This is perhaps the meaning of “baptize” in 1 Cor. 10:2 when Paul speaks of the Israelites being “baptized” in the Red Sea. BDAG indicates that this was the Israelites affirming Moses’ leadership. Dunn indicates that baptism is “boundary marker” which “is to be reckoned a sine qua non of membership in the Pauline churches.”
While none of these meanings is inconsistent with seeing baptism as “an outward sign of an inward change,” to limit it only to one area of significance does injustice to the word itself, to the ritual, to the teachings of the apostles, and to the text of Scripture.
 Everett Ferguson, Baptism in the Early Church: History, Theology, and Liturgy in the First Five Centuries (Grand Rapids: Eerdmans, 2009).
 Ferguson, 176.
 Ferguson, 171.
 Ferguson, 184.
 Ferguson, 171.
 Ferguson, 184.
 James D. G. Dunn, Jesus Remembered (Grand Rapids: Eerdmans, 2003), 368.
 Dunn, Jesus, 804.
 Dunn, Theology, 421, n. 44.
 Ferguson, 153.
 Matt. 3:11; Mark 1:8; Luke 3:16; John 1:33; Acts 1:5; 11:16. Ferguson, 153, also n. 17.
 Richard E. DeMaris, The New Testament in Its Ritual World (London: Routledge, 2008), 19.
 William Arndt, Frederick W. Danker and Walter Bauer, A Greek-English Lexicon of the New Testament and Other Early Christian Literature, 3rd ed. (Chicago: University of Chicago Press, 2000), 164. Hereafter, BDAG.
 See Ferguson’s discussion of this, 152-153.
 BDAG, 164.
 Robert H. Mounce, vol. 27, Romans, electronic ed., Logos Library System; The New American Commentary (Nashville: Broadman & Holman Publishers, 2001), 149.
 James D. G. Dunn, The Theology of Paul the Apostle (Grand Rapids: Eerdmans, 1998), 457.
 Ignatius, To the Trellians, 2:1.
 Dunn, Theology, 470. Dunn says that baptism represents the death of Christ, not his resurrection.
 BDAG, 164.
 DeMaris, 30.
 BDAG, 165.
 James D. G. Dunn, Beginning from Jerusalem (Grand Rapids; Eerdmans, 2009), 649. Dunn’s discussion on pp. 649-652 is helpful, though he seems to equate baptism and circumcision contra his previous discussions (see notes above).