What the hell is Banking as a Service? And what is it not? Blog

Many founders are shocked by the amount of compliance work required to launch embedded financial products. In many cases, you’ll need to hire a Chief Compliance Officer before a bank will even talk to you. Other weighty compliance obligations include KYC, AML, disputes, and third-party risk management. That said, many banking-as-a-service platforms help their customers streamline compliance activities, substantially reducing the necessary investment. They allow your customers to deposit and withdraw funds, as well as make and receive payments.

banking as a service platform

If you’re looking for a way to project what that might look like for your company, check out our revenue calculator and full revenue projection tool. Create an account and start accepting payments—no contracts or banking details required. Diversity matters because it enables fintechs to become better at what they do. As the image below demonstrates, BaaS can have multiple service tiers, and customers can choose numerous of them for the business. However, as with almost everything related to finance, BaaS is surrounded by mystery.


In order to meet this demand, BaaS providers are offering an API-based suite of banking solutions that can integrate deeply into their partners’ operations, including sharing data and revenues. While many fintechs have been at the forefront of this trend, traditional banks have also begun to take advantage of this opportunity and are increasing their market share. Determining whether a company is a fintech isn’t straightforward anymore. With these tailored financial services, platforms become a one-stop destination, enabling customers to manage all aspects of their business in a single place. The two models often get confused, as open banking also involves banks connecting to non-banks via API.

banking as a service platform

This alleviated the need to reconcile manually and drastically cut operational overhead and human error. For businesses with complex payments and banking needs, BaaS enables them to change the way they operate and reduce manual overhead. This can be seen in features such as automatic payment reconciliation, freeing up Ops staff by banking as a service platform integrating virtual IBANs and a payment infrastructure that routes and reconciles payments automatically. Approaches such as this can eliminate human error and empower your teams to focus solely on growing your business. The space is getting increasingly crowded, with dozens of platforms claiming to offer banking-as-a-service.

The Core Banking Platform to the rescue of banks

Issue branded physical and virtual cards instantly, with the spending controls they need with Solid’s /card API. BaaS providers are integral for a variety of businesses, from neobanks to marketplaces. When a software platform uses a BaaS provider, this is typically called “embedded finance” because the platform adds the financial services as part of its core software. Many platforms already offer a version of embedded finance today by providing payment processing, ACH access, or wire transfers through a payments provider. A BaaS provider enables platforms to add even more financial services to their product. Making embedding finance into apps and customer journeys as simple as drag and drop.

banking as a service platform

It connects third-party organizations to bank infrastructure, allowing them to see a customer’s account balance, transactions, and credit card information. The data allows the creation of consumer and SMB applications in areas like payments, online lending, PFM, robot advisors, customer onboarding, insurance, investment services, P2P marketplaces, and cryptocurrencies. Digital challenger banks are now running https://globalcloudteam.com/ at a fraction of the cost of incumbents. Some technology companies have obtained banking licenses, enabling them to offer their BaaS platforms to distributors that want to provide financial products to their customers. Core banking systems should include shared capabilities for deposit, loan and credit processing and should interface with the company’s general to general accounting and reporting systems.

Banking as a Service vs. Banking as a Platform

So, it’s not that the client needs BaaS – BaaS requires a client. That’s why BaaS providers strive to offer a truly superior experience. They are making an effort to meet the needs of banking customers who are digital natives and genuinely tech-savvy. Our open API platform enables the world’s innovators to instantly issue & process cards with more control, flexibility & scale. Marqeta is rewriting the rules for what’s possible with payment cards.

Acquiring a licence imposes not only significant capital requirements, but more importantly compliance with strict regulations on money laundering, banking secrecy and deposit protection, to name a few. Innovative solutions strive to be customer-centric and offer all the necessary functions in one place. This enhances financial transparency and simplifies cash management compared to traditional bank accounts. The company’s mission is to deliver solutions that eliminate financial borders, enabling businesses to operate both locally and internationally with ease across Europe, the UK, LatAm, APAC and Africa. Based in London, Unlimint has 500 employees across 16 offices and five continents, including Frankfurt, Singapore, São Paulo, Hong Kong, and Mexico. Many banks have the ambition to deliver better technology to their customers, but are held back by legacy platforms and technology.


With the licensed bank or middleman FinTech software company as a BaaS provider, these partners use API integration to connect with a bank’s infrastructure system. The BaaS model creates revenue streams and enables customer sharing for the participants. Regulated banks and financial institutions with licenses securely link to a non-bank entity’s embedded financial services through an API , enabling seamless communication. The customer doesn’t need to go to a different bank website to get financial services, including loans, making payments, product financing, credit cards, or digital wallets. Embed financial services into your client experience and enhance your business offer thanks to Treezor’s white-label solution.

They could apply for a loan from the same financial institution where they opened their bank account, but they end up finding a lower interest rate loan from another local bank. They apply for the loan in person and fill out a lengthy application with their business information. Unfortunately, since the bank isn’t familiar with Hair Flair, or the typical cash flow that’s expected for salons, Hair Flair isn’t approved for the loan. They apply for a loan at two more banks and are approved for one a few months later. The future of banking as a service will include a modernized architecture of traditional banks.

Can I use Crassula service without financial expertise?

This is a behind the scenes component that end-users will be unable to discern between a complete automated service and one that includes HuaaS. The infrastructure as a service layer provides basic infrastructure services through an IaaS provider. A majority of these services would be available on demand and do not necessarily need to be FinTech services .

  • Banking as a Service lets companies integrate banking products into their own services.
  • We hope we could shed some light into the potpourri of technical terminology and business models in the evolving banking and fintech world.
  • Solid’s Card Issuance and Management platform is the first of its kind.
  • For example, offering expense cards means managing user verification, ensuring PCI compliance, understanding KYC requirements, and maintaining measures to reduce fraud.
  • Among accomplished banking-as-a-service providers, Accedia stands out due to its transparent approach across all development stages.
  • With BaaS, the payments company offers this range of services without actually having to hold a banking license itself.
  • It is likewise simpler to find the potential financial backers required.