Neobanks Compliance


Banking as a Service (BaaS): What It Is + Examples

May 22, 2024




12 min read


Banking as a Service (BaaS) is transforming how financial products reach customers. 

By allowing non-banking businesses to deliver tailored financial products through seamless API integrations, BaaS enables third-party distributors to connect with regulated banking infrastructure and offer innovative financial services to their customers.

As fintech startups, technology giants, and traditional banks embrace this model, a new ecosystem of embedded banking products is emerging, unlocking opportunities for financial growth and strategic partnerships.

In this article, we will explore the evolution of BaaS, its various models, the key players in the industry, and the benefits it brings to financial institutions, non-bank companies, and customers.

As you explore the transformative potential of Banking as a Service, remember that navigating its regulatory landscape is key. Contact InnReg today for a complimentary consultation.

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InnReg is a global regulatory compliance and operations consulting team serving financial services companies since 2013. If you need assistance with compliance or fintech regulations, click here.

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What Is Banking as a Service?

Banking as a Service is a financial framework that allows non-banking businesses to offer tailored banking products through seamless partnerships with licensed financial institutions

By leveraging APIs, these businesses can connect directly to the infrastructure of traditional banks and provide banking services under their own brand. This model empowers fintech companies, startups, and even established enterprises across various industries to deliver innovative financial products such as digital wallets, payment processing, lending solutions, and more.

The significance of BaaS lies in its ability to democratize the banking value chain, giving rise to specialized propositions that meet the rising demand for embedded financial services. Tech-savvy legacy banks are also realizing the potential of BaaS to open new revenue streams and fend off competition from fintech disruptors. 

By offering greater transparency and accessibility, BaaS is fundamentally transforming how financial services are delivered and consumed.

Banking as a Service Definition (BaaS)

Evolution of Banking as a Service

Banking as a Service has evolved rapidly over the past decade, disrupting traditional financial models and ushering in new opportunities for banks and non-banks alike. 

According to Juniper Research, BaaS revenue is expected to grow from $1.7 billion in 2021 to over $17.3 billion by 2026. This remarkable growth is fueled by the increasing demand for financial services that can be seamlessly added to existing customer experiences.

A recent survey by Finastra also found that 85% of senior executives—across banks, fintech companies, and other customer-facing brands—are either already using BaaS or plan to start soon. This widespread interest shows how BaaS transforms financial services by helping businesses reach new markets and expand their product offerings.

The evolution of BaaS, as defined by Deloitte in a 2021 report, can be broken down into three key stages:

  • Co-Brand and White Label Solutions

  • Embedded Financial Products

  • Tailored Financial Propositions

Each phase shifts toward more personalized banking solutions that change how customers interact with financial services. Let's explore these phases to see how BaaS has evolved and where it's headed next.

Banking as a Service Models

Co-Brand and White Label Solutions

Timeline: 2010s
Complexity: Simple
User Experience: Limited

In the early days of Banking as a Service, co-brand and white-label solutions allowed established consumer-facing brands to partner with banks and offer financial products like credit cards under their own branding. 

This model helped banks tap into new customer segments by leveraging the established customer base and market influence of these brands. Co-branding enabled businesses to offer financial products without needing to build their own banking infrastructure. 

This early form of BaaS paved the way for embedded financial services and laid the foundation for more innovative solutions that have emerged in recent years.

Banking as a Service Models

Embedded Financial Products

Timeline: Early 2020s
Complexity: Moderate
User Experience: Unified

As Banking as a Service evolved, businesses began embedding basic financial products directly into their offerings. These include simple deposit accounts, payments, and lending services, all integrated seamlessly within non-bank platforms.

This development allowed a broader range of companies, such as fintech startups, e-commerce platforms, and mobile apps, to offer financial services to their customers without acquiring a banking license.

With APIs enabling secure and easy integration, these embedded financial products deliver a more convenient and cohesive user experience. This phase also marked the shift toward meeting specific customer needs, further closing the gap between traditional financial institutions and modern digital services.

Banking as a Service Models

Tailored Financial Propositions

Timeline: Late 2020s and beyond
Complexity: Advanced
User Experience: Immersive

The latest stage in the evolution of Banking as a Service involves developing tailored financial propositions that cross product lines to address unmet customer needs. This phase goes beyond simple embedded products to deliver comprehensive and highly customized financial solutions that align with a brand’s specific audience.

Businesses now have the potential to integrate services like personal finance tools, investment options, and lending solutions directly into their platforms, offering a full suite of financial products tailored to their unique customer base. This level of personalization provides businesses with greater flexibility to meet customer expectations and empowers end-users to manage their finances seamlessly, all while enjoying a cohesive and branded experience.

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How Banking as a Service Works

How exactly does Banking as a Service work?

BaaS enables non-bank companies to offer banking products and services through partnerships with regulated financial institutions. These partnerships are facilitated through application programming interfaces (APIs) that allow third-party distributors to integrate banking functions seamlessly into their platforms. 

APIs provide access to banking infrastructure and data, potentially enabling businesses to create financial products without the need for a banking license.

Implementing BaaS requires expertise and rigorous compliance. Reach out to InnReg to learn how our tailored compliance services can help you accelerate your BaaS strategy.

Banking as a Service Models

This type of collaboration typically follows different models, each catering to varying levels of involvement between banks, fintechs, and other businesses.

Here’s a closer look at the leading models driving BaaS:

1. Provider-Only Model

Complexity: Low
Integration: Basic
Customer Focus: Bank-Centric

Providers repurpose their existing banking infrastructure to deliver new experiences and generate additional revenue. 

They offer modular services that distributors can mix and match to build products meeting specific customer needs. By customizing these products and exposing market-facing APIs, providers empower distributors to offer a personalized experience while reducing direct costs.

Providers often benefit from regulations like the Durbin Amendment, which caps interchange fees and helps lower costs for both distributors and end customers. Their established reputation in the BaaS sector is a differentiator when partnering with distributors, enabling them to expand their services with minimal additional investment.

2. Provider-Aggregator Model

Complexity: High
Integration: Advanced
Customer Focus: Distributor-Centric

Provider-Aggregators expand their core services by partnering with other providers, offering a broader set of financial products that distributors can integrate with minimal effort. 

Their wide range of services means distributors don't need to rely on multiple partners to provide different products. Instead, they can work with a single aggregator to streamline their offerings.

By combining features from multiple providers, aggregators deliver a unique value proposition that standalone providers can't match. This integration deepens relationships with distributors and allows them to develop stronger, longer-lasting connections with their customers.

3. Distributor-Aggregator Model

Complexity: High
Integration: Advanced
Customer Focus: Distributor-Centric

Distributor-Aggregators bring novel financial products to their customers by bundling banking services with their own capabilities.

This combination allows distributors to create unique and convenient solutions that meet customer needs in ways competitors cannot. These offerings are embedded within the distributor’s existing platform, providing seamless user experiences and lowering barriers to customer adoption.

Distributor-Aggregators often leverage their existing customer base and analytics to refine their financial products, making their acquisition and conversion campaigns more effective. By working with multiple banking partners, they can distribute tailored banking services without needing to acquire a banking license.

4. Distributor-Only Model

Complexity: Medium
Integration: Intermediate
Customer Focus: Distributor-Centric

Distributors aim to enhance their customer experience by providing banking products that add value and strengthen their existing core business. They combine multiple features and embed financial services into their platform's ecosystem, creating new offerings that align with their brand while reducing barriers to adoption.

By partnering with various providers, distributors can deliver comprehensive, all-in-one solutions that would have otherwise required using several standalone applications. This gives them a competitive edge, allowing them to offer the best solutions in one seamless package.

These models form the backbone of BaaS, enabling a flexible, scalable, and highly customizable approach to delivering banking products and services.

Top Banking as a Service Companies in 2024

Several companies have emerged as leaders in Banking as a Service, offering comprehensive platforms and services that redefine how businesses can deliver financial products.

Here are some of the top BaaS companies to watch in 2024 (in no particular order):

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Solaris Banking as a Service Example


Country: 🇩🇪 Germany
Founded: 2016

Solaris offers digital banking services, branded payment cards, and compliance solutions. Its BaaS platform provides APIs and technology that help businesses integrate financial products into their operations. Solaris' customers include Vivid Money and Samsung Pay.

Bankable Banking as a Service Example


Country: 🇬🇧 United Kingdom
Founded: 2010

Bankable serves financial institutions, corporates, and fintech entrepreneurs through its payment solutions platform. Its API-based and white-label services include a virtual ledger manager, digital banking, and branded payment cards with features like SEPA and SWIFT payments.

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Treezor Banking as a Service Example


Country: 🇫🇷 France
Founded: 2016

Treezor specializes in card issuance, payment processing, and electronic wallets. Its API-driven platform offers regulatory compliance and payment services for European markets. The company is a principal member of EMI-authorized Mastercard.

Railsr Banking as a Service Example


Country: 🇬🇧 United Kingdom
Founded: 2016

Railsr's platform includes APIs for payments, open banking, and digital wallets. Fintech and retail businesses can use its BaaS services to integrate banking products. Railsr’s features include international payments, regulatory compliance, and account management.

Starling Bank Banking as a Service Example

Starling Bank

Country: 🇬🇧 United Kingdom
Founded: 2014

Starling Bank is a challenger bank offering digital banking and open banking features through its BaaS platform. It includes business banking, lending, digital wallets, and integration with third-party providers. Their clients include fintech startups and digital payment providers.

Stripe Banking as a Service Example


Country: 🇺🇸 United States
Founded: 2010

Stripe provides scalable APIs for payments, branded cards, and lending programs. Businesses use its services for multiparty payments, embedded finance, and bank account replacements. Stripe partners with Shopify, Lightspeed, and other tech companies.

Synctera Banking as a Service Example


Country: 🇺🇸 United States
Founded: 2020

Synctera connects fintech companies with sponsor banks through its BaaS platform. Their APIs facilitate compliance, risk management, card issuance, and account management. Synctera also supports payment and lending products, allowing fintechs to build and launch banking services efficiently.

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Cambr Banking as a Service Example


Country: 🇺🇸 United States
Founded: 2017

Cambr provides a deposit platform that connects clients with over 850 banks, helping them manage cash storage and returns. Their solution allows fintech companies to integrate banking services through an easy onboarding process.

ClearBank Banking as a Service Example


Country: 🇬🇧 United Kingdom
Founded: 2015

ClearBank provides secure banking infrastructure for fintech, e-commerce, and digital banking companies. The platform caters to payments and compliance, helping organizations unlock new financial products.

Intergiro Banking as a Service Example


Country: 🇸🇪 Sweden
Founded: 2018

Intergiro provides APIs for digital banking, allowing businesses to integrate payment and card services into their platforms. It offers multi-currency IBAN accounts, card issuance, and neobanking solutions.

Synapse Banking as a Service Example


Country: 🇺🇸 United States
Founded: 2014

Synapse provides a unified banking-as-a-service platform with APIs for deposits, lending, card issuance, and payments. Their platform enables the integration of credit and investment products, helping businesses scale globally while maintaining compliance.

Mbanq Banking as a Service Example


Country: 🇺🇸 United States
Founded: 2016

Mbanq provides digital banking technology to fintech and traditional banks. Their cloud-based platform offers compliance and scalability across global markets, enabling rapid product launches and smooth integrations.

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Helix Banking as a Service Example


Country: 🇺🇸 United States
Founded: 2004

As part of Q2, Helix provides fintech companies with an API suite that includes accounts, payments, and data. The platform offers scalable tools for embedding personalized banking products into software applications.

OneConnect Banking as a Service Example


Country: 🇨🇳 China
Founded: 2015

OneConnect, a subsidiary of Ping An Group, provides financial technology solutions for banking, insurance, and blockchain. Their platform combines AI and big data to deliver banking services at scale.

Solid Banking as a Service Example


Country: 🇺🇸 United States
Founded: 2018

Solid offers a fintech platform with APIs for card issuance, payments, and lending. Its fully integrated suite allows businesses to quickly embed and scale financial services, ensuring compliance through a unified infrastructure.

Are you considering partnering with a top BaaS provider? InnReg can guide you through the complexities of regulatory compliance and help optimize your financial product offerings. Discuss your needs with us today.

Benefits of Banking as a Service

Banking as a Service (BaaS) offers numerous advantages, both for the companies that provide these services and those that utilize them. Here’s a closer look at how BaaS benefits financial institutions, non-bank companies, and end customers.

For Financial Institutions

  • Increased Revenue:
    Financial institutions can generate new revenue streams by providing their infrastructure to fintechs and non-bank businesses through BaaS partnerships.

  • Scalability:
    By allowing third parties to access their APIs, banks can scale their operations with minimal additional investment, reaching more customers indirectly.

  • Expanded Market Reach:
    Partnering with non-bank distributors lets banks enter new markets and extend their customer base.

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For Non-Bank Companies

  • New Revenue Streams:
    By embedding financial products, businesses can offer valuable new services, enhancing customer engagement and creating additional revenue streams.

  • Personalized Services:
    Companies have the potential to tailor financial solutions to their audience, providing unique value propositions aligned with customer needs and brand identity.

  • Faster Market Entry:
    BaaS provides the infrastructure for non-bank companies to potentially integrate and launch financial services quickly without building it from scratch.

  • Improved Customer Experience: Embedded financial services enable a seamless user journey where customers access everything they need within the company’s ecosystem.

For End Customers

  • Convenience:
    Customers may have the opportunity to access a wider range of financial products directly from the platforms they already use, such as mobile apps or e-commerce sites.

  • Cost-Effectiveness:
    BaaS services may sometimes offer lower fees and better terms than traditional banks due to lower operational costs.

  • One-Stop-Shop:
    Embedded finance aims to provide a unified experience, helping customers manage their finances seamlessly alongside other services.

These benefits highlight why Banking as a Service has become so influential in reshaping the modern financial landscape.

Key Trends Shaping the Future of Banking as a Service

The continuously maturing Banking as a Service model is driving significant change in how financial products are developed and delivered. Here are some of the key trends expected to shape the future of BaaS:

Open Banking and Data Sharing

Open banking regulations tend to promote greater data transparency, enabling BaaS providers to offer more personalized services. This trend enhances customer-centric innovation, enabling customers to securely share their financial information across platforms for tailored product recommendations.

Companies like Plaid—which powers services like Venmo and Tink, and is used by PayPal—exemplify the potential of open banking to facilitate secure data sharing and personalized financial solutions.

Digital-Only Banking

Digital-only banking solutions, including neobanks and fintechs, are disrupting traditional banking by providing seamless, mobile-first experiences. BaaS supports these digital-only players, enabling them to quickly bring innovative banking services to market without physical branches.

Examples include Revolut, which offers a broad range of services from currency exchange to crypto trading, and Chime, known for its fee-free and user-friendly mobile banking experience.

Embedded Finance Expansion

The growing popularity of embedded finance means more non-financial brands are integrating financial services into their offerings. Companies across various sectors like e-commerce, healthcare, and telecom are embedding payments, lending, and personal finance tools within their platforms to create comprehensive customer experiences.

Shopify Capital's offerings and Square’s integrated financial solutions are prime examples of how embedded finance is transforming business operations.

RegTech Adoption

Regulatory technology (RegTech) is becoming more critical as financial regulations grow more stringent. BaaS platforms will increasingly incorporate RegTech solutions to help fintechs and distributors remain compliant, particularly in areas like KYC, AML, and data security.

These trends reveal the broad and dynamic potential of BaaS in reshaping how businesses and customers interact with financial services. By staying ahead of these developments, companies can better leverage BaaS to meet changing market needs.

Are you ready to navigate the future of Banking as a Service? Partner with InnReg for strategic compliance solutions that can help you grow your financial services. Share your compliance needs with us, and let’s discuss your path to success in the dynamic financial sector.

How Can InnReg Help?

InnReg is a global regulatory compliance and operations consulting team serving financial services companies since 2013.

We are especially effective at launching and scaling fintechs with innovative compliance strategies and delivering cost-effective managed services, assisted by proprietary regtech solutions.

If you need help with neobank compliance, reach out to our regulatory experts today:

Published on May 22, 2024


Last updated on May 22, 2024

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